Commonplace Chartered anticipates that increasing institutional investments will drive the recovery of the cryptocurrency market amid regulatory ambiguity.

Digital asset prices are expected to experience ongoing short-term fluctuations due to a lack of clarity from the new US administration, although medium-term prospects could yield significant gains, according to a report by Standard Chartered.

Geoffrey Kendrick, the bank’s global head of digital assets research, indicated in the report that the absence of any reference to digital assets on President Donald Trump’s first day in office was viewed unfavorably by the market.

This situation, combined with continued silence, may prolong price corrections for major cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH). However, he also highlighted the importance of institutional inflows, which are anticipated to keep rising in the medium term.

Kendrick stated:

“We recommend purchasing during dips in expectation of medium-term upward movements.”

The report reaffirmed that Bitcoin is expected to reach $200,000 and Ethereum $10,000 by the end of 2025 as institutional investors increase their allocations to crypto-related exchange-traded funds (ETFs).

Kendrick further projected that pension funds would become significant holders of Bitcoin and other crypto ETFs, likely driving prices higher due to their “long-only” investment strategy. He noted that currently, only 1% of these funds have exposure to crypto ETFs.

Market phases

Kendrick identified three distinct phases for digital assets in 2025. The first, termed “when hope dies,” reflects the recent price declines as market optimism diminishes. Prices could fall further by 10% to 20%, driven by speculative fatigue and a lack of supportive policy developments.

The second phase, “buy the dip,” indicates the potential for recovery as the administration begins to implement crypto-friendly policies.

Kendrick wrote:

“We expect this may take several weeks or months, considering the relative size of the asset class.”

He further elaborated on the timeline by comparing the digital asset market to the scale of a single tech giant like Apple.

The final phase — “altcoin alpha” — is anticipated to commence shortly after the recovery begins. Kendrick predicted that specific altcoins, such as Litecoin (LTC) and Uniswap’s native token UNI, could benefit from new ETF approvals and regulatory changes, providing investors with opportunities for additional returns.

Institutional interest remains strong

Despite recent challenges, Kendrick maintains a positive outlook on institutional adoption. Funds categorized as “pension trusts” represented only 1% of Bitcoin ETF ownership as of September 2024, indicating substantial room for growth.

According to Kendrick:

“New capital is likely to flow into these assets, supporting both Bitcoin and Ethereum’s long-term performance.”

Standard Chartered’s analysis emphasized differentiation within the broader crypto market, with sectors like DeFi likely to gain traction due to reduced regulatory compliance burdens. Uniswap, in particular, stands to benefit from these changes, which could enhance protocol revenues.

While short-term downside risks remain, Kendrick concluded that the current environment offers strategic entry points for long-term investors.

He added:

“No news is bad news for now, but positive actions from policymakers will drive a robust recovery.”

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