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According to a report from crypto asset management company Signum, a “demand shock” driven by institutional investors could push Bitcoin (BTC) prices to new highs in 2025. However, altcoins may underperform due to factors such as reduced capital rotation from BTC to other cryptocurrencies.
Bitcoin is likely to continue its momentum in 2025
In a report titled “Crypto Market Outlook 2025,” asset management firm Signum outlined several factors that are likely to push BTC prices even higher next year. The report highlights new capital inflows into the market, especially institutional investors, as a key driver of the crypto bull market in 2025.
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This analysis highlights the “synergy effect” caused by Bitcoin's limited liquid supply and inflows of capital from institutional investors. For example, it has been reported that every $1 billion of net inflows into spot BTC exchange-traded funds (ETFs) triggers a 3-6% price increase.
Additionally, the report points out that Bitcoin's price momentum is amplified by the concept of reflexivity, meaning that as the price rises, the demand for Bitcoin increases, forming a feedback loop. With the influx of institutional investors, multiplier effects, and Bitcoin's reflexivity, 2025 is expected to be a pivotal year for cryptocurrencies.
The report also highlights the importance of the pro-cryptocurrency regulatory environment in the United States following the confirmation of Donald Trump's victory in the November presidential election. The outcome is widely seen as positive for crypto law, with hopes for a comprehensive regulatory framework that will bring much-needed clarity to the industry.
The election results bode well for cryptocurrency legislation, as there are widespread expectations for the establishment of a comprehensive regulatory framework, including clarifying the current status of cryptoassets and defining the role of regulatory bodies. The CFTC's role in cryptocurrency oversight is expected to expand, greatly increasing the chances of various cryptocurrency bills being passed and enacted.
Key crypto bills in focus include the Payment Stablecoin Act, the Bitcoin Act to force the U.S. government to build a strategic Bitcoin reserve, the CBDC Anti-Surveillance Act, and the Support for Cryptocurrency Self-Custody Act. Several other bills are included. , cryptocurrency mining, decentralized finance.
2025: A turning point year for BTC
The report predicts that large institutional investors such as BlackRock, Fidelity, and Morgan Stanley will continue to increase their exposure to cryptocurrencies. Notably, some portfolios now allow up to 25% allocation to cryptocurrency investments, while typical allocations remain in the 1-3% range.
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Additionally, BTC could benefit from central banks and local governments looking to set aside some of their funds as BTC reserves. In particular, countries like El Salvador and Bhutan are already actively mining and accumulating BTC as part of their broader national economic strategies.
The report adds that inflows to crypto ETFs in 2025 are likely to be “significantly higher” than historical net inflows. As of Dec. 11, the U.S.-based Spot BTC ETF had a total net asset value of $113.72 billion, according to SoSoValue data.
Despite the optimistic forecast, the report acknowledges several potential risks that could dampen Bitcoin's bullish trajectory. These include inflationary pressures, geopolitical uncertainty, and Tether's increasing dominance in the stablecoin market. At the time of writing, BTC is trading at $100,940, up 0.9% in the past 24 hours.
BTC is trading at $100,940 on daily chart | Source: BTCUSDT on TradingView.com
Featured image from Unsplash, chart from TradingView.com
