J.P. Morgan Outlook for 2025: Trump Policies and FTX Capital Inflows to Drive Cryptocurrency Prospects

JPMorgan recently released a cryptocurrency market report, proposing several factors that could drive the growth of cryptocurrencies, including the impact of Trump's election, investor hedging behavior, and global geopolitical situations. These factors may increase the demand for cryptocurrencies such as Bitcoin in the market by 2025.

Geopolitical Tensions and Expectations of Dollar Depreciation Drive Cryptocurrency Demand

According to a report from The Block, as global geopolitical tensions rise, especially with the upcoming U.S. presidential election, investors are seeking safe-haven assets to hedge against economic uncertainty. JPMorgan stated that Bitcoin and gold will be the primary beneficiaries of the "debasement trade" as they are seen as alternatives to counter the depreciation of the U.S. dollar and are considered to have characteristics of "value storage." However, Ethereum may not be favored due to the lack of this characteristic, as its value volatility is more driven by ecosystem development rather than pure hedging demand.

With BTC briefly falling below 60K, will the "debasement trade" lead Bitcoin to a Uptober?

Trump's Reelection Could Boost Demand for Safe-Haven Assets

JPMorgan mentioned that if Trump is reelected, besides potentially being more favorable towards Bitcoin in terms of regulation, his policies could also strengthen the trend of the "debasement trade." This is because Trump's policies may include:

1. Imposing tariffs to address geopolitical tensions: Trump's policies are typically tough on geopolitics and may involve imposing tariffs to counterbalance other countries. This could increase market instability, prompting investors to seek safe-haven assets like Bitcoin and gold.

2. Expansionary fiscal policies: This may involve large-scale government spending, such as infrastructure, further expanding U.S. national debt. As the government increases borrowing and continues to expand spending, the market may worry about the depreciation of the U.S. dollar, leading investors to shift funds to assets like gold or Bitcoin with inflation-resistant properties to hedge against the weakening purchasing power of the dollar.

Involvement of Traditional Wealth Management Companies, FTX Bankruptcy Funds Returning to the Market as Potential

JPMorgan also noted that as asset management company Morgan Stanley begins recommending Bitcoin ETFs to clients, it could bring growth potential to the market. It further pointed out that the bankruptcy asset liquidation of Mt. Gox and Genesis, as well as the German government's sale of Bitcoin, have reached a conclusion. It is expected that the bankruptcy fund liquidation of FTX will be completed by the end of this year or early 2025, and these funds may flow back into the cryptocurrency market, providing potential support to the market.

Bankruptcy Court Approves! FTX to Return 119% of Claim Amount Within 60 Days

Stablecoin Market Heating Up, U.S. Regulatory Bills Driving Mainstream Adoption

JPMorgan observed that the current market value of stablecoins is approaching the previous peak of $170 billion before the Terra/Luna collapse. However, U.S. stablecoin legislation is still in progress, expected to be passed no earlier than 2025. Analysts believe that the future release of stablecoin regulatory bills will help stablecoins enter the mainstream financial system. U.S.-compliant stablecoins will have an advantage, while non-compliant stablecoins like Tether may face challenges.

Bitcoin Price Relatively Stable, Support Continues to Strengthen

According to JPMorgan's observation, the current price of Bitcoin is around $67,000, significantly higher than its $47,000 cost, indicating a high premium on Bitcoin's spot price. This implies strong market demand for Bitcoin, and after adjusting for volatility, Bitcoin's value relative to gold is in an upward trend. Analysts believe that this price stability and potential for returns will attract more investors to enter the cryptocurrency market.