Citi Analyst Says ETF Inflows Driving Bitcoin and Ethereum Rallies, Unveils One Factor That Could Pose the Biggest Risk to More Upside for BTC and ETH
The head of quant macro research at Wall Street giant Citi, Alex Saunders, says heavy demand from investors for Bitcoin ( BTC ) and Ethereum ( ETH ) is fueling the two crypto assets’ rallies.
In a new interview on CNBC, Saunders says exchange-traded funds (ETFs) are the primary catalysts driving the rally in Bitcoin and Ethereum.
“Quite simply, the bull case is based on flows. We’ve seen a huge amount of flows in the last year. And we continue to expect those flows to be realized, so flows into the year-end and then flows for the next 12 months. That is really the key determinant of the bull case, but even the base case for both Bitcoin and Ethereum…
The ETF is the best proxy, the best high-frequency proxy to measure those flows. And that’s where you see pretty consistent inflows. Now, recently we’ve seen a pickup in flows from digital asset treasuries. Those ones potentially are not as consistent… Primarily, we see the ETF flows as being the catalysts.”
On what could curtail the continued rise in the price of Bitcoin, Ethereum and other crypto assets, Saunders says,
“The biggest risks in our view to that [bull] case are not actually from the flows. Particularly for Bitcoin, we think they are likely to be fairly persistent because we are fairly early in the adoption cycle of financial advisers and asset managers. So, those are likely to maintain.
The biggest risk is a change in sentiment from the macro economy, and in particular, downside to equity risk, because we think that would, number one, probably reduce the amount of flows that you see.
But secondly, because of those exposures, and because Bitcoin and Ethereum are quite sentiment driven, [it] would drive that price down.”
At time of writing, Bitcoin is trading for $121,826 and Ethereum is worth $4,479.
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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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