Investing.com -- JPMorgan has turned bullish on digital assets, citing a range of positive catalysts that could support the sector through the rest of 2025.
“We turn more constructive on digital assets,” strategists led by Nikolaos Panigirtzoglou said in a Monday note, highlighting a change in stance after a period of lackluster performance from both CTAs and crypto hedge funds earlier this year.
One of the key drivers for the renewed optimism is the anticipated wave of institutional adoption. JPMorgan points to “additional buying from MicroStrategy (NASDAQ: MSTR ) and other Bitcoin-accumulating corporates.”
The Wall Street bank also points out positive policy developments, such as “more U.S. states allowing Bitcoin to be added to their strategic reserves” and the expected regulatory progress in crypto derivatives and stablecoins.
These changes, according to the bank, could induce “more confidence and greater participation by traditional institutional investors.”
While the sector has seen volatile returns—with digital assets down 17.9% in Q1 after a strong performance in 2024—the bank sees regulatory clarity and broadening use cases as critical tailwinds.
JPMorgan also forecasts a 10% projected return for digital assets, the highest among all alternative investment classes in its updated allocation model.
The more bullish view comes as JPMorgan moves alternatives to an Underweight position overall, cutting exposure to private equity, private credit, and real estate.
In contrast, the bank has upgraded digital assets to an Overweight alongside hedge funds and traditional public equities.
Despite the renewed interest, crypto hedge funds continue to lag, with performance trailing Bitcoin in both 2025 and previous years. JPMorgan notes that “active crypto managers have not performed as well historically compared to passively managed crypto funds.”
The firm also connects crypto inflows to what it calls the “debasement trade,” driven by long-term concerns over inflation, fiscal deficits, and waning trust in fiat currencies. In this environment, Bitcoin is emerging alongside gold as a structural component in investor portfolios.