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Bitcoin No Longer a Niche Investment as Institutional Adoption Takes Off: WisdomTree
Multi-asset investment portfolios with allocations to bitcoin are consistently outperforming those that don't hold the cryptocurrency, the report said.
Jan 21, 2025, 9:20 a.m.
What to know:
- Multi-asset portfolios that hold bitcoin are consistently outperforming those that don't hold the cryptocurrency, the report said.
- WisdomTree said institutional adoption is expected to grow this year as more clients seek exposure to the asset class.
- Positive ETF momentum will continue in 2025 as more countries approve products for altcoins such as solana and XRP, the asset manager said.
The institutionalization of crypto markets means that is no longer considered a niche investment, and increased adoption is forcing hesitant investors to reconsider the asset class, WisdomTree said in a report Monday, which looked at crypto trends for 2025.
The investment manager noted that portfolios with allocations to bitcoin are consistently outperforming those that don't hold the world's largest cryptocurrency.
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Asset managers need to integrate the digital asset into multi-asset portfolios or "risk falling behind in a rapidly evolving financial landscape," wrote analyst Dovile Silenskyte, adding that bitcoin adoption is expected to grow this year as more clients demand exposure to the asset class.
The launch of spot exchange-traded funds (ETFs) in the U.S. helped take crypto more mainstream in 2024. This momentum is expected to continue this year as the regulatory environment becomes more friendly in the U.S. under President Trump, and as more countries approve exchange-traded products (ETPs) for altcoins such as solana's SOL and XRP, WisdomTree said.
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"This next wave of altcoin ETPs will expand the diversity of crypto investment opportunities and further integrate cryptocurrencies into the global financial system," Silenskyte wrote.
The Ethereum blockchain's role as the "backbone of decentralized finance (DeFi), non-fungible tokens (NFTs) and Web3 is unmatched," the report said, but its scalability issues are still a problem.
Still, recent upgrades including Dencun are expected to drive layer-2 adoption on the blockchain, the report noted.
Stablecoins are "becoming indispensable to the global financial system," and networks such as Solana are ideal for stablecoin payments and remittances, WisdomTree said.
Tokenization, the process of putting the ownership of real world assets on the blockchain, will expand dramatically in 2025, and will transform industries from private equity to venture capital, the report added.
Read more: Stablecoin Deals and China, Europe to Follow U.S. With Bitcoin Reserve: Wintermute Predictions
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What to know:
- Bitcoin surged towards $100,000 on Wednesday's U.S. trading session, gaining 3.2% in the past 24 hours.
- The rally coincided with significant spot BTC price premium on Coinbase.
- Fed Chair Jerome Powell called bitcoin a competitor to gold during a panel discussion.
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