Citi Analyst Alex Saunders: ETF Flows Drive Crypto Bull Case for Bitcoin and Ethereum

Crypto Bull Case Driven by Flows

• 💡 The primary bull case for crypto, specifically Bitcoin and Ethereum, is based on consistent inflows.
• 🎯 These flows are expected to continue through year-end and into the next 12 months, acting as the key determinant for price action.

ETF Inflows as a Key Proxy

• 📈 ETF flows are identified as the best high-frequency proxy for measuring these inflows into crypto assets.
• ⚠️ While digital asset treasury flows are also present, they are less consistent and depend on the trading premium of their Net Asset Value (NAV).

Correlation with Macro Assets

• 🔗 Bitcoin's correlation with gold has notably picked up, reinforcing its 'digital gold' narrative due to limited supply.
• 📊 However, the primary macro determinant for both Bitcoin and Ethereum remains equity markets and overall risk appetite.

Key Risks to the Outlook

• ⚠️ The biggest risk to the crypto bull case is not the persistent ETF flows, but a macroeconomic sentiment shift, particularly a downturn in equity markets.
• 📉 Such a shift could reduce expected flows and, due to Bitcoin and Ethereum's sentiment-driven nature and equity exposures, negatively impact their prices.