4 reasons bitcoin is poised to outperform other cryptos in 2025

• There's been talk that 2025 will be the year of the altcoin, but JPMorgan isn't convinced.
• The apex token has dominated the crypto fund space and is developing competitive use cases.
• Bitcoin is also a clear beneficiary of governments' crypto plans, JPMorgan argues.

Bullishness is high in the cryptocurrency market and investors see tailwinds developing for the wider space beyond just bitcoin.

Yet, while some have called for 2025 to be the year of the altcoin, JPMorgan thinks bitcoin is set to be the main attraction, with the apex token poised to keep surging after a 120% rally in the last year.

Market pros have pointed to cyclical trends that could boost altcoins like solana or XRP, both of which rallied sharply after Donald Trump's election victory on the prospect of more support from the incoming administration.

However, JPMorgan gave four reasons investors shouldn't necessarily flock to altcoins.

First, future policy remains speculative, with the timing and effect of new regulation still in question.

While looser regulatory oversight should boost sentiment across the industry, there's no guarantee that the appeal of decentralized finance is about to rise.

"It remains unclear the extent to which these new regulations would allow the crypto ecosystem to encroach into the traditional financial system and whether public blockchains such as the ethereum blockchain and others would play a more significant role going forward," JPMorgan said.

Meanwhile, ambitious plans for the development of crypto reserves both in the US and beyond are likely to focus entirely on bitcoin, JPMorgan said. Some US states are already pushing bills to start stockpiling the token as an inflation hedge, an idea Washington could embrace in Trump's second term.

Second, bitcoin has demonstrated dominance in the crypto fund space.

JPMorgan expects retail and institutional investors to maintain inflows into spot bitcoin ETFs, aided by the token's characterization as digital gold. In December, Bernstein predicted that bitcoin would replace gold as the premier store-of-value asset in the world economy over the next decade.

According to JPMorgan, bitcoin accounted for 35% of the total $78 billion inflows that entered the crypto market in 2024.

That's compared to the relatively subdued flows into spot ethereum ETFs, which have accumulated around $2.4 billion after launching in July, JPMorgan said. The bank suggested that future ETFs for altcoins like solana would also likely attract limited inflows.

Third, the bitcoin network is becoming a competitor to tokens with more defined use cases, such as ethereum.

For most of its existence, bitcoin has been viewed solely as a buy-and-hold asset, offering little in the way of utility. But programmers have worked to expand its functionality, and new smart contract capabilities will help it catch up to challengers.

Meanwhile, public blockchains — such as ethereum — may be passed over by large institutions in favor of private ones, which have been developing customizable solutions for institutional investors, JPMorgan said.

Fourth, incoming altcoin projects will need time to evolve.

New decentralized initiatives typically experience early success amid fresh hype, before user activity fades away — eroding a token's value. To achieve longevity, projects need to prove long-term application benefits, the bank said.

Faced with this, investors shouldn't hold out for a repeat of the 2021 crypto bull run. That year, projects found success through token distribution, but the industry is now more focused on developing blockchain capabilities.

"In this model, profits from successful projects often benefit private corporations, diverting value from crypto tokens," JPMorgan outlined.

JPMorgan also notes that MicroStrategy is only halfway through its plan to plow $42 billion bitcoin. The software firm has made a name for itself by accumulating a bitcoin treasure trove using equity and loan financing. Its massive purchases have become a cited tailwind for the token, with the company responsible for 28% of crypto inflows last year.