Originally published on: December 12, 2024
Sygnum Bank, a crypto-focused asset manager, predicts that Bitcoin’s price could experience significant spikes in 2025 due to “demand shocks” caused by surging institutional inflows. According to their Crypto Market Outlook 2025 report released on Dec. 12, every $1 billion of net inflows into spot exchange-traded funds (ETFs) has been driving a 3-6% price move for BTC. With institutional investors like sovereign wealth funds, endowments, and pension funds expected to increase their Bitcoin allocations, the multiplier effect on BTC’s price is only expected to intensify.
Martin Burgherr, Sygnum’s chief clients officer, believes that 2025 could see a steep acceleration in institutional participation in crypto assets, especially if the US provides regulatory clarity and recognizes Bitcoin as a central bank reserve asset. However, this trend may not extend to alternative cryptocurrencies unless US lawmakers implement laws supportive of crypto adoption, including projects that can pass value to tokenholders without triggering compliance burdens they cannot meet.
Sygnum emphasized the importance of proposed acts like the Financial Innovation and Technology for the 21st Century Act (FIT21) and Payment Stablecoin Act for the growth of cryptocurrencies. They also mentioned the need for regulations regarding self-custody, crypto mining, and decentralized finance (DeFi) to further support the industry.
While Bitcoin continues to thrive, Sygnum warned that the lackluster user growth in decentralized applications might drive speculative investments towards memecoins, posing a risk of a bubble in the market. Despite these challenges, the overall outlook for Bitcoin remains positive, especially with the recent milestone of US Bitcoin ETFs surpassing $100 billion in net assets.
As the crypto landscape continues to evolve, investors and traders are advised to stay informed about market trends and developments by subscribing to newsletters like the Markets Outlook for critical insights and trading strategies. Stay ahead of the curve and make informed investment decisions for a successful crypto journey.