Citi has maintained its strategic outlook on Bitcoin (BTC) despite a small sale of the cryptocurrency by Strategy, the software company that holds the largest corporate bitcoin treasury.
It described the disposal as a routine tax-optimisation measure flagged at the company's last results call rather than a signal of changing conviction.
The bank identifies exchange-traded fund (ETF) flows as the primary driver of Bitcoin price appreciation, accounting for around 45% of weekly return variation and representing the most reliable gauge of broader investor adoption.
Those flows have recently turned negative, while the prospects for a US market structure bill, which Citi views as a potential catalyst for renewed institutional interest, are described as diminishing.
Citi expects sentiment to remain subdued, particularly given the stark divergence between Bitcoin's performance and equity markets.
That's, unless positive regulatory developments emerge or fears around fiscal deterioration revive the so-called de-basement trade, a thesis that hard assets benefit from concerns over government debt and currency debasement.
The bank does not expect selling by other digital asset treasury holders to be a material driver of near-term price weakness.
