Citibank: Cryptocurrency weakness is due to slowing ETF inflows and reduced risk appetite

According to ChainCatcher, citing CoinDesk, Wall Street bank Citi stated that while the stock market has performed strongly, the cryptocurrency market has recently weakened again, with significant liquidations in October undermining investor confidence.

The wave of sell-offs has reduced risk appetite among leveraged traders and new spot ETF investors, with the latter withdrawing their investments. Recently, capital inflows into US spot bitcoin ETFs have dropped sharply, weakening a key factor supporting the market's optimistic outlook. Citi had previously predicted that as financial advisors and others increased their bitcoin exposure, ETF inflows would continue, but now the momentum has stalled and market sentiment may remain subdued.

On-chain data has also contributed to a cautious atmosphere, with the number of large bitcoin holders declining, the number of small retail wallets rising, and funding rates decreasing, indicating that long-term investors may be selling and demand for leverage is weakening. Technically, bitcoin has fallen below its 200-day moving average, which may further suppress demand. Citi also linked bitcoin's weakness to tightening bank liquidity. The report concludes that spot ETF capital flows are a key signal to observe shifts in cryptocurrency market sentiment.