It has been an extraordinary year for cryptocurrency, defined by bitcoin's meteoric ascent. The world's first crypto soared from under $40,000 in January, stabilized around $60,000 throughout the summer and then surged above $100,000 this fall.
The real turning point, of course, came with the U.S. presidential election in November – an event that reshaped not just the political map but also the financial landscape.
Post-election enthusiasm, driven by pro-crypto policies and regulatory clarity, has sent bitcoin to a market capitalization of approximately $1.96 trillion.
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That's a remarkable achievement for an asset that's only been in existence since shortly after Satoshi Nakamoto published the famous white paper in October 2008.
One thing is clear: The crypto industry is evolving at a blistering pace. Momentum is obvious. But uncertainties remain.
Looking ahead to 2025, the big question is, what's next for bitcoin and the broader cryptocurrency ecosystem? Will bitcoin's rally continue? Will altcoins rise to challenge its dominance?
Let's consider some of the key trends shaping the crypto landscape in 2025.
Bitcoin has momentum
Multiple secular forces are driving bitcoin and the broader crypto market right now.
First of all, bitcoin is the standard in terms of trust, brand and liquidity. Federal Reserve Chair Jerome Powell recently underscored this point, calling bitcoin "just like gold, only it's virtual, it's digital."
This comparison speaks volumes about bitcoin's growing legitimacy in the financial world.
Another transformative development is the advent of spot bitcoin ETFs. These exchange-traded funds have rapidly gained traction since their introduction in early 2024, shattering expectations by raising over $60 billion within nine months.
According to Calamos Investments Senior Vice President and Head of ETFs Matt Kaufman, "Spot bitcoin ETFs from iShares and Fidelity have been the fastest-growing new product launches in history. This reflects the immense pent-up demand investors have for this asset class."
One more key element fueling bitcoin's rise is its fixed supply: The total number of BTC is capped in the original source code at 21 million. This built-in scarcity bolsters the value.
"A real-time supply shock is unfolding as bitcoin's fixed supply meets surging demand," notes Anthony Rousseau, head of brokerage solutions product management at TradeStation. "Many holders also remain unwilling to sell at current levels."
Investors, however, should still proceed with caution. Bitcoin remains a highly volatile asset.
"People are chasing gains like it's 2021 all over again," says David Materazzi, CEO of Galileo FX. "Bitcoin, meme stocks, you name it. Everyone wants in on the action. It's fun, I'll give it that. But speculation works until it doesn't."
Ethereum could eclipse bitcoin
Ethereum (ETH) is the second-largest cryptocurrency by market capitalization, just behind bitcoin.
What makes ethereum compelling isn't just its stature. Its role as a platform for building decentralized applications (dApps), particularly in areas like financial services, also sets it apart.
At its core is ether, the native token of ethereum, which serves as the fee for transactions on the platform.
"The institutional allocation disparity between bitcoin and ethereum is one of the most overlooked opportunities in the market today," notes Jesper Johansen, CEO and Founder at Northstake. "When we look at the numbers – 6% of bitcoin in ETFs versus just 1.9% for ethereum – we're seeing a massive gap that's prime for correction."
"Institutional investors are gradually recognizing that ethereum isn't just another digital asset," Johansen observes. "It's a yield-generating instrument. In 2025, we'll begin to see parity between ETH and BTC holdings."
Johansen points to staking as a major driver of ethereum's upside potential. Staking allows investors to earn rewards or interest on their cryptocurrency holdings.
According to Johansen, the potential regulatory approval of staking-focused U.S. ETFs could significantly boost ethereum's appeal.
"What makes staking so attractive," he explains, "is its ability to deliver yields often surpassing those of traditional savings accounts or fixed-income bonds."
Get ready for crypto IPOs
The meteoric rise of crypto stocks has been one of the most electrifying stories on Wall Street in 2024.
Take Coinbase Global (COIN), for instance, whose shares have nearly doubled. And MicroStrategy (MSTR) is showing an eye-popping 500% surge year to date.
Still, there are few pure-play crypto stocks available to trade on traditional exchanges. But that could change in 2025 with a more welcoming initial public offering (IPO) environment.
President-elect Donald Trump's choice of Paul Atkins to lead the Securities and Exchange Commission (SEC) should provide a big boost for crypto IPOs.
Atkins is a crypto advocate who is expected to pave the way for smoother regulatory approval of new filings.
So, what are the hottest upcoming IPOs to watch for?
Circle Internet Financial, the second-largest issuer of stablecoins, is a strong contender. Stablecoins are cryptocurrencies pegged to assets like the US dollar.
And Circle has already captured the market's attention. Back in April 2022, the company raised $400 million, drawing support from heavyweights like BlackRock and Fidelity Management and Research.
Another standout is Kraken, a crypto trading platform with a client base exceeding 10 million. With projected 2024 revenues north of $1 billion, it's a company primed to make waves in the public markets.
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