Photo: Satheesh Sankaran / Wikimedia Commons, CC BY 2.0, cropped

Bitcoin Topped $87,000 and Citi Now Says $113,000. Three Months Ago the Same Bank Said $82,000

What happened

Bitcoin has had a good two months. August was its best run in three years, and it gained nearly 6% in September.

On Friday morning, the US reported that employers added just 29,000 jobs in September. Within minutes, Bitcoin jumped above $87,000. It gave back some of that and spent the rest of the day around $85,500 to $86,000.

Gold rose too, to about $4,190 an ounce.

Why a jobs report moves Bitcoin

Bitcoin doesn't pay interest or dividends. When interest rates are high, holding it means giving up a safe 4% or 5% you could earn elsewhere. When rates look like they'll stop rising, that trade-off gets less painful.

A weak jobs report makes the Fed less likely to raise rates on October 28. So assets that compete with interest-bearing cash got a lift: Bitcoin, gold and tech stocks all rose together.

There was also a technical push. Traders who had bet on Bitcoin falling had to buy it back as it climbed through $85,500, which fed the rally.

The Citi call

The other headline this week came from Citigroup. Analyst Alex Saunders raised the bank's 12-month Bitcoin target to $113,000.

Here's the history of that target this year:

Citi pointed to stronger market activity, money returning to Bitcoin ETFs, a softer dollar after the US Treasury stepped up its bond buybacks, and new rule proposals from the SEC.

Citi's model assumes about $5 billion flows into crypto funds over the next year. For scale, US spot Bitcoin ETFs took in about $2.4 billion in a single week in late September. Nearly half the bank's yearly assumption arrived in five days.

Citi also keeps a bear case of $53,000. The gap between $53,000 and $113,000 tells you how wide the range of outcomes is.

How much should you trust a price target?

Look at the table again. The target went down when the price went down, and up when the price went up.

That's normal for Wall Street forecasts on any volatile asset. Analysts update their models with the latest price and flows. A target is a snapshot of current assumptions. It isn't a promise, and it shouldn't be the reason you buy.

A better question than "where is Bitcoin going?" is "how much could I lose, and could I live with it?"

If you want to own some

Decide on a size first. Bitcoin has fallen more than 50% several times in its history. A common rule of thumb for people who want exposure is a small single-digit percentage of a portfolio, an amount that wouldn't change your life if it halved.

Use an ETF if you want simplicity. Spot Bitcoin ETFs trade like stocks in a normal brokerage account. You don't need a crypto exchange, a wallet or a password you can never lose.

Canadians have options too. Spot Bitcoin ETFs have traded in Toronto since 2021, and you can hold them in a TFSA or RRSP.

Buy gradually. If you're going to buy, spreading purchases over several months reduces the risk of putting everything in at a peak. It's the same idea as dollar-cost averaging into stocks.

Don't skip the basics. An emergency fund and regular contributions to a diversified portfolio come first. Crypto is an extra, not a foundation.

The honest uncertainty

The same things that lifted Bitcoin this week can reverse. If inflation data comes in hot and the Fed hikes anyway, the rally could fade as quickly as it came. Bitcoin already gave back part of Friday's jump within hours.

The bottom line

Bitcoin is rising because rate-hike fears eased and ETF money came back, not because a bank raised a target. If you hold some, keep it small and expect a bumpy ride. If you don't, you're not missing a sure thing. Nobody, including the analysts, knows where it will be in a year.

Frequently asked questions