According to a report released by Sygnum Bank, which focuses on crypto asset management, a significant inflow of institutional funds in 2025 could trigger a 'demand shock' for Bitcoin (BTC), subsequently driving the price of Bitcoin to soar.

Bitcoin will accelerate growth in 2025

Sygnum stated in its (2025 Cryptocurrency Market Outlook) that the inflow of institutional capital has already created a 'multiplier effect' on Bitcoin's spot price, with every net inflow of $1 billion in spot ETF funds potentially driving Bitcoin's price up by about 3-6%.

Sygnum expects this trend to accelerate further in 2025, as large institutional investors such as sovereign wealth funds, endowment funds, and pension funds will increase their allocation to Bitcoin, noted Sygnum customer Martin Burgherr in a statement.

As the regulatory environment in the United States becomes clearer, and Bitcoin may be recognized as a central bank reserve asset, 2025 could mark rapid growth in institutional participation in crypto assets. Our analysis shows that even a relatively low allocation of funds from these institutions could fundamentally change the ecosystem of crypto assets.

Uncertainty of Altcoins

The report mentioned that whether this trend extends to other cryptocurrencies (altcoins) will depend on whether the U.S. passes laws that support the popularization of cryptocurrencies. The report indicated that the success of altcoins will depend on 'regulations tailored for this asset class that allow projects to pass value to token holders without triggering unmanageable compliance requirements.'

Sygnum specifically mentioned that the (Financial Innovation and Technology Act) (FIT21) and the (Stablecoin Payment Act) play a crucial role in the cryptocurrency industry. Additionally, the report pointed out that the U.S. needs to establish relevant laws regarding self-custody, cryptocurrency mining, and decentralized finance (DeFi). Before these laws come into effect, the strong growth drivers of Bitcoin will limit the relative performance of altcoins.

Moreover, Sygnum also warned that the user growth of most decentralized applications and use cases is sluggish, leading speculative funds to flow into meme coins, thus creating bubble risks.

Source