Author: Galaxy Research
Compiled by: Deep Tide TechFlow
2025 Cryptocurrency Predictions from @glxyresearch, covering price trends for Bitcoin and Ethereum, the ETH/BTC ratio, Dogecoin and D.O.G.E., stablecoins, DeFi, L2 solutions, policies, venture capital, and more. Here is what we just shared with @galaxyhq clients and partners:
The price of Bitcoin is expected to exceed $150,000 in the first half of 2025 and reach or exceed $185,000 in the fourth quarter.
Institutional, corporate, and national-level adoption will be the main driving force behind Bitcoin's price hitting new highs in 2025. Since its inception, Bitcoin's appreciation rate has consistently outpaced all other asset classes, especially the S&P 500 and gold, a trend that will continue in 2025. Bitcoin's market capitalization is expected to reach 20% of the total market capitalization of gold.
- @intangiblecoins
The total assets under management (AUM) of U.S. spot Bitcoin ETPs will exceed $250 billion in 2025.
In 2024, Bitcoin ETP products attracted over $36 billion in net inflows, becoming the best-performing ETP product lineup in history. Many global top hedge funds (such as Millennium, Tudor, and D.E. Shaw) have chosen Bitcoin ETPs, and according to 13F filings, the Wisconsin Investment Board (SWIB) also holds relevant positions. In just one year, the AUM of Bitcoin ETPs is only $24 billion (19%) away from surpassing the total size of all U.S. physical gold ETPs.
- @intangiblecoins
Bitcoin will again be one of the best-performing assets globally on a risk-adjusted basis in 2025.
Bitcoin's exceptional performance is not only attributed to record fund inflows but is also driven by price increases in 2024. Based on risk-adjusted return metrics, Bitcoin ranks third among global assets, behind only a few top assets. MicroStrategy, a company that calls itself a 'Bitcoin treasury', has particularly outstanding Sharpe ratio performance.
- @intangiblecoins
At least one top wealth management platform is expected to recommend clients allocate 2% or more of their portfolio to Bitcoin in 2025.
Due to factors such as familiarity periods, internal education, and compliance requirements, no major wealth management company currently includes Bitcoin in its investment recommendations. However, this situation is expected to change in 2025, further driving inflows of funds and growth of AUM in U.S. spot Bitcoin ETPs.
- @intangiblecoins
Five Nasdaq 100 companies and five countries will announce the inclusion of Bitcoin in their balance sheets or sovereign wealth funds.
Whether for strategic needs, portfolio diversification, or trade settlement considerations, Bitcoin will gradually enter the balance sheets of major corporations and national-level investors. In particular, non-aligned countries, countries with large sovereign wealth funds, and even countries in opposition to the U.S. will actively acquire Bitcoin through mining or other means.
- JW
Bitcoin developers will reach consensus on the next protocol upgrade in 2025.
Since 2020, Bitcoin core developers have been discussing how to enhance transaction programmability by introducing opcodes. As of the end of 2024, the most supported opcodes include OP_CTV (BIP 119) and OP_CAT (BIP 347). Although soft fork consensus in Bitcoin is extremely rare and time-consuming, it is expected to reach consensus in 2025, jointly promoting the introduction of OP_CTV, OP_CSFS, and/or OP_CAT. However, this upgrade will not activate in 2025.
- @hiroto_btc
More than half of the market cap of the top 20 publicly listed Bitcoin mining companies is expected to announce transformation or establish partnerships with hyperscalers, AI, or high-performance computing (HPC) companies in 2025.
With the surge in computing demand from AI, Bitcoin miners will gradually retrofit existing facilities, build new infrastructure, or collaborate with HPC companies to deploy mining farms. This trend will limit the annual growth rate of global hash power, which is expected to reach 1.1 zetahash by the end of 2025.
These predictions outline a possible blueprint for the cryptocurrency market in 2025, filled with opportunities as well as challenges.
- @intangiblecoins, @SimritDhinsa
The Bitcoin DeFi market size is expected to double by 2025.
As of the end of 2024, over $11 billion worth of wrapped Bitcoin (like WBTC) has been locked in DeFi smart contracts. Of this, over 70% of locked Bitcoin is used as collateral for lending protocols. Additionally, around $4.2 billion is deposited through the largest Bitcoin staking protocol, Babylon. The current total valuation of the Bitcoin DeFi market is $15.4 billion, and significant growth is expected by 2025. This growth will come from multiple directions, including existing DeFi protocols on Ethereum L1/L2, new DeFi protocols on Bitcoin L2, and staking layers like Babylon. Key drivers of the market doubling include: a 150% year-on-year increase in cbBTC supply, a 30% increase in WBTC supply, a TVL of $8 billion for Babylon, and new Bitcoin L2 networks achieving $4 billion in DeFi TVL.
- @hiroto_btc
Ethereum's price is expected to surpass $5,500 in 2025.
As regulatory pressure on DeFi and staking eases, Ethereum will reach new historical highs in 2025. Collaboration between DeFi and traditional finance may unfold in a new regulatory sandbox environment, allowing traditional capital markets to explore public blockchains more deeply, with Ethereum and its ecosystem being the primary beneficiaries. Meanwhile, enterprises will gradually experiment with Layer 2 networks based on Ethereum technology. Some public blockchain-based games may find product-market fit, while NFT trading volume will also see a significant rebound.
The Ethereum staking rate is expected to exceed 50% in 2025.
The U.S. government may provide clearer regulatory guidance for the crypto industry, such as allowing spot ETH ETPs to stake a portion of their held ETH. Demand for staking will continue to grow next year, and by the end of 2025, the amount of staked Ethereum may exceed half of its circulating supply. This will prompt Ethereum developers to more seriously consider adjusting the network's monetary policy. Meanwhile, the rising staking rate will further drive demand for staking pools (like Lido and Coinbase) and re-staking protocols (like EigenLayer and Symbiotic).
- @christine_dkim
The ETH/BTC ratio is expected to fall below 0.03 in 2025 but will rebound to above 0.06 by the end of the year.
The ETH/BTC ratio is one of the most watched trading pairs in the crypto market. Since Ethereum completed its 'merge' upgrade and transitioned to proof of stake in 2022, this ratio has been declining. However, regulatory changes are expected to particularly support Ethereum and its application layer, especially DeFi, reigniting investor interest in the world's second-largest blockchain.
- @intangiblecoins
L2's economic activity is expected to surpass that of other Alt L1 networks in 2025.
The fee share of L2 networks (currently in the mid-single digits) is expected to exceed 25% of the total fees of Alt L1 by the end of the year. As L2 networks approach their scaling limits at the beginning of the year, transaction fees may spike frequently, forcing networks to adjust gas limits and blob market parameters. However, technological solutions (such as Reth clients or alternative virtual machines like Arbitrum Stylus) will improve the efficiency of Rollups, keeping transaction costs within acceptable ranges.
- @FullNodeChuck
DeFi may enter a 'dividend era' in 2025, with on-chain applications expected to distribute at least $1 billion in value to users and token holders.
As DeFi regulation gradually clarifies, the value-sharing mechanisms of on-chain applications will be expanded. Projects like Ethena and Aave have begun discussing or implementing fee mechanisms through proposals that will allow users to directly benefit. Other protocols that previously opposed such mechanisms (like Uniswap and Lido) may reassess their positions due to regulatory clarity and competitive pressure. A more relaxed regulatory environment and increased on-chain activity indicate that protocols may conduct buybacks and direct income distributions more frequently.
- @ZackPokorny_
On-chain governance may see a resurgence in 2025, with applications attempting to adopt futurist governance models.
The total number of active voters in on-chain governance is expected to grow by at least 20%. On-chain governance has long faced two main issues: low participation rates and a lack of diversity in voting (most proposals pass with overwhelming majorities). However, with the easing of regulatory pressure and the success of Polymarket, both issues are expected to improve in 2025. At that time, more applications will shift from traditional governance models to futurist governance models, enhancing voting diversity and optimizing governance outcomes.
- @ZackPokorny_
- @FullNodeChuck
- @hiroto_btc
The world's four major custodians are expected to start offering digital asset custody services in 2025.
The Office of the Comptroller of the Currency (OCC) plans to provide a policy pathway for national banks to custody digital assets, which will drive the world's four major custodians—BNY Mellon, State Street, JPMorgan Chase, and Citibank—to launch digital asset custody services in 2025.
- @intangiblecoins
At least ten stablecoins supported by traditional finance are expected to launch in 2025.
From 2021 to 2024, the stablecoin market has grown rapidly, with currently 202 projects, some of which have established close ties to traditional finance (TradFi). Not only is the number of projects increasing, but their trading volume is also growing much faster than traditional payment networks, such as ACH (annual growth of about 1%) and Visa (annual growth of about 7%). In 2024, stablecoins are gradually integrating into the global financial system. For example, the licensed FV bank in the U.S. has supported direct stablecoin deposits, while Japan's three major banks have partnered with SWIFT through the Pax project to achieve faster and lower-cost cross-border fund transfers. Payment platforms are also actively building stablecoin infrastructure, such as PayPal launching the PYUSD stablecoin on the Solana blockchain, and Stripe acquiring Bridge to natively support stablecoins. Moreover, asset management giants like VanEck and BlackRock are also collaborating with stablecoin projects to actively lay out this field. As the regulatory environment becomes clearer, traditional financial institutions will further integrate stablecoins into their businesses to seize market opportunities and lay the groundwork for future development.
- JW
The total supply of stablecoins is expected to double by 2025, exceeding $400 billion.
The application of stablecoins in payments, remittances, and settlements is rapidly growing. As regulations for existing stablecoin issuers and traditional banks, trusts, and custodians become clearer, the supply of stablecoins is expected to experience explosive growth in 2025.
- @intangiblecoins
Tether's market share is expected to fall below 50% in 2025, challenged by yield-bearing stablecoins.
Tether uses the income from its USDT reserves to fund its portfolio, but other stablecoin issuers and protocols attract users through revenue sharing, which will cause existing users to shift from Tether to yield-bearing solutions. For example, USDC rewards paid on Coinbase's exchange and wallet balances will become a powerful attraction, not only boosting the entire DeFi sector but also potentially being integrated by fintech companies to enable new business models. In response, Tether may start distributing the income from collateralized assets to USDT holders, and may even launch competitive yield-bearing products, such as a market-neutral stablecoin.
- @FullNodeChuck
Total capital investment in crypto venture capital (VC) is expected to exceed $150 billion in 2025, with a year-on-year growth rate of over 50%.
As interest rates decline and the regulatory environment for crypto improves, investor interest in venture capital will significantly increase, driving a surge in venture capital activity. Crypto venture funding has historically lagged behind broader crypto market trends, but a 'catch-up' phenomenon may occur in the next four quarters.
- @hiroto_btc, @intangiblecoins
Stablecoin legislation is expected to pass both houses of the U.S. Congress and be signed by President Trump in 2025, but market structure legislation may not pass.
Legislation to establish a registration and regulatory framework for stablecoin issuers is expected to pass with bipartisan support and be signed into law by the end of 2025. The growth of USD-backed stablecoin supply will consolidate the dollar's global dominance and further promote the development of the U.S. Treasury market. Coupled with the easing of restrictions on banks, trusts, and custodians, the adoption of stablecoins is expected to grow significantly. However, market structure legislation (such as establishing registration, disclosure, and regulatory requirements for token issuers and exchanges, or adjusting existing rules of the SEC and CFTC to cover these entities) is complex and is not expected to be completed and signed into law by 2025.
- @intangiblecoins
The U.S. government is not expected to purchase Bitcoin in 2025 but may utilize existing reserves to build inventory and foster discussions on expanding Bitcoin reserve policies among government departments and agencies.
- @intangiblecoins
The U.S. Securities and Exchange Commission (SEC) is expected to investigate Prometheum, the first 'special purpose broker'.
Prometheum, a previously unknown broker, suddenly acquired a new brokerage license in 2023 and publicly supported SEC Chair Gensler's views on the securities status of digital assets, raising widespread questions. Its CEO faced questioning from Republican lawmakers during congressional hearings, and according to FINRA records, Prometheum's alternative trading system (ATS) has not conducted any trades. Republicans have called for the DOJ and SEC to investigate whether Prometheum has 'ties to China,' while irregularities have been pointed out in its fundraising and financial reporting. Whether an investigation occurs or not, the 'special purpose broker' license is expected to be abolished in 2025.
- @intangiblecoins
Dogecoin may finally surpass $1 in 2025, with a market capitalization expected to reach $100 billion.
As the world's most well-known and longest-standing memecoin, Dogecoin's market performance is expected to reach new heights in 2025. However, its market cap peak may be surpassed by the budget cuts identified and successfully implemented by the 'Department of Government Efficiency' in 2025.
- @intangiblecoins
Statement:
Members of Galaxy and/or Galaxy Research hold Bitcoin, Ethereum, and Dogecoin. Many predictions have not been shared, and more predictions can be made. These predictions are not investment advice and do not constitute an offer, recommendation, or invitation to purchase or sell any securities (including Galaxy securities). These predictions only represent the views of the Galaxy Research team as of December 2024 and do not necessarily reflect the positions of Galaxy or any of its affiliates. These predictions will not be updated.
