Originally published on: December 12, 2024
Sygnum Bank, a prominent crypto-focused asset manager, predicts that Bitcoin’s price could experience a significant spike in 2025 due to what they call “demand shocks” caused by surging institutional inflows. As stated in their recent Crypto Market Outlook 2025 report, institutional capital flows are already playing a crucial role in driving up Bitcoin’s spot price.
According to Sygnum, for every $1 billion of net inflows into spot exchange-traded funds (ETFs), there is a 3-6% price movement in Bitcoin. This multiplier effect is expected to intensify in 2025 as large institutional investors, such as sovereign wealth funds, endowments, and pension funds, begin adding Bitcoin to their portfolios.
Martin Burgherr, the chief clients officer at Sygnum, believes that with clearer US regulatory guidelines and the potential for Bitcoin to be recognized as a central bank reserve asset, institutional participation in crypto assets will see a significant uptrend in 2025.
Sygnum also highlighted the importance of US lawmakers passing legislation that supports the adoption of alternative cryptocurrencies alongside Bitcoin. They emphasized the significance of laws that enable projects to distribute value to tokenholders without imposing excessive compliance burdens. Sygnum mentioned the proposed Financial Innovation and Technology for the 21st Century Act (FIT21) and the Payment Stablecoin Act as crucial pieces of legislation for the crypto industry.
The report also pointed out the necessity of regulations governing self-custody, crypto mining, and decentralized finance (DeFi) in the US. Until these regulatory frameworks are in place, Bitcoin’s growth drivers are expected to overshadow the performance of alternative cryptocurrencies.
In addition to Bitcoin, the report raised concerns about the speculative investment trend towards memecoins, cautioning that it could lead to a potential bubble. Despite these challenges, recent data from Bloomberg Intelligence shows that US Bitcoin ETFs have surpassed $100 billion in net assets for the first time, underscoring the growing interest in cryptocurrencies among institutional investors.
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