Citigroup has sharply raised its price targets for Bitcoin and Ether.

Reuters reported on Oct. 1 that Citigroup increased its 12-month target for Bitcoin to $113,000 from $82,000, a gain of about 38%. It also lifted its 12-month target for Ether to $3,028 from $2,240, up about 35%.

Citigroup expects institutional investors to gradually increase their Bitcoin allocations, allowing capital inflows into the crypto market to resume at a steady pace. It projected about $5 billion of inflows over the next 12 months.

On the regulatory front, Citigroup cited the failure of the U.S. crypto market structure bill, known as the Clarity Act, to clear the U.S. Senate as a factor limiting further upside. The bank said the failed vote narrowed the path for the bill's passage. Still, it said the setback prompted the Securities and Exchange Commission to move more directly on rulemaking, helping ease negative investor sentiment.

Bitcoin and Ether prices have risen 40% and 68%, respectively, over the past three months. Citigroup said a weaker dollar following expanded purchases of long-term Treasuries by the U.S. Treasury, along with a recovery in exchange-traded fund inflows, improved sentiment and provided momentum for the rally.