Digital asset prices are expected to face continued short-term volatility due to a lack of policy clarity from the new US administration, but medium-term opportunities could deliver significant gains, according to a report by Standard Chartered.
Geoffrey Kendrick, the bank’s global head of digital assets research, noted in the report that the absence of any mention of digital assets during President Donald Trump’s first day in office was perceived negatively by the market.
This, coupled with continued silence, could extend price corrections for major coins like Bitcoin (BTC) and Ethereum (ETH). However, he also emphasized the importance of institutional inflows, which are expected to continue increasing in the medium term.
Kendrick wrote:
“We recommend buying the dips in anticipation of medium-term moves higher.”
The report reaffirmed that Bitcoin is projected to hit $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 which is likely to drive prices higher due to their “long-only” nature. He noted that so far, only 1% had exposure to crypto ETFs.
Market phases
Kendrick outlined three distinct phases for digital assets in 2025. The first, dubbed “when hope dies,” reflects the recent price declines as market optimism wanes. Prices could drop further by 10% to 20%, driven by speculative fatigue and a lack of supportive policy developments.
The second phase, “buy the dip,” signals the potential for recovery as the administration begins implementing crypto-friendly policies.
Kendrick wrote:
“We anticipate this may take several weeks or months, given the relative size of the asset class.”
He further explained the timeline by comparing the digital asset market to the scale of a single tech giant like Apple.
The final phase — “altcoin alpha” — is expected to begin shortly after recovery starts. Kendrick predicted that specific altcoins, such as Litecoin (LTC) and Uniswap’s native token UNI, could benefit from new ETF approvals and regulatory changes, offering investors opportunities for additional returns.
Institutional interest remains strong
Despite recent setbacks, Kendrick remains optimistic about institutional adoption. Funds classified as “pension trusts” accounted for only 1% of Bitcoin ETF ownership as of September 2024, leaving significant room for growth.
According to Kendrick:
“Fresh capital is likely to flow into these assets, supporting both Bitcoin and Ethereum’s long-term performance.”
Standard Chartered’s analysis highlighted differentiation within the broader crypto market, with sectors like DeFi poised to gain traction due to reduced regulatory compliance burdens. Uniswap, in particular, stands to benefit from these changes, which would enhance protocol revenues.
While near-term downside risks persist, Kendrick concluded that the current environment presents strategic entry points for long-term investors.
He added:
“No news is bad news for now, but constructive action from policymakers will drive a robust recovery.”
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