JPMorgan has shifted to a more optimistic stance on digital assets, pointing to several factors that may support growth throughout 2025.
“We turn more constructive on digital assets,” strategists led by Nikolaos Panigirtzoglou stated in a Monday note, marking a change after subdued results from crypto hedge funds and CTAs earlier this year.
A major catalyst fueling this renewed confidence is the expected increase in institutional adoption. The bank highlights “additional buying from MicroStrategy (NASDAQ:MSTR) and other Bitcoin-accumulating corporates” as key contributors.
JPMorgan also emphasizes favorable policy shifts, noting “more U.S. states allowing Bitcoin to be added to their strategic reserves” and anticipated progress on regulation of crypto derivatives and stablecoins.
According to the firm, these developments could foster “more confidence and greater participation by traditional institutional investors.”
Although the sector experienced volatility—digital assets fell 17.9% in Q1 following a strong 2024—the bank views regulatory clarity and expanding applications as vital tailwinds.
JPMorgan projects a 10% return for digital assets, the highest expected among alternative investments in its latest allocation model.
This upbeat outlook accompanies a broader move by JPMorgan, which downgraded alternatives overall to Underweight by reducing exposure to private equity, private credit, and real estate. In contrast, digital assets have been upgraded to Overweight status alongside hedge funds and conventional public equities.
Despite this positive view, crypto hedge funds continue to underperform, lagging behind Bitcoin returns in 2025 and prior years. The firm noted, “active crypto managers have not performed as well historically compared to passively managed crypto funds.”
JPMorgan also ties crypto inflows to the so-called “debasement trade,” reflecting long-term worries about inflation, fiscal deficits, and diminishing confidence in fiat currencies. In this context, Bitcoin is positioning itself alongside gold as a core element in investor portfolios.