5 Cryptocurrency Predictions for 2025

When the curtain falls in 2024, investors will applaud Wall Street. The rise of artificial intelligence (AI) and the euphoria of stock splits have helped raise the bar Dow Jones Industrial Average, Standard & Poor’s 500and Nasdaq Composite to multiple record closing levels.

However, Wall Street’s gains pale in comparison to the tremendous year it had Cryptocurrencies. As of this writing late in the evening of December 28, the total value of the entire cryptocurrency market has risen from $1.71 trillion to $3.32 trillion on a year-to-date basis. This 94% gain triples the return of the growth-focused Nasdaq Composite in 2024.

Bitcoin (Bitcoin 1.09%) Leading the charge, the world’s largest cryptocurrency by market cap has added up to $1 trillion in value, good for a 125% year-to-date rise. release Spot Bitcoin ETFs Exchange Traded Funds (ETFs) have played a major role in facilitating mainstream investment in the leading cryptocurrency in 2024.

In addition, Donald Trump wins in November He helped push Bitcoin to over $100,000 per token. Trump and soon-to-be Vice President J.D. Vance have a positive view of Bitcoin.

But the investment landscape is about looking forward. After another great year, here are five cryptocurrency predictions for 2025.

1. The cryptocurrency bear market will return

The first prediction is that it is unpopular: Bear market He will come back.

The stars have aligned perfectly for Bitcoin in 2024. The emergence of spot Bitcoin ETFs has spurred much-needed buying, and the April 2024 halving event has reduced the pace of new Bitcoin mining. However, the biggest catalyst of all for the world’s largest cryptocurrency may be… Accurate strategy‘s (MSTR -4.40%) Ascension as the world’s first “Bitcoin Treasury Company”.

Michael Saylor, CEO of MicroStrategy, has been a long-time supporter of the world’s top cryptocurrency and oversaw the purchase of 442,262 Bitcoin at an average cost of US$62,257, as of December 23. Saylor funded MicroStrategy’s big bet on Bitcoin by selling and issuing convertible debt. Shares of his company’s stock. He is currently seeking approval Increased the number of outstanding shares of his company by 10 billion to 10.33 billion shares.

While this leveraged bet on Bitcoin has led some investors to believe in the mythical “infinite financial imbalance,” we Leveraged investment scenarios have repeatedly failed on Wall Street. To make matters worse, MicroStrategy will likely lack the operating cash flow from its AI enterprise analytics software segment to even cover its debt servicing costs.

Without MicroStrategy’s continued buying, which seems likely to fade sometime in the new year, Bitcoin’s upward momentum will diminish. With major catalysts now in the rearview mirror and Bitcoin’s history of stunning corrections, a bear market decline of 20% or more is expected.

2. Ethereum will easily outperform Bitcoin

Secondly, don’t be surprised to see the second largest cryptocurrency by market cap, Ethereum (Ethereum -0.41%)significantly outperforms Bitcoin in the new year. For some context, Ethereum’s 48% year-to-date gain lags significantly behind Bitcoin’s 125% increase.

One tangible catalyst for Ethereum is the approval of more than six of them Spot Ethereum ETFs In May 2024 by the Securities and Exchange Commission (SEC). Creating a path for everyday investors to buy Ethereum without having to buy it on an obscure cryptocurrency exchange could provide the same leverage for the No. 2 cryptocurrency that we saw from Bitcoin in 2024.

Moreover, history is on Ethereum’s side. The last time we saw a gap this wide in total cryptocurrency market cap dominance between Bitcoin and Ethereum was in early 2021. Between June 2020 and June 2021, Ethereum more than tripled Bitcoin’s return. Historically, when Ethereum’s dominance declines, compared to Bitcoin, investors flock to the #2 cryptocurrency.

3. Popular dog-themed coins will lose half their value

While altcoins are expected to become a hot commodity in 2025 following the Bitcoin surge, they are already very popular. Meme symbols Dogecoin (Doug 1.19%) and Shiba Inu (Gray 0.89%) It will likely lose 50% of its value.

Dogecoin skyrocketed after Trump’s victory in November. This gathering is related to Trump’s appointment Tesla CEO Elon Musk Head of Department of Government Efficiency (DOGE) With Vivek Ramaswamy. Musk has admitted to owning Dogecoin and has previously offered to help developers improve its network. His appointment to head DOGE for the Trump administration was seen as a positive for sentiment-driven Dogecoin.

However, the story is always the same with Dogecoin and Shiba Inu: they made a lot of noise on social media but It has almost no real-world use and offers little in the way of differentiation From a long list of other cryptocurrency projects.

History has shown time and time again that when Bitcoin weakens, coins like Dogecoin and Shiba Inu take a harder hit. With no real catalysts or competitive advantages for either token, we expect both to be around 2025.

4. A number of new spot cryptocurrency ETFs will be approved

New Year’s can too Paving the way for the inclusion of spot ETFs beyond Bitcoin and Ethereum On the major stock exchanges on Wall Street.

SEC Chairman Gary Gensler, who has been a vocal critic of cryptocurrencies, has already announced plans to step down on Trump’s inauguration day (January 20, 2025). With the incoming administration favoring clarity on the laws governing cryptocurrencies, the path to listing crypto ETFs should be much easier in 2025 (and beyond).

Logical candidates for spot ETFs listed next are the largest cryptocurrencies after Bitcoin and Ethereum, such as Solana (Sol 0.51%), XRP (XRP 1.21%)And maybe even Cardano. Issuers have already filed for spot ETFs with the SEC for Solana and XRP.

But one thing to note about cryptocurrency legislation is that it’s not exactly a priority for the incoming administration. While simplifying the cryptocurrency landscape is bound to be on the agenda at some point, it will likely take a back seat in tax, trade, and immigration policies until the latter half of 2025.

5. Strategic reserve of Bitcoin in the United States wont It is established

Last but not least, There was a lot of commotion Surrounding President-elect Trump’s desire to create a “Bitcoin Strategic Reserve.” Although the United States already owns up to 200,000 bitcoins (as of November 2024), which have been seized from criminals, Trump’s plan would entail holding on to existing bitcoins (i.e., stopping selling them), as well as intentionally buying more.

“We’re going to do something great in crypto because we don’t want China or anyone else — not just China, but others adopting it — we want to be the head,” the president-elect said. Interview with CNBC just a few weeks ago.

However, creating a strategic bitcoin reserve in the United States will be a daunting task in 2025.

For example, funding the Strategic Reserve would likely require congressional approval. Even with Republicans control both chambers of CongressSupport for cryptocurrencies is not widespread among the Republican Party. Getting a majority of elected officials to agree to buy Bitcoin amid a large federal deficit does not seem possible.

Additionally, Federal Reserve Chairman Jerome Powell recently indicated that the central bank has no intention of holding Bitcoin, putting another problem in Trump’s proposal to create a Bitcoin reserve.

To round things off, analysts at Barclays We believe that financing a strategic reserve for Bitcoin will require the issuance of new treasury debt, per Reuters. This is bound to face significant opposition given America’s already ballooning national debt.