Written by: Matt Hougan, Chief Investment Officer, Bitwise, and Ryan Rasmussen, Head of Research, Bitwise
Compiled by: Yangz, Techub News
2024 is a monumental year for the cryptocurrency industry. Thanks to the launch of the US Bitcoin spot ETF (which has gathered $33.56 billion in assets), Bitcoin soared to an all-time high of $103,992 (as of this writing, Bitcoin's annual increase has reached 141.72%). Other mainstream coins have also made huge gains, with SOL up 127.71% this year, XRP up 285.23%, and Ethereum up 75.77%. At the same time, MicroStrategy and Coinbase's stocks soared 525.39% and 97.57% respectively.
However, data is not the only development worth watching. The cryptocurrency industry has emerged as one of the winners in the 2024 US election, making the prospects for cryptocurrency regulation in the United States even brighter. President-elect Trump firmly supported cryptocurrencies during his campaign, vowing to establish a strategic reserve of Bitcoin and reorganize the U.S. Securities and Exchange Commission (SEC), which has historically been hostile to cryptocurrencies. In addition, he nominated Scott Bessent as Treasury Secretary, who once said, "Cryptocurrency is about freedom, and the cryptocurrency economy is here to stay." In 2024, Congress tilted heavily toward the cryptocurrency industry, and pro-cryptocurrency candidates defeated cryptocurrency opponents in several key races. We also look forward to seeing industry-friendly legislation in the coming months.
With impending stimulus from major central banks around the world, rising institutional adoption, and rapid improvements in blockchain technology, the outlook for the cryptocurrency industry in 2025 looks bright. We recently convened the brain trust at Bitwise to look ahead to 2025. We believe we are entering a golden age for cryptocurrency.
Bitcoin, Ethereum, and Solana set to hit new all-time highs, with Bitcoin set to break the $200,000 mark
The three biggest cryptocurrencies, Bitcoin, Ethereum, and Solana, outperformed all major asset classes in 2024, gaining 141.72%, 75.77%, and 127.71%, respectively. Meanwhile, the S&P 500 returned 28.07%, gold returned 27.65%, and bonds returned 3.40%. We expect this momentum to continue into 2025, with Bitcoin, Ethereum, and Solana all hitting new all-time highs.
Bitcoin: $200,000. Record inflows into Bitcoin spot ETFs have pushed Bitcoin to a new all-time high in 2024. We don’t see this trend slowing down anytime soon. Combine this demand with the reduced supply from the April 2024 halving, plus new buying from corporations and governments… you get the idea. (Note: $200,000 would turn into $500,000 or more if the U.S. government implements its proposal to establish a 1 million Bitcoin strategic reserve).
Ethereum: $7,000. Despite Ethereum’s 75.77% gain in 2024, the second-largest cryptocurrency has lost favor with many investors, who have either turned their attention to Bitcoin or to the rapidly developing programmable blockchains that compete with Ethereum. However, as Buffett said, “I am fearful when others are greedy, and I am greedy when others are fearful.” We expect the Ethereum narrative to shift in 2025 as L2 activities such as Base and Starknet accelerate, and billions of funds flow into Ethereum spot ETFs. In addition, the massive growth of stablecoins and Ethereum-based tokenized projects will also serve as a catalyst.
Solana: $750. Like a phoenix rising from the ashes, Solana reaches new heights in 2024 after the 2022 market crash, and the craze for its ecosystem Memecoin makes the GameStop legend look inferior. We believe that Solana's momentum has just begun. The introduction of "serious" projects will complement its dominance in the Memecoin field and serve as a catalyst for the network in 2025. We are already seeing early examples of projects such as Render. We expect this trend to accelerate in the year ahead.
Possible catalysts
Institutional Investment
Enterprise Purchase
Comprehensive brokerage firm approval
US Strategic Bitcoin Reserve
Better regulatory/political environment
Bitcoin halving leads to tight supply
L2 Extensions
Macro windfalls (rate cuts, central bank stimulus)
Expanded distribution
Potential downsides
Washington's unfulfilled promises
Leverage Blowout
Government sell-off
Memecoin mania fails
Disappointing rate cut
Bitcoin spot ETFs will attract more funds in 2025 than in 2024
When the US Bitcoin spot ETF launched in January 2024, ETF experts predicted inflows of $5 billion to $15 billion in the first year. In fact, these ETFs exceeded the upper end of this forecast within the first six months. Since launch, these ETFs have gathered $33.6 billion in inflows. We expect inflows to exceed this figure in 2025. Here are three reasons:
The first year is usually the slowest for ETFs: The best historical analogy we have for the launch of a Bitcoin ETF is the launch of the gold ETF in 2004. That year, the gold ETF received $2.6 billion in inflows as soon as it was launched, which made everyone excited. But look at the subsequent years: $5.5 billion in year 2, $7.6 billion in year 3, $8.7 billion in year 4, $16.8 billion in year 5, and $28.9 billion in year 6 (based on inflation-adjusted figures). The point is that it is not normal for the flow of funds in year 2 to exceed that of year 1, and the flow to gradually decrease.
Large brokerage firms will gain exposure to Bitcoin ETFs: When it comes to Bitcoin ETFs, the world’s largest brokerage firms, including Morgan Stanley, Merrill Lynch, Bank of America, and Wells Fargo, have yet to unleash their armies of wealth managers, who are largely unable to access these products. We believe this will change in 2025, and the trillions of dollars managed by these firms will begin to flow into Bitcoin ETFs.
Investors Doubling Down: In the seven years that Bitwise has been helping investment professionals gain exposure to cryptocurrencies, we have witnessed a clear pattern where most investors start with a small allocation and then increase over time. We believe that most investors who buy a Bitcoin ETF in 2024 will double down in 2025.
Coinbase to Become Most Valuable Broker, Stock Price to Surpass $700
In 2023, investors could buy Coinbase stock at $35. Today, it trades at $344, a nearly 10x increase. We think it can go even higher.
We forecast that Coinbase stock will trade at over $700 per share (more than double today’s price) in 2025. This would make Coinbase the world’s most valuable broker, surpassing Charles Schwab.
As for why, Coinbase is more than just a broker, and there are three major catalysts that will help it achieve this goal:
Stablecoins: Coinbase’s stablecoin business is booming thanks to its deal with USDC issuer Circle. Year to date, its stablecoin revenue has surged by $162 million (+31%). If our assessment of the trajectory of stablecoins is correct, this trend should continue.
Base: Last year, Coinbase launched Base, an L2 based on Ethereum. Now, it is the leader in L2 in terms of transaction volume and total locked value. With growth comes a lot of revenue. Base now generates tens of millions of dollars in revenue every quarter, and as more developers, users, and funds flow into the Base ecosystem, we expect revenue to grow.
Pledge & Custody Services: These two business lines generated $589 million in revenue as of Q3. This is an increase of $304 million (+106%) compared to the same period last year. Both businesses are driven by asset balances and net new asset flows. We expect both businesses to grow significantly by 2025, bringing these business lines to over $1 billion in annual revenue.
2025 will be the "first year of cryptocurrency IPOs", with at least five cryptocurrency unicorns set to go public in the U.S.
The cryptocurrency industry has been in a “lukewarm period” in terms of IPOs over the past few years. However, we expect a surge in cryptocurrency unicorn IPOs in 2025.
Why now? The context is very different today than it was a few years ago. Crypto prices are rising, investor demand is growing, institutional adoption is surging, blockchain technology has gone mainstream, the macro environment has become favorable, and most importantly, the political environment has warmed. This has created favorable conditions for many industry giants to go public.
Here are five companies that could go public in 2025:
Circle: As the issuer of one of the largest stablecoins, USDC, Circle has been actively preparing for an IPO for some time. Circle’s strong position in the stablecoin market and its continued expansion into new financial services could lead to its listing.
Figure: Figure is known for using blockchain technology to provide a variety of financial services such as mortgages, personal loans, and asset tokenization. The company has reportedly been exploring an IPO since 2023, and with Wall Street's growing obsession with tokenization, now may be the time.
Kraken: One of the largest cryptocurrency exchanges in the United States, Kraken has been considering an IPO since at least 2021. The company's plans were delayed due to market conditions, but may be put on the agenda again in 2025.
Anchorage Digital: Anchorage Digital provides infrastructure services for digital assets and has a diverse client base that includes investment advisors, asset managers, and venture capital firms. The company’s status as a federally chartered bank and its comprehensive cryptocurrency services could facilitate its listing.
Chainalysis: As a market leader in blockchain compliance and intelligence services, Chainalysis is likely to go public in 2025. The company's unique products and growth trajectory make it a good candidate for a public listing, especially given the growing importance of compliance in the cryptocurrency industry.
Tokens launched by AI agents will lead a bigger token frenzy than in 2024
As we head into 2025, we will see a bigger Memecoin craze than in 2024. We believe that tokens launched by AI agents will lead this trend.
A recent interaction between a16z’s Marc Andreessen and an autonomous chatbot called Truth Terminal led the AI agent to promote GOAT. Soon, this AI Memecoin became an asset with a market cap of over $1.3 billion. There is no doubt that when we combine AI with the wild world of Memecoins, the potential is huge.
The breakthrough that we are most excited about is Clanker. As an AI agent, it allows users to autonomously deploy tokens on Coinbase's L2 scaling solution Base. Users only need to tag Clanker in a post on Farcaster, tell the AI agent a given token name and image, and it will automatically deploy the token.
In less than a month, Clanker has launched over 11,000 tokens (and generated over $10.3M in fees). We believe AI-launched tokens will drive a new Memecoin craze in 2025.
As for whether these memecoins are useful in the real world? We think it’s unlikely. Most of them will go to zero, but they represent an interesting collision of two groundbreaking technologies, AI and crypto, that’s worth keeping an eye on.
The number of countries holding Bitcoin will double
Whether the US will establish a strategic reserve of Bitcoin by 2025 remains to be seen, but it is certainly possible. Senator Cynthia Lummis has introduced a bill that would require the US to purchase 1 million Bitcoins within five years, and President-elect Trump also supports the idea. However, the probability of this prediction on Polymarket is less than 30%. But we think it doesn't matter.
The fact that the United States is actively considering establishing a strategic Bitcoin reserve will set off an arms race around the world for governments to buy Bitcoin. We have already seen lawmakers from Poland to Brazil introduce bills aimed at promoting the establishment of strategic Bitcoin reserves in their countries.
According to BitcoinTreasuries.net, nine countries currently hold Bitcoin (led by the United States). We expect this number to double by 2025.
Coinbase to join S&P 500, MicroStrategy to join Nasdaq-100
The average American investor has no exposure to cryptocurrencies. Cryptocurrencies are a new asset class that many investors either don’t understand or simply choose to ignore. Yet, almost every investor owns a fund that tracks the S&P 500 or the Nasdaq 100. Many investors hold both.
However, the largest publicly traded cryptocurrency companies, Coinbase and MicroStrategy, are not tracked by these indices to date. We expect this to change as early as this month, when the next major reorganization of the two indices takes place, and this could have a big impact.
Consider this: $10 trillion in assets track the S&P 500 directly, and another $6 trillion is “benchmarked” to the index. If Coinbase joins the index, we expect funds to buy about $15 billion of Coinbase stock. And if funds benchmarked to the index also include Coinbase, stock purchases would increase by another $9 billion.
Given the relative size of funds tracking the Nasdaq 100, the impact on MicroStrategy is expected to be smaller, but still significant.
U.S. Department of Labor to Ease Guidance on Cryptocurrency in 401(k) Plans
In March 2022, the U.S. Department of Labor issued guidance “reminding 401(k) plan fiduciaries of the significant risks of adding cryptocurrency investment options to their plans.” The DOL even said it would “launch a program of investigations to protect plan participants from these risks .” With the new administration in Washington, D.C., we expect the department to relax this guidance.
Why should you care? Because $80 billion of capital is at stake.
US 401(k) plans hold $8 trillion in assets. More money flows into these funds every week. If cryptocurrencies account for 1% of 401(k) assets, $80 billion of new capital will enter the space and continue to flow in. If it reaches 3%, that's $240 billion!
If the United States passes stablecoin legislation, the market value of stablecoins will reach 400 billion US dollars
The stablecoin boom in 2025 will see stablecoin market cap reach or exceed $400 billion. The following four catalysts will drive growth:
Stablecoin legislation: For the new Washington policymakers who support cryptocurrencies, the passage of comprehensive stablecoin legislation is the most likely. At that time, some major questions such as who will regulate stablecoins? Appropriate reserve requirements will be answered, and large traditional banks such as JP Morgan are expected to enter this field.
Global Trade and Remittances: Stablecoins are already eating into the global payments and remittances market. We see stablecoin transactions reaching $8.3 trillion in 2024, second only to Visa’s $9.9 trillion in payments during the same period. Additionally, stablecoin giant Tether recently funded a $45 million oil transaction through its USDT, clearly demonstrating the potential of stablecoins to facilitate large-scale global trade. As digital dollars continue to disrupt these massive markets, the demand for stablecoins will continue to grow.
Integration of fintech giants: Payment giant Stripe spent $1.1 billion to acquire stablecoin platform Bridge in October, calling stablecoins "superconductors of financial services." PayPal launched its own stablecoin (PYUSD) in 2023, and Robinhood recently announced plans to work with some cryptocurrency companies to launch a global stablecoin network. As stablecoins penetrate popular fintech applications, we see a surge in the size of stablecoin assets under management and transaction volume.
Bull Market Growth: Finally, there is one more obvious catalyst, which is the continuation of the bull market. When the cryptocurrency economy expands, the scale of stablecoin asset management will also expand. We are optimistic about the cryptocurrency industry in 2025, so we are also optimistic about stablecoins.
By 2025, the market size of tokenized RWA will exceed $50 billion
Three years ago, the cryptocurrency industry’s “tokenized” real-world assets (RWAs) (such as private credit, U.S. Treasuries, commodities, and stocks) were less than $2 billion. Today, the market is worth $13.7 billion.
What is the reason for this massive growth? Why tokenize RWA, or represent real assets on the blockchain?
Simply put, tokenization is better. It provides instant settlement, at a fraction of the cost of traditional securitization, and 24/7/365 liquidity, while also bringing transparency and exposure to virtually every asset class.
This is why Larry Fink, CEO of BlackRock, went from being a Bitcoin skeptic to being the biggest advocate of tokenization. He said, “The next generation of the market will be the tokenization of securities.” Remember, this is coming from the leader of the world’s largest asset management company.
We agree. In our view, Wall Street is just beginning to realize this, which means that big institutional money will soon be pouring into tokenized RWAs.
How big is it? We believe that the tokenized RWA market will reach $50 billion in 2025 and has the potential to grow exponentially. Of course, we are not the only one who is optimistic. Venture capital firm ParaFi recently predicted that the tokenized RWA market will grow to $2 trillion by 2030, while the Global Financial Markets Association predicts that it will reach $16 trillion.
In 2029, Bitcoin will surpass the gold market and the price will exceed $1 million
When making predictions, people tend to look one year ahead. But why should we? As long-term cryptocurrency investors, we like to look further ahead.
We believe Bitcoin will surpass the gold market by 2029. At gold’s current market cap, this would mean Bitcoin will rise to over $1 million per coin.
As for why 2029? Historically, Bitcoin has fluctuated in four-year cycles. While there is no guarantee that this will continue, 2029 will mark the apex of the next cycle (and the 20th anniversary of Bitcoin). It would be quite an achievement to surpass gold within 20 years of Bitcoin's birth, but we think Bitcoin can do it. (Note: If the United States announces the purchase of 1 million Bitcoins as a strategic reserve, then we can reach the goal of $1 million per Bitcoin faster).
Appendix: Bitwise 2024 prediction results and ratings
Last November, the Bitwise Research team made 10 predictions for 2024 (plus one bonus prediction). Now, we’re happy to report that we were not bullish enough!
Bitcoin price will break through $80,000, a record high: A
Bitcoin spot ETF will be approved: A
Coinbase's revenue will double, beating Wall Street's revenue growth expectations by at least 10 times: A
The amount settled using stablecoins will exceed Visa: remains to be seen
JPMorgan Chase will tokenize a fund and launch it on the chain: F
Ethereum revenue will reach $5 billion: F
Taylor Swift to launch NFT: F
AI assistants will use cryptocurrency for online payments: A
More than $100 million will flow into the prediction market:
Ethereum's major upgrade will bring average transaction costs below $0.01: B
Additional prediction: By the end of 2024, 1 in 4 financial advisors will have crypto in their client accounts: To be seen
