The post Crypto May Face Less Favorable Macro Conditions in 2025, Citi Warns appeared on BitcoinEthereumNews.com.

Crypto May Face Less Favorable Macro Conditions in 2025, Citi Warns Cryptocurrencies may encounter a challenging macroeconomic environment in 2025, according to a new report from Citigroup. Analysts have outlined six critical factors that could determine the success or failure of the digital asset market, emphasizing the importance of macroeconomic stability, ETF inflows, and regulatory developments. While the first quarter of 2025 is expected to support cryptocurrencies as risk assets, Citi warns of growing uncertainty due to potential policy shifts and increased market volatility later in the year. Six Key Factors for Crypto’s Success in 2025 Citi analysts identified the following factors as pivotal for the cryptocurrency market in 2025: 1. Supportive Macro Backdrop A favorable macroeconomic environment—marked by stable interest rates and inflation—could encourage risk-taking and drive capital into cryptocurrencies. However, Citi warns that U.S. policy shifts and global market volatility might disrupt this stability beyond Q1 2025. 2. Inflows into Spot ETFs Spot Bitcoin and Ethereum ETFs have been significant market drivers in 2024, and continued inflows will be crucial for maintaining liquidity and investor interest. Citi analysts predict that crypto ETFs will remain a dominant force, especially as institutional adoption grows. 3. Integration into Multi-Asset Portfolios For institutions to increase their cryptocurrency allocations, crypto returns must consistently outperform equities and offer diversification benefits. Broader portfolio integration could enhance crypto’s appeal to traditional investors. 4. Stablecoin Issuance Stablecoins are expected to play a pivotal role in the DeFi ecosystem, offering liquidity and stability in an otherwise volatile market. Growth in stablecoin issuance may signal greater adoption of blockchain-based financial systems. 5. Regulatory Developments Regulatory clarity remains critical for institutional adoption. Citi highlights the need for balanced policies that promote innovation while addressing risks like fraud and market manipulation. 6. Economic Uncertainty Uncertainty tied to stock market volatility and…

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Filed under: News - @ December 27, 2024 1:22 pm