fromcrypto – Cryptocurrencies are poised to proceed their momentum after practically doubling their complete market capitalization in 2024, however wider adoption in 2025 will rely on how successfully the Trump administration can set up a clearer regulatory path for cryptocurrency prosperity.
“This yr (2024) has been a powerful one for cryptocurrencies, seeing greater than 90% progress in complete market capitalization,” Citi Analysis stated in its 2025 outlook. “Markets are bullish on the regulatory entrance given the views and employees of the incoming US administration cryptocurrency pleasant.”
Dramatic positive factors in 2024 had been fueled by the launch of spot and ETF funds, which collectively pulled in web inflows of $36.4 billion and $2.4 billion by way of December 19, respectively. Citi stated these flows have been essentially the most important driver of cryptocurrency income, anticipating the pattern to proceed into 2025.
Nevertheless, the prospects are removed from clear. Whereas the incoming administration beneath President-elect Donald Trump is extensively seen as pro-crypto, the potential for significant regulatory reform stays unsure.
“Trump's assist from a regulatory lens isn't essentially a deregulation story … some market contributors imagine the incoming administration could search to interchange extra regulators it believes have crypto-skeptic information and assist these whose views align higher with by his administration,” Citi stated.
Trump signaled a willingness to again away from the present administration's “anti-crypto campaign,” which he criticized for stifling innovation. Its proposed insurance policies embrace a shift away from enforcement-focused regulation to a extra legislative-based strategy that goals to scale back uncertainty for each buyers and issuers.
In an indication that the winds of change are transferring, Trump nominated crypto-friendly Paul Atkins to interchange SEC chief Gary Gensler, who is anticipated to step down from his function on January 20.
The regulatory surroundings is influencing cryptocurrency adoption, Citi stated, pointing to a number of different metrics, together with buying and selling/flows, on-chain metrics and complete worth locked in decentralized finance as key measures to look at.
The regulatory framework will likely be an necessary determinant of its adoption,” Citi stated, pointing to the prospect of elevated regulatory transparency bringing extra cryptocurrencies into the investor highlight.
“One of many implications of the potential change within the regulatory regime is that cryptocurrencies can imply way more than simply bitcoin,” Citi added.
Nevertheless, Citi warns that macroeconomic elements may erode this optimistic narrative as political uncertainty threatens to set off volatility in danger property.
“ Macro (BCBA:) could flip much less favorable for the rest of the yr (2025) resulting from elevated US coverage uncertainty and anticipated fairness volatility,” he stated.
