Citi has formally revised down its 12-month price targets for Bitcoin and Ether, scrapping its earlier ETF inflow assumptions entirely. The bank cited two compounding headwinds: a stalled legislative calendar for U.S. crypto regulation and evidence of softening retail and institutional demand into spot Bitcoin and Ether ETFs. This is not a speculative warning — it is a model-level revision from a major bank that had previously embedded ETF flow momentum as a core bullish driver.

The revision matters because Citi's ETF inflow thesis was widely shared across Wall Street. If the bank is abandoning it, the consensus support structure for a continued 2024-style rally is weakening. Bitcoin and Ether ETFs had attracted significant inflows post-approval, but those flows have decelerated, and without a legislative catalyst — a stablecoin bill, market structure clarity — the marginal institutional buyer has less reason to add exposure.

The second-order setup is a potential sentiment reset. Crypto assets are highly reflexive: when institutional price targets fall and flow narratives reverse, retail positioning can unwind quickly. The bull case rests on the possibility that legislation accelerates, flows re-ignite on any macro catalyst (Fed cuts, risk-on rotation), or a supply-side Bitcoin shock reasserts the trend. The bear case is that the ETF-driven demand wave was a one-time re-rating event, and without ongoing inflows, prices revert toward pre-ETF approval levels.

Watch for Congressional crypto bill progress, weekly ETF flow data from Farside/Bloomberg, and whether other major banks follow Citi's target cuts. A cluster of similar revisions would materially shift the institutional sentiment backdrop for the next 2-3 months.