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According to a report by crypto asset management firm Sygnum, an investor-led ‘demand shock’ could drive up Bitcoin (BTC) prices that new highs in 2025. However, altcoins may not perform well due to factors such as reduced capital rotation from BTC to other cryptocurrencies.
Bitcoin May Continue Its Momentum Into 2025
In a report titled Crypto Market Outlook 2025, asset manager Sygnum outlined a number of factors that could drive the price of BTC higher next year. The report highlights the influx of new money into the market – especially institutional income – as the main driver of the crypto bull market in 2025.
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The analysis highlights the ‘multiplier effect’ caused by institutional inflows combined with Bitcoin’s limited liquidity. For example, every $1 billion in net worth that goes into BTC exchange-traded funds (ETFs) is reported to trigger a 3-6% price increase.
Additionally, the report notes that Bitcoin’s price momentum is amplified by the concept of volatility – the demand for BTC increases as its price rises, creating a feedback loop. Together, institutional penetration, the multiplier effect, and the volatility of Bitcoin are expected to make 2025 an important year for cryptocurrencies.
The report also emphasizes the importance of a pro-crypto In America, following the confirmation of Donald Trump’s victory in the November presidential election. The result is widely seen as agreeable with crypto legislation, in anticipation of a comprehensive regulatory framework that could provide much-needed clarity to the industry.
The election result reflects well on crypto legislation, with broad expectations for the establishment of a comprehensive regulatory framework, which includes clarifying the status of crypto assets and defining the roles of regulatory bodies. It is expected that the CFTC’s role in overseeing crypto will be expanded, and the chances of various crypto bills being passed and written into law will increase significantly.
Some of the major crypto bills that will be in focus are The Payment Stablecoin Act, The Bitcoin Act – which forces the US government to create a BTC depository – The CBDC Anti-Surveillance Act, and several other bills that support crypto independence . , crypto mining, and money laundering.
2025: BTC’s Water Year
The report predicts that institutional giants such as BlackRock, Fidelity, and Morgan Stanley will continue to increase their exposure to crypto. Notably, some portfolios now allow allocations of up to 25% of crypto investments, although typical allocations remain at 1-3%.
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In addition, BTC may benefit from central banks and local governments considering setting aside a portion of their funds to store BTC funds. Remarkably, the countries are similar El Salvador again Bhutan they are already mining and accumulating BTC as part of a broader national economic strategy.
The report adds that 2025 inflows into crypto ETFs are likely to be ‘significantly higher’ than total inflows to date. As of December 11, total assets in US-based BTC ETFs stood at $113.72 billion, according to data from SoSoValue.
Despite the optimistic predictions, the report acknowledges several risks that could dampen Bitcoin’s bullish trajectory. These include inflationary pressures, global uncertainty, and the increasing dominance of Tether in the stablecoin market. At press time, BTC is trading at $100,940, up 0.9% in the last 24 hours.
Featured image from Unsplash, Chart from TradingView.com
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