Citi Warns Crypto Liquidations Are Shaking Investor Confidence

Recent events in the cryptocurrency market are causing growing concern among investors. According to Citigroup, a major Wall Street bank, a wave of large-scale liquidations in October has significantly undermined investor confidence. The heightened selling pressure, particularly the sell-off witnessed on October 10th, has discouraged both leveraged traders and new participants in spot Bitcoin Exchange-Traded Funds (ETFs), leading to a notable pullback in investments.

One of the critical factors highlighted is the sudden slowdown in inflows to US spot Bitcoin ETFs. Earlier this year, expectations were high that ETF inflows would continue to support the market as more financial advisors and investors sought exposure to Bitcoin. However, that momentum has now faltered, reflecting a widespread drop in risk appetite across the sector.

On-chain data paints a similar picture of caution. There has been a decrease in the number of large holders of Bitcoin, while smaller retail wallets have become more common. At the same time, funding rates have declined, suggesting that long-term investors may be selling and that the demand for leveraged positions is softening. Notably, Bitcoin’s price has broken below its 200-day moving average, a technical indicator that could further weaken market demand.

Citigroup also points out that broader financial conditions, such as tightening bank liquidity, are contributing to the ongoing weakness in the cryptocurrency market. Overall, the flow of funds into spot ETFs is now seen as a crucial signal of shifting sentiment, and unless confidence returns, subdued trading and investor caution may persist in the months ahead.