JPMorgan Chase has maintained a positive outlook on digital assets, projecting a bullish trend for 2025. Led by managing director Nikolaos Panigirtzoglou, the firm's analysts have outlined key factors driving their optimism in their "Alternative Investments Outlook and Strategy" report.
Debasement Trade and Economic Uncertainty:
One of the primary factors contributing to the bullish outlook is the emergence of the "debasement trade." As investors seek alternatives to traditional assets amid economic instability, gold and Bitcoin have gained traction. Concerns over global political uncertainty, inflation, and government debt levels, coupled with a loss of confidence in fiat currencies, have fueled demand for these assets.
2024 U.S. Presidential Election:
The upcoming 2024 U.S. presidential election could further bolster the debasement trade, particularly if Donald Trump wins. His policies, including tariffs and expansionary fiscal actions, could amplify concerns about economic stability and increase demand for gold and Bitcoin.
Decline of the U.S. Dollar:
The International Monetary Fund (IMF) reported that the share of the U.S. dollar in global currency reserves fell to 57% in the third quarter of 2024. This decline, coupled with China's pause in gold purchases, has raised concerns about the future of fiat currencies, strengthening the appeal of gold and Bitcoin as alternative stores of value.
Speculative Demand and Institutional Interest:
JPMorgan's analysis of Commodity Futures Trading Commission (CFTC) data indicates growing speculative demand for gold and Bitcoin futures. While hedge funds view gold and Bitcoin as similar assets benefiting from the debasement trade, institutional interest in Ethereum remains low. Retail investors are also following this trend, as evidenced by the inflows into Bitcoin ETFs in September.
Positive Developments:
Additional factors supporting the bullish outlook include announcements from traditional wealth advisors like Morgan Stanley recommending spot Bitcoin ETFs to clients. The completion of liquidations from the Mt. Gox and Genesis bankruptcies, along with the German government's Bitcoin sale, have relieved pressure on the market. Additionally, cash payouts from the FTX bankruptcy are expected by late 2024 or early 2025, which could lead to reinvestment in cryptocurrencies.
Stablecoin Outlook:
JPMorgan also addressed the future of stablecoins, noting their resilience and potential benefits from new regulations. While U.S.-compliant stablecoins could thrive, non-compliant stablecoins like Tether (USDT) may face challenges.
Bitcoin's Fundamentals:
The report highlighted Bitcoin's current price, which is well above its estimated production cost. Furthermore, Bitcoin's volatility-adjusted comparison to gold suggests a fair value close to its current level.
Overall, JPMorgan's analysis suggests that the combination of economic uncertainty, growing demand for alternative assets, and positive developments in the cryptocurrency market support a bullish outlook for digital assets in 2025.
October 2024, Cryptoniteuae