US Government bought C at $3.25 (converted the prefer shares into common shares at this price). If the price goes down below, the taxpayer would lose money, and Uncle Sam would be angry. That is why the bottom might be at $3.25 to save O8's face.
I really doubt if it will go below $4. Lots of people are waiting to get in and gov't will probably sell/dilute when there is still a reasonable profit. Besides, Citi wouldn't just let huge dilution happen. The reuters article says they are "planning" to avoid too much effect on the stock price.