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All Eyes on the Federal Reserve
ETFS Multi-Asset Weekly All Eyes on the Federal Reserve
Tin prices rebound from six year low.
Chinese bourses climb on stimulus hopes.
EURJPY in focus as BOJ meets ahead of Eurozone inflation.
The week’s Federal Open Market Committee meeting to decide on US rates will not be followed by a press conference. The market will therefore remain very attentive to FOMC member speeches and public engagements to glean any information about the possible path of rate increases this year. As a result, we expect no surprises, which will keep USD gains capped. Elsewhere, continued Greek bailout negotiations will likely weigh on European bourses and keep volatility high. The rising animosity between the Greek Finance Minister and his EU counterparts has increased the risk of an accident in negotiations.
Commodities
Tin prices rebound from six year low. Tin prices witnessed a 3.4% weekly gain, after having declined by 40% since April last year. Tin prices have come under significant pressure following the appreciation of the US Dollar and burgeoning production of tin ore from Myanmar. The sharp increase in price came as the largest tin producer in Indonesia, the world’s top exporter, announced that it would be cutting production in the face of price weakness. In emissions markets, the price of carbon allowances rose 5.5% as progress was made toward relieving the current oversupply of allowances in the EU Emissions Trading Scheme (EU ETS). The conclusion of the US winter and its associated seasonal heating demand weighed on the natural gas price this week. The price fell 5.7% as US working natural gas inventories grew by more than expected, reflecting the absence of significant demand.
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Equities
Chinese bourses climb on stimulus hopes. The MSCI China A Index rallied 5.4% during the week following a reduction of the national reserve requirement ratio (RRR) by 1% to 18.5%. Speculation has been growing that Chinese authorities will aggressively support growth targets through monetary stimulus, fuelling bullish sentiment and taking the index to highs not witnessed since 2007. In Europe, equity indices have fallen over the week as concerns grew that Greece will fail to meet its upcoming €780mn debt payment to the International Monetary Fund (IMF) due in May. IMF Director, Christine Lagarde, has made it clear that the international group will not allow Greece to delay these payments, putting greater pressure on the nation to finalise negotiations over economic overhauls and its international bailout. The DAX 30 and FTSE MIB Index have fallen by 2.3% and 1.7% respectively as a result.
Currencies
EURJPY in focus as BOJ meets ahead of Eurozone inflation. The Bank of Japan has appeared to be comfortable with the progress with the inflation outlook, and as such we feel that the upcoming policy meeting will be largely uneventful. The first tendrils of wage growth appear to be starting to take root, in turn helping inflation stabilise around the 2% level, in line with the BOJ target. Alongside CPI, a raft of other Japanese economic indicators will also be released this week, including industrial production and retail trade. Although there has been some volatility in industrial activity, survey evidence shows that business attitudes are improving in the manufacturing sector. Consumers remain under pressure, but this could continue if earnings post further gains. Meanwhile, inflation data will be the main focus for Euro investors, but we expect there to be little progress on the price front for the Eurozone. As a result we expect EUR/JPY to trade even lower this week.
Important Information
This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (”FCA”).
2024 was a landmark year for bitcoin, solidifying its role as a fully institutionalised asset class.
Institutional inflows into physical bitcoin exchange-traded products (ETPs) reached nearly $35 billion globally, signalling a major shift in how traditional investors view crypto. As bitcoin continued to enhance portfolios’ risk-return profiles, more institutional investors followed suit, reshaping the financial landscape.
Looking ahead, 2025 promises to bring exciting developments across the crypto ecosystem. Here are the top five crypto trends to watch.
Fear of being left behind
The era of bitcoin as a niche investment is over. Institutional adoption is creating a ripple effect, forcing hesitant players to reconsider. Portfolios with bitcoin allocations are consistently outperforming those without, highlighting its growing importance.
Figure 1: Bitcoin in a multi-asset portfolio
| 60/40 Global Portfolio | 1% Bitcoin Portfolio | 3% Bitcoin Portfolio | 5% Bitcoin Portfolio | 10% Bitcoin Portfolio | MSCI AC World | Bloomberg Multiverse | Bitcoin | |
| Annualised Return | 5.77% | 6.46% | 7.83% | 9.20% | 12.57% | 9.07% | 0.56% | 56.24% |
| Volatility | 8.79% | 8.86% | 9.14% | 9.62% | 11.42% | 13.94% | 5.05% | 67.28% |
| Sharpe Ratio | 0.48 | 0.55 | 0.68 | 0.79 | 0.96 | 0.54 | -0.20 | 0.81 |
| Information Ratio | 1.01 | 1.01 | 1.01 | 1.00 | ||||
| Beta | 70% | 71% | 73% | 75% | 81% | 100% | 24% | 181% |
Source: Bloomberg, WisdomTree. From 31 December 2013 to 30 November 2024. In USD. Based on daily returns. The 60/40 Global Portfolio is composed of 60% MSCI All Country World and 40% Bloomberg Multiverse. You cannot invest directly in an index. Historical performance is not an indication of future performance and any investment may go down in value.
With bitcoin’s ability to noticeably improve portfolios’ risk-return profiles, asset managers face a clear choice: integrate bitcoin into multi-asset portfolios or risk falling behind in a rapidly evolving financial landscape. In 2025, expect the competition to heat up as clients demand exposure to this powerhouse cryptocurrency.
Expanding crypto investment options
In 2024, regulatory breakthroughs opened the doors for physical bitcoin and ether ETPs in key developed markets. This marked a critical step towards making cryptocurrencies mainstream, providing seamless access to institutional and retail investors alike.
Figure 2: Global physical crypto ETP assets under management (AUM) and 2024 net flows
Source: Bloomberg, WisdomTree. 02 January 2025. Historical performance is not an indication of future performance and any investment may go down in value.
In 2025, this momentum is expected to accelerate as the crypto regulatory environment becomes more friendly in the United States and as key developed markets follow Europe’s lead and approve ETPs for altcoins such as Solana and XRP. With their clear utility and growing adoption, these altcoins are strong candidates for institutional investment vehicles.
This next wave of altcoin ETPs will expand the diversity of crypto investment opportunities and further integrate cryptocurrencies into the global financial system.
The maturing of Ethereum’s layer-2 ecosystem
Ethereum’s role as the backbone of decentralised finance (DeFi), non-fungible tokens (NFTs), and Web3 is unmatched, but its scalability challenges remain a hurdle. Layer-2 solutions—technologies such as Arbitrum and Optimism—are transforming Ethereum’s scalability and usability by enabling faster, cheaper transactions.
In 2025, Ethereum’s recent upgrades, such as Proto-Danksharding (introduced in the ‘Dencun’ upgrade), will drive layer-2 adoption even further. Innovations like Visa’s layer-2 payment platform leveraging Ethereum for instant cross-border transactions will underscore the platform’s evolution.
Expect Ethereum’s layer-2 ecosystem to power real-world use cases ranging from tokenized assets to decentralised gaming, positioning it as the infrastructure of a truly scalable digital economy.
Stablecoins: bridging finance and blockchain
Stablecoins are becoming indispensable to the global financial system, offering the stability of traditional assets with the efficiency of blockchain. Platforms such as Ethereum dominate the stablecoin landscape, hosting stablecoin giants Tether (USDT) and USD Coin (USDC), which facilitate billions in daily transactions.
Figure 3: Key stablecoin chains
Source: Artemis Terminal, WisdomTree. 05 January 2025. Historical performance is not an indication of future performance and any investment may go down in value.
As we move into 2025, stablecoins will increasingly interact with blockchain ecosystems such as Solana and XRP. Solana’s high-speed, low-cost infrastructure makes it ideal for stablecoin payments and remittances, while XRP Ledger’s focus on cross-border efficiency positions it as a leader in global settlements. With institutional adoption rising and DeFi applications booming, stablecoins will serve as the backbone of a seamless, interconnected financial ecosystem.
Tokenization: redefining ownership and revolutionising finance
Tokenization is set to redefine how we think about ownership and value. By converting tangible assets like real estate, commodities, stocks, and art into digital tokens, tokenization breaks down barriers to entry and creates unprecedented liquidity.
In 2025, tokenization will expand dramatically, empowering investors to own fractions of high-value assets. Platforms such as Paxos Gold and AspenCoin are already showcasing how tokenization can revolutionize markets for gold and luxury real estate. The integration of tokenized assets into DeFi will unlock new financial opportunities, such as using tokenized real estate as collateral for loans. As tokenization matures, it will transform industries ranging from private equity to venture capital, creating a more inclusive and efficient financial system.
For the avoidance of any doubt, tokenization complements crypto by expanding the use cases of blockchain to include real-world applications.
Looking ahead
2025 is set to be a defining year for crypto, as innovation, regulation, and adoption converge. Whether it is bitcoin cementing its position as a portfolio staple, Ethereum scaling for mainstream use, or tokenization unlocking liquidity in untapped markets, the crypto ecosystem is poised for explosive growth. For investors and institutions alike, the opportunities have never been clearer or more compelling.
This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
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