Citi Says Strategy’s Bitcoin Sale Does Not Change the Long-Term Outlook

The recent Bitcoin sale by Strategy sparked concern across the cryptocurrency market, but analysts at Citi believe the move has little impact on the broader investment case for Bitcoin.

Strategy, the company formerly known for its software business and now widely recognized for its large Bitcoin holdings, sold 32 BTC worth approximately $2.5 million between May 26 and May 31. The transaction marked only the second Bitcoin sale in the company’s history and attracted significant attention from investors.

Strategy Shifts Away From “Never Sell” Approach

The sale followed comments from Strategy indicating a more flexible treasury management strategy.

For years, Executive Chairman Michael Saylor had promoted a strict “never sell” philosophy regarding the company’s Bitcoin holdings. However, management recently signaled that it would actively manage its balance sheet and could sell Bitcoin when doing so improves shareholder value or strengthens the company’s financial position.

According to Citi, this policy shift was largely expected.

The bank noted that its equity analysts had already highlighted after Strategy’s first-quarter earnings call that management appeared to be moving toward greater portfolio optimization, including the potential sale of Bitcoin holdings that may be less tax-efficient.

Citi Sees Limited Impact on Bitcoin Fundamentals

Despite the market reaction, Citi does not believe the sale changes the underlying outlook for Bitcoin.

Analysts argued that the announcement had a disproportionately large impact on investor sentiment compared to its actual significance. In their view, the transaction does not alter the fundamental drivers supporting the cryptocurrency market.

The bank continues to view Bitcoin ETF inflows as the most important factor influencing Bitcoin prices.

ETF Flows Remain the Key Driver

According to Citi, exchange-traded fund inflows account for roughly 45% of weekly Bitcoin return variation and remain the strongest real-time indicator of new investor adoption.

However, recent ETF flow data has turned negative, creating a more cautious outlook for the near term.

The bank expects investor sentiment to remain relatively weak, particularly as Bitcoin continues to underperform broader equity markets. Analysts added that a lack of positive regulatory developments and reduced concerns about government debt and currency debasement have further weighed on market enthusiasm.

U.S. Crypto Legislation Could Become a Catalyst

One potential catalyst that investors are closely monitoring is progress on a U.S. market structure bill designed to provide greater regulatory clarity for digital assets.

Citi believes the legislation could help attract new investors into the crypto market. However, analysts noted that the chances of the bill passing this year appear to be declining, although they still estimate the probability at approximately 50%.

The bank warned that weaker Bitcoin price performance relative to stocks, combined with reduced expectations for regulatory progress, may decrease the urgency for new investors and financial advisors to enter the market.

Treasury Company Selling Not Seen as a Major Threat

Citi also dismissed concerns that Bitcoin sales by digital asset treasury companies could become a significant source of downward pressure on prices.

According to the bank, buying and selling activity by these firms generally moves in line with ETF flows, meaning such transactions are unlikely to emerge as a major independent driver of Bitcoin’s performance.

Citi’s Bitcoin and Ethereum Outlook

Using its activity-based valuation model, Citi estimates Bitcoin’s fair value to be between $76,800 and $82,500, which remains above current market prices.

For Ethereum, the bank believes adoption continues to be the most important long-term factor. Analysts highlighted stablecoin growth, tokenization activity, and whether these developments are built on the Ethereum network as key indicators to watch in the coming years.

While short-term sentiment may remain subdued, Citi maintains that the long-term fundamentals for both Bitcoin and Ethereum continue to depend primarily on adoption trends and institutional participation.