Citigroup has updated its outlook on major cryptocurrencies, signaling a shift in investor sentiment within the digital asset space. The bank raised its forecast for Ethereum (ETH) while lowering expectations for Bitcoin (BTC), reflecting changing dynamics in capital flows and utility-driven demand.
Ethereum’s Expanding Utility
According to Citigroup’s latest market note, Ethereum continues to attract positive attention thanks to its expanding ecosystem of decentralized finance (DeFi), smart contracts, and tokenization projects. Recent technical upgrades—focused on scalability and reduced transaction costs—have reinforced confidence among institutional investors who increasingly see Ethereum as a backbone for blockchain innovation.
“Ethereum’s momentum underscores the market’s preference for networks that enable applications, not just asset storage,” the report stated, suggesting the next growth cycle in digital assets will be driven by platforms offering practical utility.
Bitcoin’s Waning Dominance
In contrast, Citigroup’s softened stance on Bitcoin highlights concerns over slowing institutional inflows and its limited functionality beyond serving as a store of value. While Bitcoin remains the largest cryptocurrency by market capitalization, its dominance has steadily declined as investors diversify into assets offering broader utility.
Macroeconomic and Energy Pressures
The report also pointed to macroeconomic headwinds, including rising interest rates and energy-related concerns, which have weighed more heavily on Bitcoin’s near-term outlook. Ethereum, meanwhile, has benefitted from its transition to a proof-of-stake model, significantly reducing its energy footprint and appealing to environmentally conscious investors.
Regulation and Market Volatility
Citigroup’s revised stance comes amid renewed volatility in crypto markets, with global investors closely watching regulatory developments in the U.S., Europe, and Asia. The bank emphasized that while risks remain high, the sector’s long-term trajectory continues to lean toward mainstream financial integration.
Implications for Investors
For both institutional and retail investors, Citigroup’s updated outlook is likely to influence allocation strategies. With Ethereum cementing its role in tokenized assets, Web3 development, and financial infrastructure, Bitcoin could face rising competition for investor attention as alternative blockchains mature.
