Citi Warns Bitcoin Drop May Signal Nasdaq Weakness
Citi analysts warn that Bitcoin’s slump below its 55-day moving average may presage weakness in the Nasdaq 100. The drop stems from a liquidity squeeze as the US Treasury rebuilds $500 billion in cash reserves and bank reserves decline, pressuring risk assets.
With Treasury balances nearing levels where rebuilding typically halts, liquidity could soon ease. Traders may see this as a catalyst for a year-end rally in Bitcoin and the broader stock market.
The report also highlights rising hardware costs and supply constraints could cap AI investment returns. Tech giants Meta and Alphabet are issuing new bonds for data centre expansions—echoing dot-com era credit growth but backed by healthier balance sheets—shifting from cash to debt and increasing leverage risks for investors.
Neutral
The report delivers mixed signals for Bitcoin. On the bearish side, a drop below the 55-day moving average and a liquidity squeeze from the US Treasury’s cash rebuild have pressured risk assets. On the bullish side, Treasury balances are nearing levels that typically halt rebuilds, potentially easing liquidity and sparking a year-end rally in Bitcoin. These conflicting short-term and medium-term indicators lead to a neutral impact assessment.