Despite a recent resurgence in prices, Bitcoin (BTC) and Ethereum (ETH), the two largest cryptocurrencies by market capitalization, are not expected to achieve new all-time highs this year, according to analysts at Citigroup.
The company significantly revised its forecasts for both cryptocurrencies on Tuesday, reflecting concerns about the slow pace of legislative progress in the United States, which limits the potential for regulatory catalysts that could drive increased demand from institutional investors and exchange-traded funds (ETFs).
Bitcoin And Ethereum Price Targets Revised Downward
In their latest update, Citigroup lowered its 12-month price target for Bitcoin from $143,000 to $112,000, while Ethereum’s forecast was reduced from $4,304 to $3,175.
This suggests that, based on current trade prices, Bitcoin is predicted to increase by nearly 50% in the remaining months of the year from $74,360. Ethereum, on the other hand, would see a nearly 62% increase in price from its present level of $2,314 per token over the course of the year.
Citi strategist Alex Saunders emphasized that while regulatory catalysts are essential for fostering greater adoption and inflows into the market, the opportunity for significant US legislative action this year is diminishing.
The report further highlights that, under a recessionary economic climate, Bitcoin could see its price dip to as low as $58,000, while Ethereum might fall to around $1,198.
Conversely, in a bullish scenario driven by heightened demand from end investors, Bitcoin’s price could reach $165,000, with Ethereum potentially climbing to $4,488.
Tight Timeline For Crypto Legislation Progress
The upcoming mid-term elections in November further complicate the legislative landscape for crypto-focused regulation. Should Democrats gain additional seats in Congress, the chances of passing the crypto market structure bill (CLARITY Act) could diminish. For the bill to advance, support from 7 Senate Democrats is required.
Citigroup analysts suggest that Bitcoin is likely to trade within a range while awaiting developments in the legislative arena, with $70,000 acting as a significant price point as the US election approaches.
Earlier on Tuesday, Bitcoinist reported that Alex Thorn from the research team at Galaxy Digital pointed out that time is of the essence. He cautioned that if progress is not made this month, the likelihood of passing the CLARITY Act this year will become “extremely low.”
While negotiations in Washington D.C focus on resolving the stablecoin rewards issue, Thorn highlighted that additional challenges could emerge. These challenges may include discussions regarding decentralized finance (DeFi), investor protections, and broader ethical considerations in the digital asset sector.
Featured image from OpenArt, chart from TradingView.com
