Citigroup has lowered its price outlook for both bitcoin and ethereum, pointing to slowing momentum across the crypto market and delays in U.S. regulatory progress.

The Wall Street bank cited weaker than expected ETF inflows, declining onchain activity, and a lack of near term legislative catalysts as key reasons behind its revised forecasts.

Slowing institutional momentum

One of the main drivers behind Citigroup’s earlier bullish outlook was the expectation that spot crypto ETFs would continue attracting strong capital inflows.

However, recent data suggests that demand has cooled. While ETFs initially brought significant institutional exposure into the market, inflows have become less consistent, reducing one of the strongest support factors for bitcoin and ethereum prices.

Weakening network activity

Citigroup also pointed to declining network usage across major blockchains.

Lower transaction volumes and reduced activity in decentralized finance and NFT markets have contributed to a softer overall environment. For ethereum in particular, slower usage growth has raised concerns about near term demand for block space and fees.

This drop in activity signals that retail and speculative participation has not fully recovered.

Regulatory uncertainty remains a key risk

A major factor behind the downgrade is the lack of progress on U.S. crypto legislation.

Markets had been expecting clearer regulatory frameworks that could unlock broader institutional participation. Instead, delays and political uncertainty have pushed that timeline further out.

Without strong regulatory clarity, many large investors remain cautious about increasing exposure to digital assets.

Narrowing window for catalysts

Citigroup emphasized that the window for positive catalysts in the near term is shrinking.

Earlier expectations included regulatory breakthroughs, sustained ETF demand, and renewed retail activity. With those factors either delayed or weakening, the bank now sees more limited upside in the short term.

Long term outlook still intact

Despite the downgrade, Citigroup did not dismiss the long term potential of crypto assets.

The bank acknowledged that structural trends such as institutional adoption, tokenization, and blockchain infrastructure development remain in place. However, it now expects these themes to play out over a longer time horizon than previously anticipated.