JPMorgan analysts, who have largely maintained a cautious outlook on the crypto market this year, have turned bullish for 2025, citing a combination of factors that could drive further growth.

"In all, we are bullish on digital assets into 2025," JPMorgan analysts, led by managing director Nikolaos Panigirtzoglou, wrote in the Alternative Investments Outlook and Strategy report late Friday.

The analysts outline several factors fueling their bullish outlook, such as the emergence of the "debasement trade," a trend in which investors turn to alternative asset classes — gold and bitcoin, notably — to hedge against economic instability. Amid rising geopolitical tensions and the upcoming U.S. election, speculative institutional investors, such as hedge funds, might view gold and bitcoin as beneficiaries of this trend, but not ether, according to the analysts.

A potential Trump win, apart from being supportive of Bitcoin BTC +1.89% from a regulatory standpoint, would likely reinforce the debasement trade through tariffs related to geopolitical tensions and an expansionary fiscal policy ("debt debasement"), the JPMorgan analysts said. They also mentioned that a Trump win is currently priced in with "very low probability" when examining other asset classes outside of gold and bitcoin.

The analysts provided additional reasons for their bullish stance on digital assets, including recent announcements by traditional wealth advisors such as Morgan Stanley allowing recommendations of spot bitcoin ETFs to clients; the bulk of liquidations related to the Mt. Gox and Genesis bankruptcies, along with the German government’s bitcoin sale, being largely behind us; and cash payments from the FTX bankruptcy, expected by the end of this year or early 2025, which could potentially be reinvested into cryptocurrencies.

The market cap of stablecoins has also rebounded, approaching its previous peak of around $180 billion, as seen before the Terra/Luna collapse, the analysts said.

However, U.S. stablecoin legislation is still pending, and it remains uncertain when Congress will pass it — most likely sometime in 2025 — they said. The analysts anticipate that adoption will increase when stablecoin regulations are introduced, making stablecoins more mainstream. U.S.-compliant stablecoins are poised to benefit, while non-compliant ones may face challenges; regulations could significantly impact Tether USDT +0.12% , the analysts said.

Although the stablecoin market has expanded in dollar terms, this growth primarily reflects the overall increase in the crypto market cap, with little change in stablecoins' market share relative to total crypto, said the analysts.

As for bitcoin's current price of about $67,000, it remains significantly above JPMorgan's estimated average production cost of $47,000, the analysts said, adding that its volatility-adjusted comparison to gold is currently at $63,000, slightly above the current bitcoin price.

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