forexcryptozone — Cryptocurrencies are poised to proceed their momentum after practically doubling whole market capitalization in 2024, however their broader adoption in 2025 will rely on how efficient the crypto-friendly Trump administration is -currencies, will have the ability to set up a clearer regulatory path for cryptocurrencies to thrive.
“This yr (2024) was a powerful yr for crypto, seeing a rise of over 90% in whole market capitalization,” famous Citi Analysis in its 2025 outlook. “Markets are optimistic on the regulatory entrance given the crypto-friendly views and personnel of the brand new US administration.”
The dramatic 2024 features have been fueled by the launch of spot and ETFs, which collectively attracted $36.4 billion and $2.4 billion in web inflows via Dec. 19, respectively. These flows have been a very powerful driver of cryptocurrency returns, Citi mentioned, anticipating this pattern to proceed into 2025.
However the prospects stay removed from easy. Though the brand new administration of President-elect Donald Trump is broadly seen as pro-crypto, the potential for significant regulatory reform stays unsure.
“The 'Trump nudge' from a regulatory perspective isn’t essentially a narrative of deregulation… Some market members consider the brand new administration could search to switch extra regulators it sees as having a observe file crypto-skeptics, and to advertise these whose views higher align with these of his administration,” Citi mentioned.
Trump had signaled a want to maneuver away from the present administration's “anti-crypto campaign,” which he criticized for stifling innovation. Its proposed insurance policies embody a shift from enforcement-oriented regulation to a extra legislative method, geared toward lowering uncertainty for each buyers and issuers.
In an indication that the winds of change are transferring, Trump nominated crypto-friendly Paul Atkins to switch SEC chief Gary Gensler, who is predicted to depart workplace on January 20.
The regulatory surroundings exerts affect on crypto adoption, Citi mentioned, highlighting a number of different metrics, together with exchanges/flows, on-chain metrics, and whole worth locked in decentralized finance, as key metrics to observe.
The regulatory framework might be an necessary determinant for adoption,” Citi mentioned, highlighting the prospect of elevated regulatory transparency bringing different cryptocurrencies into the investor highlight.
“One consequence of the potential change within the regulatory regime is that crypto may imply far more than simply Bitcoin,” Citi added.
Citi cautions, nevertheless, that macroeconomic components may disrupt this optimistic narrative, as political uncertainty threatens to set off volatility in threat property.
“ Macro (BCBA:) may change into much less favorable over the rest of the yr (2025) given elevated uncertainty in US politics and anticipated volatility in shares,” he mentioned.
