Citi Group has raised its 12-month price forecasts for Bitcoin and Ethereum, citing stronger cryptocurrency market activity, a favorable macroeconomic environment, and a rebound in ETF inflows.

The bank lifted its Bitcoin target from $82,000 to $113,000, and increased its Ethereum target from $2,240 to $3,028.

In a report released on Wednesday, Citi said it expects cryptocurrency inflows to resume at a slower but more steady pace as advisors and brokers gradually increase their Bitcoin allocations. The bank also predicted $5 billion of inflows over the next 12 months.

Last week, the U.S. Senate failed to advance the Clarity Act, which aims to establish a regulatory framework for digital assets, marking a setback for the industry.

Citi stated that while the setback to the Clarity Act reduced the likelihood of a market structure bill being introduced, it also prompted the U.S. Securities and Exchange Commission (SEC) to issue related rules, thereby easing negative market sentiment.

Over the past three months, Bitcoin and Ethereum prices have risen nearly 40% and 68% respectively, narrowing their year-to-date declines to about 4% and 9%.

After lagging behind broader risk assets for several months, Bitcoin has gained 40% since hitting a low in July; this was mainly driven by a weaker U.S. dollar and the U.S. Treasury's recent buyback of long-term bonds, which revived the cryptocurrency market's upward momentum.