Kraken: Crypto rebound requires recovery in institutional momentum

The cryptocurrency market this year will be characterized more by structural shifts than by price volatility, according to a new report from Kraken. The exchange noted that the market is undergoing fundamental changes in its distribution structure, driven by macroeconomic uncertainty, a rigid market framework, and a shift in cycles led by institutional capital. While Bitcoin remains a key indicator of market risk, the pathways for demand, liquidity, and risk transmission have evolved. Specifically, U.S. spot Bitcoin ETFs and companies holding digital asset treasuries (DATs) have become major variables in price formation. These entities generated $44 billion in net demand last year, but the market price did not react as strongly as anticipated because long-term holders supplied the market with their holdings, dampening the immediate upward price reaction seen in previous cycles, The Block reported. Despite these structural changes, Kraken stated that the macroeconomic environment remains a key factor. Moderate U.S. economic growth, persistent inflation, and a slow pace of monetary easing are limiting the upside potential for risk assets. For cryptocurrencies to rebound, a recovery in institution-led momentum is essential. The report highlighted that net inflows into ETFs slowed last year compared to the prior year, and DAT companies have found it more difficult to issue new shares due to shrinking premiums. A clear risk-on momentum is needed for the market to move higher.