Forbes: Cryptocurrency will be redefined in 2025

Original title: "7 Reasons Why 2025 Could Redefine Crypto"

ByNina Bambysheva , Forbes

Compiled by: Luffy, Foresight News

Cryptocurrency winter? it's over. Crypto empire in decline and courtroom drama? It's all a thing of the past. survivor? It has been tested in actual combat, and its eyes are as bright as a new gold rush.

After years of conflict with the U.S. Securities and Exchange Commission (SEC), Bitcoin and Ethereum exchange-traded funds (ETFs) have finally arrived. According to cryptocurrency research firm K33 Research, as of December 16, the size of assets held by U.S. Bitcoin ETFs reached $129 billion, surpassing the $125 billion held by gold ETFs.

The market excitement after the US election, coupled with Donald Trump's promise to make the United States the "cryptocurrency capital of the world" and establish a strategic Bitcoin reserve, caused the price of Bitcoin to once exceed US$100,000.

Solana is seeing growth opportunities, fueled by memecoin hype and the rise of new narratives like DePIN. DePIN is a network that leverages blockchain technology to decentralize control and ownership of physical infrastructure. Platforms such as Polymarket, where users can bet on the outcome of the US presidential election, and the battle royale game Off The Grid have found mainstream success. A new wave of “degens” are betting on tokens like fartcoin and dogwifhat, both of which currently have market caps in excess of $1 billion.

Rob Hadick, general partner at San Francisco-based cryptocurrency venture capital firm Dragonfly, said: “This year, cryptocurrencies have entered mainstream consciousness in a way not seen in 2021, and now it is a sustainable long-term asset class that will have a voice. "If you just look at the impact of cryptocurrencies on elections, whether it's crypto political donations or promoting it among legislators and presidential candidates, it's unprecedented, it's the legalization of cryptocurrencies. A big improvement."

Donald Trump attends Bitcoin Conference 2024 in Nashville, Tennessee. Photo credit: The Washington Post

As Trump and a group of pro-cryptocurrency officials prepare to take office, what industry insiders call the "golden age of cryptocurrency" has arrived. Here are the trends brewing:

All-time highs and U.S. Bitcoin reserves

The art of boldly predicting prices is back in vogue. Crypto asset management company Bitwise predicts that if the United States establishes a strategic reserve similar to oil or gold, the price of Bitcoin will reach $200,000 or even $500,000. The logic is: the official U.S. Bitcoin reserve will trigger global FOMO.

Trump proposed at the Nashville Bitcoin Conference in July that he use 200,000 bitcoins (valued at $21 billion) confiscated from criminals to start the reserve. But the legal path is unclear. Will congressional approval be required, or can the executive branch act unilaterally? Pro-cryptocurrency Senator Cynthia Lummis proposed a reserve program run by the Treasury Department in July. Skeptics believe that Bitcoin’s volatility could undermine financial stability. Trump has remained silent on whether the U.S. will buy more Bitcoin through the open market, adding another layer of confusion.

Cryptocurrency regulatory reset: A friendly Washington

The new administration is expected to be the most crypto-friendly yet. Some of the key government appointments regarding cryptocurrencies include:

• U.S. Securities and Exchange Commission (SEC): Former SEC commissioner and cryptocurrency supporter Paul Atkins is set to replace cryptocurrency nemesis Gary Gensler, who was known for his litigation and enforcement against crypto companies during his tenure.
• Commodity Futures Trading Commission (CFTC): Andreessen Horowitz policy director and former CFTC commissioner Brian Quintenz is the favorite to lead the agency.
• Treasury Department: Hedge fund billionaire and Bitcoin advocate Scott Bessent is Trump’s pick for Treasury Secretary.
• Department of Commerce: Howard Lutnik, CEO of Cantor Fitzgerald (the primary custodian of Tether’s USDT reserves), will lead this department.
• Artificial Intelligence and Cryptocurrency Czar: David Sacks, a longtime venture capitalist who also worked with Elon Musk at PayPal, will oversee policy in two key areas of Trump's strategy to make the country more competitive.
• House Financial Services Committee: Arkansas Republican Rep. French Hill, who has joined outgoing committee chairman Patrick McHenry in advocating for crypto-industry-friendly legislation, plans to prioritize crypto market structure bills within the first 100 days and investigate so-called “killing points.” "Choke Point 2.0", which many believe unfairly targets the crypto industry through de-banking practices.

“This is a real opportunity to create good policy for the industry,” said Kristin Smith, CEO of the Washington, D.C.-based Blockchain Association, which represents more than 100 cryptocurrency companies. “The White House has said this is a priority. I think we’re going to see a significant shift in efforts across government working together, legislation to drive market structures and stablecoins, and a lot of innovation coming back to the United States,” she added.

New Crypto IPOs and Venture Capital Entry

The process of cryptocurrency IPOs is heating up. Bitwise lists five companies that may go public next year:

• Circle: The issuer of USDC, the second largest stablecoin, secretly applied for an IPO in January this year.
• Figure: The company, known for its blockchain-based financial services such as mortgages, personal loans and asset tokenization, has been exploring a listing since last year.
• Kraken: The U.S.-based cryptocurrency exchange’s IPO plans date back to 2021.
• Anchorage Digital: Status as a federally chartered bank could pave the way for its listing.
• Chainalysis: Leader in blockchain compliance and intelligence services, expected to go public.

In addition, Dragonfly’s Hadick said: “I expect the LP (limited partners of crypto venture capital institutions) market will get better and they will want to put more money into cryptocurrencies. Many traditional Web2 crossover funds will return to the Web3 space "We are already seeing this trend in certain areas, such as stablecoins and payments," he said, adding that venture capital deals tend to lag public market price increases by a quarter or two.

Crypto-related companies included in major stock indexes

MicroStrategy's stock price is up more than 400% this year. The company is now a component of the Nasdaq 100 Index due to new accounting rules that allow companies to reflect their Bitcoin investments as market capitalization in financial statements, and analysts predict that the company will be included in the S&P 500 Index next. The change could put MicroStrategy in index-tracking funds, adding it to the portfolios of countless U.S. investors. MicroStrategy co-founder and executive chairman Michael Saylor's "Bitcoin Treasury" strategy (selling bonds and stocks to hoard Bitcoin) has propelled his $86 billion business into the top 100 companies in the S&P 500. Analysts said Coinbase, which is up 70% this year, may also join the coveted index.

Stablecoins surge

As the United States is about to introduce much-anticipated stablecoin legislation, the stablecoin industry is expected to experience explosive growth, with the market value expected to double to $400 billion. According to Bitwise, stablecoin transaction volume will reach $8.3 trillion in 2024, almost equal to Visa’s $9.9 trillion payment volume.

Tether and Circle still dominate. However, Hadick warned that their growth could soon stall if they continue to operate like asset managers rather than payments companies.

Stripe spent $1.1 billion in October to acquire stablecoin platform Bridge, which sent a message: stablecoins may become the cornerstone of financial technology. Stripe calls it the “superconductor of financial services” and touts its unparalleled speed, low cost and global reach. Robinhood is following suit and exploring the creation of a global stablecoin network.

At the same time, the next generation “stablecoin 2.0” model is quietly emerging. "There are a lot of new stablecoin models that are giving back revenue to token holders or applications that are actually engaging users," explained Ceteris, director of research at New York-based cryptocurrency analytics firm Delphi Digital. "I think these models are disruptive."

Tokenization of traditional assets accelerates

BlackRock CEO Larry Fink has been touting tokenization for years. Everything from real estate to art may soon have tokens. The biggest benefits of tokenization are: instant settlement, lower cost than traditional securitization, round-the-clock liquidity and transparency.

Three years ago, the cryptocurrency industry tokenized just $2 billion in real-world assets (RWA), including private credit, U.S. debt, commodities, and equities. Today, that number is close to $14 billion. Venture capital firm ParaFi predicts that the tokenized RWA market could soar to $2 trillion by 2030, heralding a major shift in asset ownership and trading.

New applications, better infrastructure

The buzzword at the end of 2024 is AI agents. Get ready to witness the fusion of artificial intelligence and cryptocurrency that is closer to science fiction.

This trend is already taking shape. Take TruthTerminal, for example. This AI agent not only received $50,000 from Marc Andreessen, but also used X social media to become a millionaire. Its success stemmed from promoting a token based on a ridiculous meme from the early 2000s (the anonymous creator of the token transferred a large sum of money to TruthTerminal's wallet, which was managed by Andy Ayrey).

But analysts are cautious. Practical AI agents, such as those that attempt to perform complex transactions across blockchains on behalf of users, are few and in their early stages. “Agents are exciting because they are so novel,” Delphi’s Ceteris said. “But for better or worse, it’s probably the biggest bubble of this cycle.”

Although the blockchain industry remains fragmented and most decentralized applications have yet to become mainstream, work continues to build a robust infrastructure. Ceteris explained: “Solana has established a trend for the high-throughput blockchain era. Almost every new chain is launched under this trend, so a large amount of cheap block space will be created.”

Just like that, the cryptocurrency narrative shifts from survival to prosperity. This is just part of the surprises next year may bring. You can choose to pack your popcorn for this show or dig out your wallet for this opportunity. Caution is essential and the market will experience highs and lows. And this time, the stakes seem higher than ever.