Is it too early to expect a bounce back for the market in Q4?

In the context of the crypto market undergoing a significant fall, the question arises as to whether previous forecasts about the market still hold up against recent developments.

Many experts believe that this fall is just a temporary phase and have made predictions accordingly. It is suggested that the market may recover and continue its growth towards new highs. One expert even stated that:

"Bitcoin will fall close to the level of 106,000 USD and ETH may go down to around 3,800 USD or lower, and people will think that October is no longer meaningful."

Recently, in the field of crypto, State Street announced that institutional investors intend to double their allocation rate to crypto over the next three years. This assessment is based on the firm's third annual research report on Digital Assets and Emerging Technology.

According to the report, the average allocation rate for digital assets is expected to reach 7% by 2025, with a goal of increasing to 16% by 2028. This report is particularly significant due to the scale of State Street, a company currently managing $4.7 trillion in assets as of 2024, making it one of the largest asset management companies in the world.

The investment goal of institutional investors in cryptocurrency over the next three years | Source: State Street## Crypto news: who is leading Bitcoin adoption?

In a survey by State Street, asset managers showed a higher level of exposure to cryptocurrencies compared to asset owners. Managers are twice as likely to hold 2%-5% of their portfolios in Bitcoin, with 14% maintaining this ratio compared to just 7% of owners.

Moreover, the number of managers holding 5% or more of their AUM in Ethereum is three times that of owners, with a ratio of 6% compared to 2%. The most popular forms of digital asset investment include stablecoins and tokenized versions of listed stocks or fixed income, with feedback indicating that on average they hold 1% of their portfolio in each category.

The speed of cryptocurrency adoption by institutions | Source: State StreetIn the field of asset tokenization, asset managers report having a higher level of exposure to the tokenization of public assets compared to owners, with a ratio of 6% to 1%. Over 25% of survey participants identified Bitcoin as the highest yielding source in their digital asset portfolio, while a quarter predict that it will remain one of the best-performing assets in the next three years. Ethereum ranked second, with 21% claiming it is their largest current source of profit.

Organizations Promoting the Adoption of Digital Assets

A study by State Street shows that 68% of participants predict that the adoption of digital investment will become a mainstream trend in the next 10 years, doubling from 29% reported last year. The survey also found that 43% of participants believe that hybrid decentralized financial investment and traditional finance will become a mainstream trend within five years, a significant increase from 11% in 2024.

However, organizations remain cautious about the growth rate. By 2030, more than half of participants predict that between 10% and 24% of total investments will be made through digital assets or tokenized instruments. Only 1% believe that most investments will be made this way. Participants predict cost savings of 23% to 37% compared to current expenditures in operational areas, while revenue or investment performance is expected to average between 25% and 33%.

The industry has identified that the lack of awareness among institutional investors, concerns about cybersecurity, and the lack of clarity in regulation are the main barriers to adoption.

Crypto News: Approval of the platform unlocks trillions of USD in capital

Matthew Hougan, Chief Investment Officer of Bitwise, stated that Morgan Stanley's Global Investment Committee has released a report allowing its 16,000 advisors to manage $2 trillion that could be flexibly allocated to crypto as part of multi-asset portfolios. The firm suggests that an allocation rate of up to 4% may be suitable for risk-tolerant investors.

Wells Fargo, managing about 2 trillion USD AUM, has also shifted to allow advisors to allocate on behalf of clients. Hougan also noted that UBS, Merrill Lynch, and other large asset managers are likely to follow suit.

The approval of the platform comes after many years of restrictions preventing the largest asset managers from accessing Bitcoin (ETFs). Hougan wrote that there is significant demand from advisors and considerable capital inflow is expected to occur in Q4 as tens of thousands of financial professionals process the new guidelines.

Deflationary trading boosts institutional demand

Bitcoin and gold have emerged as the top-performing assets of 2025 not long ago, confirming what Wall Street calls a "deflationary trade." This strategy involves investing in assets that are likely to perform well if the government experiences deflation or weakens its currency through monetary expansion.

The Hougan from Bitwise stated that JPMorgan's report on deflationary trading on October 1 indicated that this strategy is becoming a mainstream trend. He also noted that when advisors conduct annual reviews with clients, they want to have prints by the end of the year to show holdings in the most successful investments.

The price of Bitcoin reached a new all-time high of 126,000 USD at the beginning of October, and Bitcoin ETF funds attracted 3.5 billion USD in net inflows during the first four trading days of Q4. Historical patterns show that in each quarter where Bitcoin records double-digit positive returns, ETF funds also see inflows in the billions of USD.

Therefore, an optimistic report on the stable adoption of institutions from State Street aligns with the current favorable context for Bitcoin. Although the current market is not very promising for Bitcoin acceptance, signals indicate that the stage has been set for a more pragmatic approach. It is hoped that the acceptance of cryptocurrencies in institutional portfolios may boost crypto performance in Q4.

Mr. Teacher