Meanwhile, altcoins may flounder unless the United States passes rules favoring crypto adoption, the asset manager said.
Surging institutional inflows could cause Bitcoin (BTC) “demand shocks” in 2025 and potentially send BTC’s price soaring, according to a Dec. 12 report by Sygnum Bank, a crypto-focused asset manager.
Institutional capital flows are already exerting a “multiplier effect” on BTC’s spot price, with every $1 billion worth of net inflows into spot exchange-traded funds (ETFs) driving an approximately 3-6% price move, Sygnum said in its Crypto Market Outlook 2025 report.
Sygnum expects this dynamic to accelerate in 2025 as large institutional investors — including sovereign wealth funds, endowments, and pension funds — add Bitcoin allocations.
“With improving US regulatory clarity and the potential for Bitcoin to be recognized as a central bank reserve asset, 2025 could mark steep acceleration for institutional participation in crypto assets,” Martin Burgherr, Sygnum’s chief clients officer, said in a statement.
“Our analysis shows how even relatively modest allocations from this segment can fundamentally alter the crypto asset ecosystem.”
Uncertain altcoin outlook
This trend will only extend to alternative cryptocurrencies if the United States passes laws supporting crypto adoption, Sygnum said.
Altcoins will only thrive if US lawmakers create rules “tailored to the asset class allow[ing] projects to pass value to tokenholders without triggering a compliance burden they cannot reasonably fulfill,” the report said.
Sygnum flagged the proposed Financial Innovation and Technology for the 21st Century Act (FIT21) and Payment Stablecoin Act as especially important for crypto.
The US also needs laws governing self-custody, crypto mining, and decentralized finance (DeFi), the report said.
Until then, “Bitcoin’s unusually strong growth drivers… will cap the relative performance of altcoins,” according to the report.
Beyond BTC, “lackluster user growth for the majority of decentralized applications and use cases has driven speculative investment towards memecoins, risking a bubble,” the report added.
Strong Bitcoin ETF demand
On Nov. 21, US Bitcoin ETFs broke $100 billion in net assets for the first time, according to data from Bloomberg Intelligence.
Bitcoin has dominated the ETF landscape since spot BTC ETFs launched in January. Investor interest accelerated after crypto-friendly President-elect Donald Trump prevailed on Nov. 5 in the US elections.
“[T]he growth of spot Bitcoin ETFs stemmed from two main factors: broad Bitcoin adoption and a superior product,” Bryan Armour, director of passive strategies research at Morningstar,
“The ETFs allowed new investors to buy Bitcoin for the first time, like those unable to set up a wallet and buy Bitcoin on a cryptocurrency exchange,” said Armour. They “also benefit from cheaper trading, low fees, and best-in-class Bitcoin storage practices.”
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