Citigroup has adjusted its year-end price forecasts for the two largest cryptocurrencies, raising its outlook for Ether while slightly reducing its target for Bitcoin. The bank attributes the change to a noticeable shift in investor flows, with a growing preference for Ether's yield-generating capabilities over Bitcoin's reliance on price appreciation alone.
Key Takeaways
- Citigroup increased its year-end 2025 price target for Ether to $4,500.
- The firm's year-end 2025 target for Bitcoin was slightly lowered to $133,000.
- The adjustment reflects a trend of investors favoring Ether for its potential to generate yield through staking and DeFi.
- Long-term forecasts remain positive, with 12-month targets of $181,000 for Bitcoin and $5,440 for Ether.
- Macroeconomic factors, such as a stronger U.S. dollar, are cited as headwinds for Bitcoin.
Investor Strategy Shifts Toward Yield
A key factor behind Citigroup's revised forecast is the changing behavior of investors in the digital asset market. According to the bank's analysis, there is an increasing appetite for assets that can produce a return, or yield, in addition to appreciating in price.
Ether, the native token of the Ethereum network, offers this through mechanisms like staking and its use in decentralized finance (DeFi) platforms. This contrasts with Bitcoin, which primarily serves as a store of value, with returns dependent solely on its price increasing.
This dynamic has made Ether more attractive to certain institutional investors and financial advisors who have increased their crypto allocations over the past year. The bank noted that Ether's price performance over the summer was supported by this growing institutional demand.
Understanding Yield Generation
In the context of cryptocurrency, "yield" refers to the returns an investor can earn by holding and using their digital assets. For Ether, this includes:
- Staking: Locking up ETH to help secure the network and validate transactions, earning staking rewards in return.
- DeFi Lending: Supplying ETH to decentralized lending protocols to earn interest from borrowers.
- Liquidity Providing: Adding ETH to liquidity pools on decentralized exchanges to facilitate trades and earn a share of the transaction fees.
Updated Price Targets and Projections
Citigroup's latest report outlines specific price targets for both cryptocurrencies for the end of 2025 and beyond. The new forecasts suggest modest short-term upside but significant potential over the next 12 months.
Year-End 2025 Outlook
For Bitcoin, the year-end target has been trimmed to $133,000. Based on a trading price of $118,747 at the time of the report, this represents a potential upside of approximately 12%. The slight downward revision is attributed to macroeconomic pressures, including a stronger U.S. dollar and weaker gold prices, which can impact assets viewed as inflation hedges.
For Ether, the year-end forecast was raised to $4,500. This target implies a nearly 3% upside from its trading level of $4,375. The increase is supported by strong inflows into Ether-based exchange-traded funds (ETFs) and the growing trend of digital asset treasuries holding the token.
12-Month Projections
Looking further ahead, Citi maintains a bullish stance. The bank projects a 12-month price target of $181,000 for Bitcoin and $5,440 for Ether, indicating continued confidence in the long-term growth of both assets.
Macro Factors and Market Scenarios
The bank's analysis includes different scenarios based on broader economic conditions and investor demand. The base case assumes steady capital inflows, while bull and bear cases consider more extreme market environments.
Bitcoin's Bull and Bear Cases
Citi's base case for Bitcoin assumes robust year-end inflows of $7.5 billion. The bank's bull case is predicated on stronger equity markets and higher-than-expected demand, which could push the price higher than the $133,000 target.
Despite the short-term headwinds, analysts believe Bitcoin's narrative as "digital gold" remains strong and will likely continue to attract a significant share of new investment into the crypto space.
However, a potential bear case exists. If recessionary macroeconomic conditions materialize, Citi projects that Bitcoin's price could fall to $83,000. This highlights the asset's sensitivity to broader market sentiment and economic health.
Ether's Outlook and Uncertainties
The upside potential for Ether is driven by its increasing adoption and its central role in the DeFi ecosystem. The ability to generate yield makes it a fundamentally different investment proposition compared to Bitcoin.
Modeling a downside for Ether is more complex, according to the brokerage. This difficulty stems from uncertainties around future network activity and how value accrues to the token through transaction fees and other on-chain activities. A market downturn would likely impact its price, but the relationship is less direct than Bitcoin's correlation with macro indicators.
Citi emphasized that both tokens are currently trading above metrics based on user activity. Therefore, sustained investor demand will be crucial to support prices through the end of the year and into 2026.
