Bitcoin Prices Expected to Surge in 2025 Amid Institutional Demand Shocks
According to a report by Sygnum, institutional investor-led demand shocks could drive Bitcoin (BTC) prices to new highs in 2025. Altcoins may underperform due to reduced capital rotation from BTC.
Bitcoin's Momentum into 2025
The report titled Crypto Market Outlook 2025 outlines factors likely to push BTC prices upward, emphasizing institutional inflows as a primary driver for the crypto bull market. A ‘multiplier effect’ from these inflows combined with Bitcoin’s limited liquid supply is noted; every $1 billion of net inflows into spot BTC exchange-traded funds (ETFs) can reportedly result in a 3-6% price increase.
Additionally, Bitcoin's price momentum is enhanced by reflexivity, where demand increases as prices rise, creating a feedback loop. Institutional inflows, the multiplier effect, and reflexivity are expected to make 2025 significant for Bitcoin.
The report highlights the importance of a pro-crypto regulatory climate in the US, especially after the recent presidential election results. This outcome is anticipated to favor crypto legislation, potentially establishing a comprehensive regulatory framework that clarifies the status of crypto assets and the roles of regulatory bodies.
The election result is viewed positively for crypto legislation, increasing the likelihood of passing various crypto bills, including The Payment Stablecoin Act and The Bitcoin Act, which mandates the US government to create a strategic BTC reserve.
2025: A Pivotal Year for BTC
Institutional giants like BlackRock, Fidelity, and Morgan Stanley are predicted to expand their crypto exposure, with some portfolios allowing up to 25% allocations for crypto investments, although typical allocations remain between 1-3%. Additionally, central banks and local governments are considering setting aside portions of their funds for BTC reserves, as seen in countries like El Salvador and Bhutan, which are actively mining and accumulating BTC.
The report forecasts that 2025 inflows into crypto ETFs will be significantly higher than previous net inflows. As of December 11, total net assets in US-based spot BTC ETFs stood at $113.72 billion, according to SoSoValue data.
Despite these optimistic projections, potential risks include inflationary pressures, geopolitical uncertainties, and Tether's increasing dominance in the stablecoin market. Currently, BTC trades at $100,940, reflecting a 0.9% increase in the past 24 hours.
