The cryptocurrency market is heading into 2025 on the heels of a bull run sparked largely by converted crypto advocate Donald Trump’s impending return to the White House.
Bitcoin and Ethereum performed strongly in H2 2024, joined by emerging contenders Solana, XRP and Cardano. Their surges accelerated after the election on the back of growing hopes for crypto adoption and integration.
2025 is expected to be a year of transformation for the crypto market, where defined regulation, institutional adoption and emerging technologies converge to shape a new era of digital finance.
Read on for an overview of what experts see coming for the fast-developing industry next year.
“The current economic landscape is quite promising for the crypto market in the upcoming year,” Dean Skurka, president and CEO of Canadian financial firm WonderFi, told the Investing News Network (INN) in an email.
“The incoming pro-crypto Trump White House has given a lot of confidence to investors, both institutional and retail, and this should reduce the uncertainty that has held many investors back from the sector. Both Canadian and US crypto investors should see the benefits from this confidence in the asset class,” he continued.
“Additionally, interest rate cuts in the US and Canada have sent a positive signal to investors in the back half of 2024. As we anticipate further cuts next year, many retail investors will feel the benefit from reduced borrowing costs, which should help increase the amount of money available for investment,” Skurka added.
The report also points to rising Chapter 11 bankruptcy filings and a decline in manufacturing as warning signs for a potential economic downturn and a possible decline in equity prices.
Given these potential headwinds for the manufacturing sector and the broader economy, investors are increasingly exploring alternative assets that might offer protection. As Dean explained, “Many investors also view crypto as a hedge against inflation, similar to gold. If inflation does creep up, investors may decide to increase the proportion of their portfolio in crypto, to mitigate the risk of their savings decreasing in value over time.”
In his view, institutional investors may particularly appreciate that crypto assets are more resistant to inflation.
The regulatory landscape is expected to see major shifts after Trump’s inauguration on January 20.
Crypto advocates are also optimistic about a united front between the SEC and the Commodity Futures Trading Commission (CFTC) when Trump takes the helm in the US.
“For a long time, the SEC and the CFTC have had something of a turf war over crypto and who is going to regulate and how,” Adam Garetson, partner at multinational law firm Gowling WLG, told INN in an interview.
“I think that the SEC is more resourced than the CFTC from an investigation and enforcement perspective, but I think the underlying asset class does lend itself well to consideration by commodities regulators, particularly Bitcoin and Ether,” he continued. He expects to see the CFTC receive more resources dedicated to crypto regulation.
As cryptocurrencies become more mainstream, large entities are seeking exposure.
At the New Orleans Investment Conference, James Lavish, managing partner at the Bitcoin Opportunity Fund, discussed Bitcoin’s shift from a speculative to a strategic asset. He emphasized its decentralized, secure nature and limited supply, highlighting its potential to outperform traditional assets like gold and bonds. Lavish also talked about the positive impact of Bitcoin exchange-traded funds (ETFs) and new accounting rules on institutional adoption.
“This is game theory at play. Other countries will see (the strategic Bitcoin reserve), and if we actually do this, it’ll force them to strongly consider to get a little bit of Bitcoin on their balance sheets too as a store of value,” he said.
“I’m not talking about replacing gold. But 5 percent of total Bitcoin supply would roughly mirror the size and scope of the US gold reserves right now,” Lavish told the audience at the event.
For his part, Garetson said talk of a strategic Bitcoin reserve is indicative of a bigger trend.
“I think the commentary around strategic reserves really does indicate sort of a broader trend of investment portfolios being managed to include exposure to digital assets, and certainly Bitcoin, being the most heavily weighted asset in the sector, is driving the most attention,” he explained to INN.
“With 14 altcoin ETFs currently waiting for approval — and more joining the list all the time — it appears the market will be very receptive to these products,” noted Dean. “As these funds launch, the overall market benefits from diversification options, improved liquidity and easier access for a wider investor base will be apparent.”
He added that internal WonderFi data shows that usage and adoption of Solana has seen a “meteoric rise” in the last 2024 months. At the time of this writing, there were four active applications for spot ETFs tracking Solana.
Heightened liquidity due to an increase in ETFs could spill over into the crypto derivatives market. Furthermore, a less restrictive regulatory environment could stimulate more growth.
“ETFs are a significant touch point between the traditional financial world and the emerging digital asset world,” said Garetson. “I think those touch points are going to continue to grow as the crypto environment matures and greater regulatory clarity comes for the industry, and I think derivatives are another domino in that line. I think we’ve seen futures products on crypto exist now for a while, so I think we’re going to see more traditional financial products that are based on or reference crypto emerging, and certainly the derivative vehicle is a place where there’s room to grow.”
Looking at the technology side of crypto, Garetson said he’s watching staking, especially liquid staking.
“Liquid staking allows for investors to maintain liquidity so that their assets can be used for lending, borrowing and trading while rewards are being generated,” he explained to INN.
“So I think this advancement is going to have a net positive implication, in particular for the ETF space as well, where assets such as Ether that are held in an ETF can still generate these staking passive returns.”
“In 2025 we’re certainly seeing a push from a global regulatory perspective to take a closer look at DeFi and DeFi arrangements. So I expect this will be an area of regulatory focus in 2025,” said Garetson.
The crypto market presents a landscape of both challenges and opportunities in 2025.
“To be sure, I think that the greatest advances that will help the crypto and digital asset sector will be greater regulatory clarity, and with that, greater institutional and retail adoption,” said Garetson.
As the market expands and diversifies, Bitcoin’s position as the top cryptocurrency is likely to remain strong.
“It is hard to make (price) predictions, but the industry has never been better positioned,” Dean told INN. “The pro-crypto US administration, the promise of a US strategic reserve of Bitcoin, the rising corporate, institutional and global jurisdictional adoption, coupled with the launch of the new Bitcoin ETFs, will all contribute to this baseline target.”
Investor behavior is set to influenced by macroeconomic and geopolitical factors, similar to trends observed in traditional markets. Dean remarked, “There’s no denying that macro conditions will contribute significantly to the supply and price of Bitcoin, so it will be worth watching as all these stories play out in 2025.”
Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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