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.
The president-elect has vowed to make the US the “crypto capital of the world,” and is stocking his cabinet with crypto-friendly proponents, heralding a new era for an industry whose market cap has hit around US$2 trillion in less than 16 years.
Bitcoin and Ethereum performed strongly in H2 2024, joined by emerging contenders Solana, XRP and Cardano. Their surges accelerated after the election results on the back of growing crypto adoption and integration.
Even so, Bitcoin has retained its dominant position. The number of active addresses has grown by over 12 percent since November 5, according to data gathered from Into the Block. Meanwhile, the anticipation of clearer regulations in 2025 is driving a price discovery phase for Bitcoin heading into 2025. Investors are optimistic, buoyed by the popular coin’s recent breakthrough to over US$100,000 on December 4. Estimates now range from around US$120,000 to US$150,000.
“The next months will have insane long opportunities,” said Capriole Fund founder Charles Edwards on December 1.
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.
Economic landscape promising for crypto
“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.
Also in play are Trump’s plans to increase deportations and implement widespread tariffs, circumstances that could worsen existing worries like rising consumer debt and job market stability.
Further compounding these concerns is August’s ‘un-inversion’ of the yield curve, a historical precursor to recessions, as highlighted in an October report from Picton Mahoney Asset Management.
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.
Trump admin to improve regulatory environment
The regulatory landscape is expected to see major shifts after Trump’s inauguration on January 20.
Gary Gensler has already said he will step down from his post as chair of the US Securities and Exchange Commission (SEC) that day, potentially bringing an end to a years-long contentious relationship between the industry and regulators. Former commissioner Paul Atkins has been nominated as his replacement.
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.
‘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.
Fox Business has reported that Trump’s team is considering shifting digital asset regulation to the CFTC.
Will the US create a strategic Bitcoin reserve?
As cryptocurrencies become more mainstream, large entities are seeking exposure.
Senator Cynthia Lummis’ (R-Wy) national Bitcoin reserve proposal could increase Bitcoin’s price and position it as a digital gold-like asset if Trump were to implement it, which he has indicated he would do.
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 balance sheet 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.
Garetson’s observation is reflected in companies like Micro Strategy (NASDAQ:MSTR). The analytics company has been steadily accumulating Bitcoin, scooping up US$1.5 billion worth of the currency between November 25 and December 2. CEO Michael Saylor presented a ‘Bitcoin strategy’ to Microsoft’s (NASDAQ:MSFT) board of directors on December 1, and members will vote on December 10 on whether to add Bitcoin to the company’s balance sheet.
Crypto investment options to diversify and grow
Looser regulations could pave the way for a broader range of investment vehicles within the crypto space, including a wider selection of ETFs offering investors exposure to a diversified mix of digital assets.
“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.”
DeFi set to attract increased attention
Looking at the technology side of crypto, Garetson said he’s watching staking, especially liquid staking.
“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.”
This rise of liquid staking has fueled increased activity in decentralized finance (DeFi), with several knock-on effects. As more users participate in liquid staking and DeFi protocols, demand for Ether rises — this has potentially contributed to its recent price surge. Additionally, liquid staking tokens can be used as collateral for borrowing, effectively increasing overall collateralization in DeFi and potentially leading to higher borrowing volumes.
Another key trend accompanying this growth is the rising prominence of stablecoins, particularly USDT (Tether) and USDC (Circle). These stablecoins play a crucial role in facilitating DeFi activity, enabling seamless transactions and providing stability within the volatile cryptocurrency market.
As CryptoQuant CEO Ki Young Ju observed recently in a post on X, former Twitter, ‘The surge in altcoin trading volume isn’t driven by $BTC pairs but by stablecoin and fiat pairs, reflecting real market growth rather than asset rotation. Stablecoin liquidity better explains the altcoin market.’
“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.
Crypto challenges and opportunities in 2025
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.
Trump’s recent proposal to eliminate capital gains taxes on cryptocurrencies issued by American companies, such as Cardano and XRP, will likely attract more investors to the space and promote innovation in the industry.
As the market expands and diversifies, Bitcoin’s position as the top cryptocurrency is likely to remain strong.
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.