Citi Cuts Crypto Targets, Oil Shock Clouds the Path for Risk Assets
Digital Asset Market: Citigroup lowered its 12-month price targets for BTC and ETH to $112,000 and $3,175, down from $143,000 and $4,304, citing slowing momentum for U.S. crypto legislation, weaker network activity, and reduced expectations for ETF inflows. The bank still sees ETFs as the main upside driver but cut its demand assumptions to $10 billion for BTC and $2.5 billion for ETH, even as recent inflows have been relatively resilient amid geopolitical and macro uncertainty. Citi argues the market’s next major catalyst is clear U.S. regulation, but the window for passing digital asset legislation this year is narrowing, with implied odds around 60% as the CLARITY Act remains stalled in the Senate. With BTC near $74,000 and ETH near $2,330, Citi expects choppy price action and range trading, while outlining a bull case of $165,000 BTC and $4,488 ETH if adoption accelerates and a bear case of $58,000 BTC and $1,198 ETH if recessionary conditions hit, noting ETH is especially sensitive to currently weak on-chain activity.
Macroeconomics: Money flowing into emerging market bond funds fell, and equity fund inflows stalled, in the week to March 11 as the war involving Iran and the resulting jump in oil prices pushed investors away from riskier assets, according to analysts citing EPFR data. Barclays warned that the energy shock is shifting the outlook from a favorable “Goldilocks” setup to stagflation risk, while Morgan Stanley estimated $1.1 billion in outflows from global emerging market funds versus $3.2 billion in inflows the prior week. Even so, Marex noted emerging market debt funds still show a record $21 billion of inflows year to date after a long rally across stocks, bonds, and currencies. With no clear end in sight and Iran’s new leader vowing to keep the Strait of Hormuz closed, investors are increasingly cautious, potentially delaying emerging market rate cuts, and Citi said the market’s direction will hinge on how long the energy price squeeze lasts.
Equities: US equities rose a bit on Tuesday, extending Monday’s rebound as investors weighed heightened Middle East conflict risks and a renewed jump in oil prices ahead of the start of the Federal Reserve’s two-day policy meeting. The Dow Jones Industrial Average led gains, up about 0.9%, while the S&P 500 and Nasdaq Composite each climbed roughly 0.6%. Stocks were supported by expectations that the Fed will hold rates steady this week, though surging energy prices are adding uncertainty around the timing of future cuts. Investors also watched Nvidia’s GTC updates, where the company highlighted major deals and projected significant chip sales growth through 2027.
The Fed and US Treasury: Rising oil prices triggered by the war in Iran are forcing major central banks, especially the Federal Reserve, back into a difficult trade-off as inflation risks reaccelerate just as growth momentum fades, making near-term rate cuts harder to justify. Markets are reflecting this shift: short-dated US Treasury yields, particularly the two-year, have risen as traders push out the expected timing of Fed easing, and European sovereign yields have become more volatile as investors weigh higher headline inflation against weaker activity. The Fed, ECB, BoE, and SNB are all expected to hold rates steady and emphasize uncertainty, but the energy-driven inflation impulse is pushing pricing toward fewer or later cuts and keeping the possibility of tighter-for-longer policy in play if inflation expectations start to drift higher.
Geopolitical: Israel has issued its broadest evacuation order for southern Lebanon since the 2006 war as it prepares expanded strikes on Hezbollah, while the wider Israel-Iran conflict intensifies with Israel claiming it killed senior Iranian figures Ali Larijani and Basij chief Gholamreza Soleimani, claims Iran disputes, as it rejects any ceasefire and vows further escalation. Oil and shipping risks are rising as Iran says Hormuz is not officially closed but that transits occur only in coordination with Tehran, alongside reports of escalating attacks on regional oil and gas infrastructure and on U.S.-linked targets in Iraq. Iraq says it is negotiating with Iran to let some Iraqi tankers pass because it lacks alternative export routes and has had to cut production. Meanwhile, President Trump has delayed a meeting with Xi due to the war, and several NATO allies, including Germany, Italy, and Spain, are declining to join U.S. efforts to secure Hormuz, citing doubts about the mission and Trump’s shifting rhetoric.
View from our desk
Bitcoin’s buyer base is maturing, and that should dampen volatility
Bitcoin looks better positioned to trade in a steadier range through the rest of 2026 than it did during the sharper swings of recent months, largely because the ownership mix is shifting toward more durable capital. Spot ETFs are seeing renewed inflows, while outflows during drawdowns have remained relatively contained, which suggests a growing share of allocators now view BTC as a strategic holding rather than a tactical trade. At the same time, a meaningful portion of the circulating supply remains in the hands of long-term holders with little incentive to sell into weakness. Layer on continued corporate treasury accumulation, led by Strategy, and a funding mix that appears to rely more on preferred structures than repeated common equity issuance, and the result is a market increasingly supported by predictable, relatively price-insensitive demand.
If the on-chain read is correct, this still looks less like the start of a fresh speculative leg and more like a late-cycle accumulation phase. That tends to produce a market structure that feels dull compared with recent volatility: choppy, rangebound, and occasionally frustrating, but with fewer violent air pockets and fewer reflexive melt-ups. That kind of tape can be easy to misread as weakness, when in reality it often reflects supply being absorbed by stronger hands over time. Our read is that Bitcoin is moving into a buy-and-hold phase, which should make the path ahead calmer, even if the macro backdrop stays noisy.
Iran’s strikes are turning escalation into an endurance test for energy markets
The latest Iranian strikes on UAE energy and transport infrastructure point to a conflict that is becoming harder to contain and harder to frame as a short, decisive campaign. Reported disruptions at the Shah gas field, fires at the Fujairah Oil Industry Zone, damage to a tanker near Fujairah, and the near-freeze in shipping through the Strait of Hormuz since the late-February strikes all reinforce the same message: this is no longer just a geopolitical headline risk. It is increasingly an operational threat to regional energy flows, shipping security, and market confidence. When infrastructure disruption begins to impair real throughput, the market stops pricing theater and starts pricing sustained supply risk.
That is why the more important question now is not who lands the next strike, but which side can sustain pressure while preserving its own defenses and logistical capacity. The need for Washington to lean on China’s influence and coordinate more closely with NATO partners on maritime security underscores that this is not unfolding according to the clean-containment scenario many escalation advocates seemed to expect. Repeated attacks on Fujairah, the temporary UAE airspace shutdown, suspended gas operations, and firmer oil prices all point to the same conclusion: this is shaping up as a conflict of endurance, not shock-and-awe. For markets, that raises the probability of a longer-lived energy risk premium and a more persistent cross-asset macro overhang.
Happy Trading!
The 1Konto Team
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