The entire crypto market is riding high as we head into 2025. Token prices are heading skywards, a crypto-friendly President-elect has been chosen to take power in the US and institutional investment is heading through the roof.
More than 7.5% of the world population has adopted cryptocurrencies, according to a recent report by MatrixPort, with that figure expected to exceed 8% by 2025. Web3 DeFi platforms are making it easier than ever to download a crypto wallet and join the digital economy.
2025 is set to be a big year for the crypto market as a whole, along with the blockchain technology that underpins it. Ethereum and Solana blockchains, together with BSC and Polygon, are finding use cases in DeFi, healthcare, and supply chain management that can take the digital economy to an entirely new level.
There are several key drivers that could change the digital economy in the year ahead, including:
Institutional Investment and Adoption
BlackRock’s IBIT ETF has become the fastest-growing ETF in history, with a 38% increase in assets under management as of Nov. 10, 2024 and $41 billion in assets under management in just 11 months. There is a massive inflows trend that coincides with new BTC ETF’s and options launched as you can see from this Bitcoin ETF netflow trends chart by CryptoQuant.
In a recent interview with Benzinga, Binance CEO Richard Teng discussed crypto inflows from regulatory clarity and the launch of Bitcoin ETFs, “Earlier this year, we saw Bitcoin ETFs approved in the U.S. and globally, from Brazil to Hong Kong and Australia. The net inflow into Bitcoin ETFs has already surpassed that of gold ETFs within a year, demonstrating the immense pent-up demand.”
Teng continued, “This year, we've seen a significant uptick in institutional interest, with sovereign wealth funds and pension funds beginning to allocate Bitcoin reserves. This is a major positive for the industry as we move into 2025.”
New investment products are bringing traditional investors to the crypto table. During the third quarter of 2024, prominent hedge funds such as Millennium Management, Capula Management, and Tudor Investment all publicly declared their support for crypto. Industry leaders see the continued integration of crypto into traditional financial markets as a growth engine for retail and institutional investors alike.
Regulatory bodies are starting to move towards crypto adoption as well. With a crypto-friendly President-elect taking charge at the White House, that institutional investment could go to another level. President-elect Trump has already promised to turn the USA into the crypto capital of the world, and analysts are predicting everything from a national Bitcoin reserve to a full-blown digital economy. Either one would have a profound positive effect on the current crypto market.
Companies themselves see the value in Bitcoin as a hedge against the US dollar, UK Pound, or Euro. Often, cash reserves are also backed up with tokenized reserves in a variety of cryptocurrencies to help weather any unexpected financial storm like runaway inflation or a devaluation of the dollar or Euro.
Blockchain Technology Marches Forward
The blockchain technology that underpins the crypto tokens has taken on a life of its own. Now, blockchain technology is the foundation for everything from supply chain management and healthcare to full financial services for the world’s poor.
Even traditional banking institutions and government voting systems are hitting the blockchain. Ethereum, Solana, BSC, Polygon, and more have helped to reshape Web3 and provide the infrastructure for dApps for DeFi, corporate logistics, and entertainment.
Ethereum is the bedrock of Web3, but it needs to get faster and solve some congestion issues before it can build the world. Right now, the time, variable fees, and energy consumption of Ethereum are real concerns.
Blockchain needs to work instantly and smoothly for mass adoption, and there are still issues that need fixing. The solutions to that and seamless cross-chain compatibility are the keys to mass adoption and an overall boost for the crypto market. So, look out for them in 2025.
Global Remittances and Financial Inclusion
The poor could yet turn into the greatest driver for cryptocurrencies. The unbanked and underbanked people in Third World nations and much closer to home are turning to crypto wallets to beat the high charges on global remittance services. Whereas before, they had to send cash via agents and accept massive fees, the world’s poorest can now share resources with a mobile phone and a crypto wallet.
Crypto was designed to cut out the middleman, and now there is a mass education program and specific platforms for people who want to borrow and lend money between family and friends. Celo is a mobile-first app aimed at small global remittances, which are as easy to send as an SMS. This simplification of the blockchain and crypto wallets opens up financial inclusion for the poor and a decentralized alternative to the current archaic banking system. From simple beginnings, sending food money to a relative, the poorest people on Earth have access to a system to save, lend, borrow, and invest.
Mass adoption on a global scale would change the face of the crypto market. And the poorest nations on Earth could yet be the driving force.
Increased Retail Adoption
The general public is getting more comfortable with crypto, and increased retail adoption will pour gasoline on the fire that is cryptocurrencies. That’s starting to happen with Microsoft, Tesla, Newegg, and now Ferrari and Shopify all accepting crypto as payment.
In the United States, you can pay your AMC Theater tickets and Sheetz grocery bills with crypto. In the UK, Shopify, Whole Foods, and Philipp Plein have opened the door to crypto payments.
Shops can easily integrate crypto payments, and an increasing number of them are, making Bitcoin and other mainstream tokens a viable way to pay for goods and an investment tool. Retail adoption will prove to be a major driver in 2025.
There are already crypto wallets linked to fiat currency debit cards like the Mastercard-Baanx-Ledger card, but this is still a halfway house that offramps crypto into fiat currency on an ad-hoc basis.
