Galaxy Research 2025 Forecast: Bitcoin hits 185,000, Ethereum breaks through $5,500
Reprinted from chaincatcher
12/30/2024·4MAuthor: Galaxy Research
Compiled by: Deep Wave TechFlow
Cryptocurrency predictions for 2025 from @glxyresearch , covering Bitcoin and Ethereum price action, ETHBTC ratio, Dogecoin and DOGE, stablecoins, DeFi, L2 solutions, policy, venture capital and more. Here are the predictions we just shared with @galaxyhq customers and partners:
Bitcoin price is expected to exceed $150,000 in the first half of 2025
and reach or exceed $185,000 in the fourth quarter
Adoption at the institutional, corporate and national levels will be the main driving force for Bitcoin prices to reach new highs in 2025. Since its inception, Bitcoin has appreciated faster than all other asset classes, especially the S&P 500 and gold, and this trend will continue in 2025. Bitcoin’s market capitalization is expected to reach 20% of the total gold market capitalization.
The total assets under management (AUM) of U.S. spot Bitcoin ETPs will
exceed $250 billion in 2025
In 2024, Bitcoin ETP products attracted more than $36 billion in net inflows, becoming the best-performing ETP product portfolio in history. Many of the world's top hedge funds (such as Millennium, Tudor and DE Shaw) have chosen Bitcoin ETPs, and according to 13F filings, the Wisconsin Investment Board (SWIB) also holds related positions. In just one year, the AUM of Bitcoin ETPs is only $24 billion (19%) away from surpassing the total size of all physical gold ETPs in the United States.
Bitcoin will once again be one of the best risk-adjusted performers
among global assets in 2025
Bitcoin’s exceptional performance is not only driven by record inflows but also by a price increase in 2024. Bitcoin ranks third among global assets based on risk-adjusted return metrics, behind only a handful of top assets. MicroStrategy, a company that calls itself the “Bitcoin Vault”, has a particularly outstanding Sharpe ratio.
At least one top wealth management platform will recommend clients
allocate 2% or more to Bitcoin in 2025
Due to factors such as investment familiarization periods, internal education and compliance requirements, no major wealth management firm currently officially includes a Bitcoin allocation in its investment advice portfolio. But this situation will change in 2025, which will further promote the capital inflow and AUM growth of US spot Bitcoin ETP.
Five Nasdaq 100 companies and five countries will announce the inclusion
of Bitcoin in their balance sheets or sovereign wealth funds
Whether for strategic needs, portfolio diversification, or trade settlement considerations, Bitcoin will gradually enter the balance sheets of major corporate and national investors. Especially non-aligned countries, countries with large sovereign wealth funds, and even countries that are in opposition to the United States, will actively acquire Bitcoin through mining or other means.
- J.W.
Bitcoin developers will reach consensus on next protocol upgrade in 2025
Since 2020, Bitcoin Core developers have been discussing how to enhance the programmability of transactions by introducing opcodes. As of late 2024, the most supported opcodes include OP_CTV (BIP 119) and OP_CAT (BIP 347). Although Bitcoin's soft fork consensus is extremely rare and time-consuming, it is expected that consensus will be reached in 2025 to jointly promote the introduction of OP_CTV, OP_CSFS and/or OP_CAT. However, this upgrade will not be activated in 2025.
More than half of the top 20 listed Bitcoin miners by market
capitalization will announce transformations or partnerships with hyperscalers, AI or high-performance computing (HPC) companies in 2025
As the computing demands of AI surge, Bitcoin miners will gradually transform existing facilities, build new infrastructure, or jointly deploy mining farms with HPC companies. This trend will limit the annual growth rate of global computing power, which is expected to reach 1.1 zetahash by the end of 2025.
These predictions outline a possible blueprint for the cryptocurrency market in 2025, which is full of opportunities and challenges.
- @intangiblecoins , @SimritDhinsa
Bitcoin DeFi market size is expected to double in 2025
As of the end of 2024, more than $11 billion in wrapped Bitcoin (such as WBTC) has been locked in DeFi smart contracts. Of these, more than 70% of locked Bitcoins are used as collateral for lending protocols. In addition, there are approximately $4.2 billion in deposits through Babylon, Bitcoin’s largest staking protocol. The current total valuation of the Bitcoin DeFi market is $15.4 billion and is expected to grow significantly by 2025. This growth will come from multiple directions, including existing DeFi protocols on Ethereum L1/L2, new DeFi protocols on Bitcoin L2, and staking layers like Babylon. Key drivers for the expected market doubling include: cbBTC supply increasing 150% year-on-year, WBTC supply increasing 30%, Babylon’s TVL reaching $8 billion, and the new Bitcoin L2 network achieving $4 billion DeFi TVL.
Ethereum price expected to top $5,500 in 2025
Ethereum will hit all-time highs in 2025 as regulatory pressure eases in the DeFi and staking space. The collaboration between DeFi and traditional finance is likely to unfold in a new regulatory sandbox environment, which will allow traditional capital markets to explore public blockchains more deeply, with Ethereum and its ecosystem being the main beneficiaries. At the same time, enterprises will gradually try Layer 2 networks based on Ethereum technology. Some games based on public blockchains may find product-market fit, and NFT transaction volume will also see a significant rebound.
Ethereum pledge rate is expected to exceed 50% in 2025
The U.S. government may provide clearer regulatory guidance for the crypto industry, such as allowing spot ETH ETPs to pledge part of their ETH holdings. Demand for staking will continue to grow over the next year, and by the end of 2025, the amount of Ethereum staked could exceed half of its circulating supply. This will prompt Ethereum developers to consider more seriously adjusting the network’s monetary policy. At the same time, rising staking rates will further drive demand and value inflows into staking pools such as Lido and Coinbase, as well as re-staking protocols such as EigenLayer and Symbiotic.
The ETH/BTC ratio will fall below 0.03 in 2025, but will rise back above
0.06 by the end of the year
The ETH/BTC ratio is one of the most talked about trading pairs in the crypto market. The ratio has continued to decline since Ethereum completed its “merged” upgrade in 2022 and moved to proof-of-stake. However, changes in the regulatory environment are expected to specifically support Ethereum and its application layer, especially DeFi, reigniting investor interest in the world's second-largest blockchain.
L2 economic activity will exceed other Alt L1 networks by 2025
The proportion of L2 network expenses (currently in the mid-single digits) is expected to exceed 25% of total Alt L1 expenses by the end of the year. As the L2 network approaches its scaling limit at the beginning of the year, transaction fees are likely to spike frequently, forcing the network to adjust gas limits and blob market parameters. However, technical solutions such as the Reth client or alternative virtual machines such as Arbitrum Stylus will increase the efficiency of Rollup and keep transaction costs within acceptable limits.
DeFi may enter the "dividend era" in 2025, with on-chain applications
expected to distribute at least US$1 billion in value to users and token holders
As DeFi regulation gradually becomes clearer, the value sharing mechanism applied on the chain will be expanded. Projects like Ethena and Aave have begun discussions or passed proposals to implement fee mechanisms that will directly benefit users. Other protocols that have previously opposed such mechanisms, such as Uniswap and Lido, may reassess their stance in the face of regulatory clarity and competitive pressure. A looser regulatory environment and increased on-chain activity suggest that protocols may conduct buybacks and direct revenue distributions with greater frequency.
On-chain governance may be revitalized in 2025, and applications will
try futuristic-based governance models
The total number of active voters for on-chain governance is expected to grow by at least 20%. On-chain governance has long faced two main problems: low participation rates and a lack of diversity in voting (most proposals pass overwhelmingly). However, both issues are expected to improve in 2025 as regulatory pressure eases and Polymarket succeeds. By then, more applications will shift from traditional governance models to futuristic governance models, thereby increasing voting diversity and optimizing governance effects.
The world’s four largest custodian banks are expected to start providing
digital asset custody services in 2025
The U.S. Office of the Comptroller of the Currency (OCC) plans to provide national banks with a policy path for custody of digital assets, which will push the world's four largest custodian banks - BNY Mellon, State Street, JPMorgan Chase and Citibank - to launch digital asset custody services in 2025 .
At least ten stablecoins backed by traditional finance are expected to
be launched in 2025
From 2021 to 2024, the stablecoin market will grow rapidly and there are currently 202 projects, some of which have established close ties with traditional finance (TradFi). Not only is the number of projects increasing, but its transaction volume is also growing much faster than traditional payment networks, such as ACH (annual growth of approximately 1%) and Visa (annual growth of approximately 7%). In 2024, stablecoins are gradually being integrated into the global financial system. For example, US-licensed FV Bank already supports direct stablecoin deposits, while three major Japanese banks have partnered with SWIFT through the Pax project to enable faster and lower-cost cross-border fund transfers. Payment platforms are also actively building stablecoin infrastructure. For example, PayPal launched the PYUSD stablecoin on the Solana blockchain, and Stripe acquired the Bridge company to natively support stablecoins. In addition, asset management giants such as VanEck and BlackRock are also cooperating with stablecoin projects and actively deploying in this field. As the regulatory environment gradually becomes clearer, traditional financial institutions will further integrate stablecoins into their businesses to seize market opportunities and lay the foundation for future development.
- J.W.
The total stablecoin supply is expected to double by 2025 to exceed $400
billion
The use of stablecoins in payments, remittances and settlements is growing rapidly. As the supervision of existing stablecoin issuers and traditional banks, trusts and custody institutions gradually becomes clearer, it is expected that the supply of stablecoins will usher in explosive growth in 2025.
Tether’s market share is expected to fall below 50% in 2025, challenged
by income-generating stablecoins
Tether uses earnings from its USDT reserves to fund investment portfolios, but other stablecoin issuers and protocols attract users through revenue sharing, which will divert existing users from Tether to yield-based solutions. For example, Coinbase's USDC rewards paid out on its exchange and wallet balances will become a powerful attraction, not only driving the DeFi space as a whole, but also potentially being integrated by fintech companies to enable new business models. In response, Tether may start distributing the proceeds from collateralized assets to USDT holders, and may even launch a competitive yield-based product, such as a market-neutral stablecoin.
Total crypto venture capital (VC) capital investment is expected to
exceed $150 billion in 2025, a year-on-year increase of more than 50%
As interest rates fall and the crypto regulatory environment improves, investor interest in venture capital will increase significantly, driving a surge in venture capital activity. Crypto venture capital funding has historically lagged broader crypto market trends, and the next four quarters may see a “catch-up” phenomenon.
- @hiroto_btc , @intangiblecoins
Stablecoin legislation is expected to pass both houses of Congress and
be signed by President Trump in 2025, but market structure legislation may not pass
Legislation establishing a registration and regulatory framework for stablecoin issuers is expected to pass with bipartisan support and be signed into law by the end of 2025. The growth in the supply of U.S. dollar-backed stablecoins will solidify the global dominance of the U.S. dollar and further promote the development of the U.S. Treasury market. Combined with the easing of restrictions on banks, trusts and custodians, stablecoin adoption is expected to grow significantly. However, market structure legislation (such as establishing registration, disclosure and regulatory requirements for token issuers and exchanges, or adjusting existing SEC and CFTC rules to cover these entities) is not expected to be completed in 2025 due to its high complexity and signed into law.
The U.S. government is not expected to purchase Bitcoin in 2025, but may
use existing reserves to build inventory and promote discussions among government departments and agencies to expand Bitcoin reserve policies.
U.S. Securities and Exchange Commission (SEC) expected to investigate
Prometheum, first-of-its-kind “special purpose broker”
Prometheum, a previously unknown broker, suddenly obtained a brand new broker license in 2023 and publicly supported SEC Chairman Gensler’s views on the status of digital asset securities, which triggered widespread doubts. Its CEO was grilled by Republican lawmakers at a congressional hearing, and Prometheum's Alternative Trading System (ATS) has not yet conducted any trades, according to FINRA records. Republicans have called on the Justice Department and SEC to investigate whether Prometheum has "ties to China," while some have pointed to irregularities in its fundraising and financial reporting. Regardless of whether an investigation is launched, the special purpose broker license is expected to be abolished in 2025.
Dogecoin may exceed $1 for the first time in 2025, with a market value
expected to reach $100 billion
As the world's most well-known and oldest memecoin, Dogecoin's market performance will reach a new peak in 2025. However, the peak of its market capitalization may be surpassed by the amount of budget cuts in the Government Efficiency Department. The department expects to identify and successfully implement cuts in 2025 that exceed Dogecoin’s peak market capitalization.
statement:
Members of Galaxy and/or Galaxy Research hold Bitcoin, Ethereum, and Dogecoin. Many predictions have not been shared, and many more could be made. These forecasts are not investment advice and do not constitute an offer, recommendation or solicitation to buy or sell any security, including Galaxy securities. These forecasts represent the views of the Galaxy Research team only as of December 2024 and do not necessarily reflect the position of Galaxy or any of its affiliates. These forecasts will not be updated.
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