JPMorgan analysts, who had a cautious outlook on the cryptocurrency market throughout 2024, stated that they now have a bullish stance for 2025.
In a report titled Alternative Investment Outlook and Strategy published late Friday, the team led by managing director Nikolaos Panigirtzoglou outlined several factors that could contribute to the growth of digital assets in the coming years.
Analysts have noted the rise of “depreciation trading,” where investors increasingly turn to alternative assets like gold and Bitcoin as a hedge against economic instability. With geopolitical tensions escalating and the upcoming U.S. presidential election, institutional investors like hedge funds may see gold and Bitcoin as favorable assets, analysts say. However, Ethereum (ETH) may not benefit much from this trend, analysts said.
A possible Trump victory in the 2024 elections is also seen as a regulatory boost for Bitcoin. According to analysts, such a scenario could reinforce the depreciation trade through tariffs tied to geopolitical tensions and expansionary fiscal policies that could contribute to “debt depreciation.” They emphasized that despite the “very low probability” of a Trump win currently priced into other asset classes, the probability remains significant for the crypto market.
JPMorgan’s report outlined additional reasons for optimistic outlooks on digital assets, including recent moves by traditional financial institutions like Morgan Stanley to allow wealth advisors to recommend spot Bitcoin ETFs to their clients. Analysts also pointed to the end of major liquidations, including the Mt. Gox and Genesis bankruptcies and the German government’s Bitcoin sale, suggesting that much of the selling pressure has abated.
The report also noted that cash payments from the FTX bankruptcy are expected to be made in late 2024 or early 2025. Once distributed, these funds could potentially be reinvested into cryptocurrencies and provide additional market support.
JPMorgan analysts observed that the stablecoin market is recovering, with the market cap approaching the pre-Terra/Luna crash levels of $180 billion. However, they warned that stablecoin legislation in the US is pending and will likely be passed by Congress in 2025. The enactment of such regulations is expected to increase the adoption and mainstream acceptance of US-compliant stablecoins while creating challenges for non-compliant ones. The report specifically noted that regulations could have a significant impact on Tether.
Despite the overall growth of the stablecoin market in dollar terms, analysts noted that this primarily reflects the broader increase in cryptocurrency market cap, with stablecoins holding relatively unchanged market share.
*This is not investment advice.
