Article reprinted from: BitPush.
Source: Forbes
Author: Leeor Shimron
Compiled by: Bitpush News
2024 is a historic turning point for Bitcoin and the broader cryptocurrency ecosystem. This year will see the debut of the first Bitcoin and Ethereum ETFs, marking true institutional adoption. Bitcoin will break the $100,000 milestone for the first time, while stablecoins continue to solidify the dollar's dominance globally. To further propel this momentum, the winning U.S. presidential candidate will make support for Bitcoin a central pillar of their campaign.
Overall, these milestones solidify 2024 as the year in which the cryptocurrency industry proves itself as an unstoppable force on the global stage. As the industry turns its focus to 2025, here are seven major predictions for significant events that may occur next year.
1) A major country in the G7 or BRICS will establish and announce a strategic Bitcoin reserve.
The Trump administration proposed establishing a strategic Bitcoin reserve (SBR) for the U.S., sparking significant debate and speculation. While adding Bitcoin to the U.S. Treasury's balance sheet would require considerable political will and Congressional approval, merely proposing this initiative has profound implications.
By signaling the possibility of an SBR, the U.S. is effectively inviting other major countries to consider taking similar actions. Game theory suggests that these countries may be incentivized to act proactively, potentially securing a strategic advantage in national reserve diversification ahead of the U.S. Bitcoin's limited supply and its emerging role as a digital store of value may heighten the urgency for countries to act swiftly.
Now, a race is on to see which major country will be the first to incorporate Bitcoin into its national reserves, holding it as they do with gold, foreign currencies, and government bonds for asset diversification. This move would not only solidify Bitcoin's status as a global reserve asset but could also reshape the landscape of international finance, having profound implications for economic and geopolitical power structures. The establishment of a strategic Bitcoin reserve by any major economy could mark the beginning of a new era in sovereign wealth management.
2) Stablecoins will continue to grow, doubling to over $400 billion.
Stablecoins have become one of the most successful mainstream use cases for cryptocurrencies, bridging the gap between traditional finance and the cryptocurrency ecosystem. Millions of people globally use stablecoins for remittances, daily transactions, and to hedge against local currency volatility by leveraging the relative stability of the dollar.
In 2024, the circulation of stablecoins will reach a historic high of $200 billion, with Tether and Circle as the market leaders. These digital currencies rely on blockchain networks such as Ethereum, Solana, and Tron to facilitate seamless, borderless transactions.
Looking ahead, the growth of stablecoins is expected to accelerate in 2025, potentially doubling to over $400 billion. The passage of dedicated stablecoin legislation will drive this growth, likely providing the much-needed regulatory clarity and fostering innovation within the industry. U.S. regulators are increasingly recognizing the strategic importance of stablecoins in reinforcing the dollar's global dominance and solidifying its status as the world's reserve currency.
3) Bitcoin DeFi supported by L2 will become a major growth trend.
Bitcoin is transcending its role as a store of value, with second-layer (L2) networks like Stacks, BOB, Babylon, and CoreDAO unlocking the potential of a thriving Bitcoin DeFi ecosystem. These L2s enhance Bitcoin's scalability and programmability, allowing decentralized finance (DeFi) applications to flourish on the most secure and decentralized blockchain.
2024 will be a transformative year for Stacks, with the launch of the Nakamoto upgrade and sBTC. The Nakamoto upgrade allows Stacks to inherit 100% of Bitcoin's determinism and introduces faster block speeds, significantly improving user experience. Meanwhile, the trustless Bitcoin-pegged asset sBTC, launched in December, enables seamless participation in DeFi activities such as lending, swapping, and staking—all based on Bitcoin's security.
Previously, Bitcoin holders seeking DeFi opportunities were forced to move their Bitcoins to other networks like Ethereum. This process relied on centralized custodians such as WBTC (BitGo), BTCB (Binance), and cbBTC (Coinbase), exposing users to centralization and censorship risks. Bitcoin L2 reduces these risks by providing a more decentralized alternative that allows Bitcoin to operate natively within its own ecosystem.
Looking ahead to 2025, Bitcoin DeFi is expected to grow exponentially. I predict that the total value locked (TVL) in Bitcoin L2 will exceed the current $24 billion represented by wrapped Bitcoin derivatives, which is approximately 1.2% of Bitcoin's total supply. As Bitcoin's market cap reaches $2 trillion, L2 networks will allow users to unlock this immense potential value more securely and efficiently, solidifying Bitcoin's position as a cornerstone of decentralized finance.
4) Bitcoin ETFs will continue to surge, with new crypto-focused ETFs emerging.
The launch of spot Bitcoin ETFs marks a historic milestone, becoming the most successful ETF debut in history. These ETFs attracted over $108 billion in assets under management (AUM) in their first year, showcasing unparalleled demand from retail and institutional investors. Major players like BlackRock, Fidelity, and Ark Invest have played a key role in introducing regulated Bitcoin exposure to traditional financial markets, laying the groundwork for a wave of innovation in crypto-focused ETFs.
Following the success of Bitcoin ETFs, Ethereum ETFs have also emerged, providing investors with opportunities to invest in the second-largest cryptocurrency by market capitalization. Looking ahead, I anticipate that staking will first be integrated into Ethereum ETFs in 2025. This feature will enable investors to earn staking rewards, further enhancing the appeal and utility of these funds.
Other cryptocurrency ETFs, such as those for Solana, are expected to launch soon, as Solana is known for its high-performance blockchain, thriving DeFi ecosystem, and rapid growth in games, NFTs, and memecoins.
Additionally, we may see the launch of weighted cryptocurrency index ETFs aimed at providing diversified investment across the broader crypto market. These indices may include top-performing assets such as Bitcoin, Ethereum, and Solana, as well as emerging protocols, providing investors with a balanced portfolio to capture growth potential across the entire ecosystem. Such innovations will make crypto investments more accessible, efficient, and attract a wide range of investors, further driving capital into the space.
5) Another company among the "Magnificent Seven" besides Tesla will add Bitcoin to its balance sheet.
The Financial Accounting Standards Board (FASB) in the United States has introduced fair value accounting rules for cryptocurrencies, which will take effect for fiscal years beginning after December 15, 2024. These new standards require companies to report their holdings of cryptocurrencies like Bitcoin at fair market value, capturing gains and losses in real-time from market fluctuations.
Previously, digital assets were classified as intangible assets, forcing companies to write down impaired assets while prohibiting the recognition of unrealized gains. This conservative approach often underestimated the true value of cryptocurrency assets on a company's balance sheet. The new rules address these limitations, making financial reporting more accurate and making cryptocurrencies a more attractive asset for corporate finances.
The Magnificent Seven—Apple, Microsoft, Google, Amazon, Nvidia, Tesla, and Meta—collectively hold over $600 billion in cash reserves, providing them with great flexibility to allocate some capital to Bitcoin. With strengthened accounting frameworks and increased regulatory transparency, one of these tech giants, aside from Tesla, is likely to add Bitcoin to its balance sheet.
This move will reflect prudent financial management:
Hedging against inflation: Preventing the devaluation of fiat currency.
Diversifying reserves: Adding unrelated limited digital assets to their portfolios.
Leveraging appreciation potential: Capitalizing on Bitcoin's long-term growth history.
Strengthening technological leadership: Staying aligned with the spirit of digital transformation and innovation.
With new accounting rules coming into effect and corporate finances adapting, Bitcoin could become a key reserve asset for the world's largest tech companies, further legitimizing its role in the global financial system.
6) The total market capitalization of cryptocurrencies will exceed $8 trillion.
In 2024, the total market capitalization of cryptocurrencies will skyrocket to a historic high of $3.8 trillion, encompassing a wide range of use cases, including Bitcoin as a store of value, stablecoins, DeFi, NFTs, meme coins, GameFi, SocialFi, and more. This explosive growth reflects the industry's increasing influence and the growing adoption of blockchain-based solutions across various sectors.
By 2025, the influx of developer talent into the crypto ecosystem is expected to accelerate, driving the creation of new applications that achieve product-market fit and attract millions of additional users. This wave of innovation may spawn breakthrough decentralized applications (dApps) in areas such as artificial intelligence (AI), decentralized finance (DeFi), decentralized physical infrastructure networks (DePIN), and other emerging fields that are still in their infancy.
These transformative dApps provide tangible utility and address real-world problems, driving increased adoption and economic activity within the ecosystem. As the user base expands and capital flows into the space, asset prices will rise accordingly, pushing the overall market capitalization to unprecedented heights. With this momentum, the cryptocurrency market is expected to surpass $8 trillion, marking the ongoing growth and innovation of the industry.
7) A resurgence of crypto startups, with the U.S. regaining its status as a global crypto powerhouse.
The U.S. cryptocurrency industry is on the brink of a transformative resurgence. The controversial "enforcement-centric" approach of SEC Chairman Gary Gensler will come to an end with his departure in January, which stifled innovation and forced many crypto startups to relocate overseas. His successor, Paul Atkins, brings a distinctly different perspective. As a former SEC commissioner (2002-2008), Atkins is known for his supportive stance on crypto and advocacy for deregulation, as well as his leadership in initiatives like the Token Alliance that support crypto. His approach promises to establish a more collaborative regulatory framework that fosters innovation rather than suppressing it.
"Operation Chokepoint 2.0" is a secret initiative aimed at limiting cryptocurrency startups' access to the U.S. banking system, and its conclusion lays the groundwork for a resurgence in cryptocurrency. By restoring the right to fairly utilize banking infrastructure, the U.S. is creating an environment where blockchain developers and entrepreneurs can thrive without excessive restrictions.
Regulatory clarity: Changes in the leadership of the SEC and balanced regulatory policies will reduce uncertainty for startups, creating a more predictable environment for innovation.
Accessing capital and resources: With the elimination of banking barriers, cryptocurrency companies will find it easier to enter capital markets and traditional financial services, achieving sustainable growth.
Talent and entrepreneurship: A reduction in regulatory hostility is expected to attract top blockchain developers and entrepreneurs back to the United States, revitalizing the ecosystem.
Increased regulatory transparency and renewed support for innovation will also lead to a significant increase in token issuance within the United States. Startups will have the ability to issue tokens as part of their financing and ecosystem-building efforts without fear of regulatory backlash. These tokens will include utility tokens for decentralized applications and governance tokens for protocols, attracting both domestic and international capital while encouraging participation in U.S. projects.
Conclusion
Looking ahead to 2025, it is clear that the cryptocurrency industry is entering a new era of growth and maturity. With Bitcoin solidifying its status as a global reserve asset, the rise of ETFs, and the exponential growth of DeFi and stablecoins, the groundwork for widespread adoption and mainstream attention is being laid.
With clearer regulations and breakthrough technologies in support, the crypto ecosystem is bound to break boundaries and shape the future of global finance. These predictions highlight a year full of potential as the industry continues to prove itself as an unstoppable force.
