Bitcoin 2025: demand shocks and the future of cryptocurrencies according to Sygnum

Bitcoin 2025: demand shocks and the future of cryptocurrencies according to Sygnum

According to a recent report by Sygnum, a specialist in cryptocurrency asset management, 2025 is expected to bring a significant increase in demand for Bitcoin, which could lead to a price spike. This trend is supported by a surge in institutional investment, which is already influencing the price of BTC through a "multiplier effect". Indeed, each net inflow of $1 billion into spot ETFs (exchange-traded funds) increases the price of Bitcoin by around 3 to 6%.

Sygnum predicts that this effect will be amplified in 2025 as large institutional investors such as sovereign wealth funds, endowments and pension funds plan allocations to Bitcoin. Martin Burgherr, client director at Sygnum, notes: "Improvements to the regulatory framework in the US and the possibility of Bitcoin being recognised as a reserve asset by the central bank could mean a significant acceleration in institutional investor participation in the cryptocurrency market."

Altcoins on thin ice

On the other hand, altcoins face an uncertain outlook. According to Sygnum, they will only thrive if the United States introduces laws that encourage the adoption of cryptocurrencies. The report states that altcoins can only thrive if US legislation creates rules that make it easier for projects to pass value to token holders without subjecting themselves to excessive regulatory burdens.

Key legislative proposals that could impact the cryptocurrency market include the Financial Innovation and Technology for the 21st Century Act (FIT21) and the Stable Coin Payment Act. The report also highlights the need for clear rules on self-transfer, mining and decentralised finance (DeFi). Until these changes are implemented, "strong Bitcoin growth factors" are likely to limit the performance of altcoins.

Interest in Bitcoin ETFs is growing

U.S. bitcoin ETFs surpassed $100 billion in net assets for the first time at the end of November, according to data from Bloomberg Intelligence. Since the launch of spot BTC ETFs in January 2023, bitcoin has dominated the ETF market. Moreover, investor interest in cryptocurrencies has increased following the victory of Donald Trump, who has proven to be a proponent of cryptocurrencies.

Bryan Armour, director of passive strategies research at Morningstar, said, "The growth of spot bitcoin ETFs has been driven by two main factors: the widespread adoption of Bitcoin and quality products." ETFs allow new investors who are not experienced with cryptocurrency exchanges easy access to bitcoin, making them more attractive due to cheaper transactions and best security practices.

The year 2025 thus appears to be a pivotal year for Bitcoin, while altcoins will face challenges that may complicate their path to success. As the market evolves, it will be interesting to see how regulation and institutional interest will translate into price dynamics for cryptocurrencies.

*This is not investment advice.

Coingarage team