The price of Bitcoin will rise in 2025 due to "demand shocks" - Sygnum

According to a report released on December 12 by Sygnum Bank, an asset manager with a focus on cryptocurrencies, rising institutional inflows could result in "demand shocks" for Bitcoin (BTC) in 2025 and possibly send the price of BTC skyrocketing.

According to Sygnum's Crypto Market Outlook 2025 research, institutional capital flows are already having a "multiplier effect" on the spot price of bitcoin, with every $1 billion in net inflows into spot exchange-traded funds (ETFs) causing a price pump of roughly 3-6%.

As major institutional investors, such as sovereign wealth funds, endowments, and pension funds, increase their Bitcoin holdings in 2025, Sygnum anticipates that this dynamic will pick up speed.

According to a statement by Sygnum's chief client officer, Martin Burgherr, "2025 could mark a steep acceleration for institutional participation in crypto assets due to improving US regulatory clarity and the potential for Bitcoin to be recognised as a central bank reserve asset."

"Our analysis demonstrates how the crypto asset ecosystem can be fundamentally changed by even relatively modest allocations from this segment."

Uncertain prospect for altcoins

Only if the US enacts legislation encouraging the adoption of cryptocurrencies will this tendency spread to other cryptocurrencies, according to Sygnum.

Regulations "tailored to the asset class allow[ing] projects to pass value to tokenholders without triggering a compliance burden they cannot reasonably fulfil" are necessary for altcoins to flourish, according to the research.

Particularly significant for cryptocurrency, according to Sygnum, are the proposed Payment Stablecoin Act and Financial Innovation and Technology for the 21st Century Act (FIT21).

According to the research, the US also need legislation pertaining to decentralised finance (DeFi), crypto mining, and self-custody.

The research states that until then, "Bitcoin's exceptionally strong growth drivers… will cap the relative performance of altcoins."

In addition to Bitcoin, the paper noted that "speculative investment towards memecoins, risking a bubble, has been driven by lacklustre user growth for the majority of decentralised applications and use cases."

High demand for Bitcoin ETFs

According to Bloomberg Intelligence statistics, US Bitcoin ETFs crossed $100 billion in net assets for the first time on November 21.

Since the introduction of spot BTC ETFs in January, Bitcoin has taken centre stage in the ETF market. After Donald Trump, the crypto-friendly president-elect, won the US election on November 5, investor interest increased.

Bryan Armour, head of passive strategies research at Morningstar, told Cointelegraph in November that "two main factors contributed to the growth of spot Bitcoin ETFs: widespread adoption of Bitcoin and a superior product."

"Those who were unable to create a wallet and purchase Bitcoin on a cryptocurrency exchange were able to do so for the first time thanks to the ETFs," Armour said. They "also benefit from best-in-class Bitcoin storage practices, low fees, and cheaper trading."

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