Coinbase recently released a cryptocurrency market outlook, highlighting five areas to watch in 2025: 1. Stablecoins are just getting started. Stablecoins have become a killer app in cryptocurrency. As of December 1, 2024, the market capitalization of stablecoins grew by 48%, reaching an all-time high of $193 billion, with some analysts predicting that this figure could grow to $3 trillion within the next five years. Year-to-date, stablecoin trading volume has exceeded $27 trillion, a year-on-year increase of about three times. As stablecoins continue to soar, we will soon see that their first and primary use case will be global capital flows and commerce, rather than trading; 2. RWA tokenization is expected to see significant growth. According to data from rwa.xyz, as of December 1, tokenized RWAs have grown by over 60%, reaching $13.5 billion (excluding stablecoins), with significant progress expected to continue in 2024. Companies are experimenting with using tokenized assets as collateral for other financial transactions (such as those involving derivatives), which can simplify operations and reduce risks. Additionally, the RWA trend is expanding beyond assets like U.S. Treasury bonds and money market funds, gaining attention in private credit, commodities, corporate bonds, real estate, and insurance. We believe that the cumulative effects of sustained investment and technological improvements in 2025 should lay the groundwork for tokenization to become a cornerstone of the current crypto market cycle. Ultimately, we believe tokenization can simplify the entire investment portfolio construction and investment process by bringing it on-chain, although this may take a few more years; 3. Crypto ETFs have forever changed the supply-demand dynamics of cryptocurrencies. Following the record success of the U.S. spot Bitcoin ETF, the entire cryptocurrency market has changed. Almost every type of institutional investor (including endowments, pension funds, hedge funds, investment advisors, and family offices) now holds cryptocurrency ETFs. As institutional adoption continues to rise, we believe these holders will provide a long-term stable source of demand for the asset class. Looking ahead, the industry is focused on potential approval of spot ETFs for tokens like XRP, SOL, LTC, and HBAR in the U.S., but we believe meaningful institutional demand in the short term may be limited to a small subset of assets. We are more interested in what would happen if the SEC lifted the authorization for cash rather than physical creations and redemptions of ETF shares or allowed these products to be included in staking. These changes could enhance the potential returns for ETF holders, making ETFs more attractive to investors; 4. The revival of DeFi will propel it into a new era. DeFi faced some shocks in the last cycle, but a more sustainable and resilient ecosystem has emerged. Lending protocol TVL has reached an all-time high, while DEX trading volume share (relative to CEX) has peaked. Additionally, the shift in the U.S. regulatory landscape and the adoption of on-chain verification may help provide a clear path for traditional institutional investors to participate in DeFi. All of this suggests that DeFi may expand its influence in the near future; 5. Regulation will ultimately shift from headwinds to tailwinds. For years, the U.S. has suffered from regulatory ambiguity and inconsistency, but the situation has now reversed, as Congress is about to welcome the most crypto-friendly congress in history. Both parties in the House and Senate support cryptocurrencies, which means that U.S. regulation will bolster cryptocurrency performance in 2025. Cryptocurrencies have become an election issue, highlighting the urgency for policymakers to align with the evolving demands of this influential voting bloc, and we believe there is a strong likelihood of achieving new legislative milestones. Specifically, we expect the U.S. to establish a comprehensive regulatory framework, introduce sound stablecoin legislation, and end the era of enforcement-centric regulation. The U.S. is not the only jurisdiction preparing to make progress on regulation. Many G20 countries and major financial centers are developing rules to accommodate digital assets, which will help create a more favorable environment for innovation and growth. In summary, these initiatives could open the door for more individuals and institutions to confidently participate in the crypto economy. As the regulatory and technological landscape evolves, the crypto ecosystem is expected to grow significantly, as broader adoption will bring the industry closer to realizing its full potential. Breakthroughs and advancements in 2025 are likely to determine the long-term trajectory of the crypto industry for decades to come. It will be a pivotal year.

#RWA