A surge of long liquidations has revealed bitcoin’s equity sensitivity, as reported by Wall Street bank Citigroup.
The bank indicated that increasing U.S.-China trade tensions caused a significant selloff in futures on Friday, which affected the crypto market and highlighted its volatility alongside equities.
Since then, both crypto and stock markets have regained some of their losses, with the largest cryptocurrency trading around $111,700 at the time of publication.
A sudden flash crash struck the crypto markets on Friday, wiping out over $500 billion in total value and leading to almost $20 billion in liquidations across derivatives platforms. Bitcoin saw a drop of as much as 13% in just one hour, hitting a bottom near $102,000.
Citi noted that inflows into exchange-traded funds (ETFs) remained strong, likely due to newer, less leveraged investors, and it does not anticipate that these liquidations will disrupt demand.
Bitcoin and ether are still hovering around September levels, and the bank maintained its 12-month price targets of $181,000 for BTC and $5,400 for ETH, with year-end forecasts of $133,000 and $4,500, respectively.
Citi mentioned that sustained ETF flows support its base case, while the bear case relies on weakness in equity markets.
Read more: Bitcoin ETF Inflows Set to Break Records in Q4, According to Crypto Asset Manager Bitwise
