Industry experts say that Bitcoin saw a breakthrough growth last year, but other areas of the crypto market are expected to perform even better in 2025.
In recent weeks, Bitcoin trading has been in a consolidation range, and traders are looking for new catalysts to boost Bitcoin. Analysts and commentators have indicated that due to Trump's promise to reduce regulation on digital assets, altcoins (any cryptocurrency other than Bitcoin) are expected to rebound this year.
Bitcoin soared 116% in 2024, fueled by enthusiasm for the approval of a spot Bitcoin ETF, the halving event, and Trump's election victory.
Bitcoin broke the $100,000 mark, rising 51% in just one month. Altcoins also surged, with Ethereum up 59%, and other tokens like XRP, Solana, and Tron showing strong growth.
However, after the Fed made hawkish comments, Bitcoin's upward momentum slowed, while other cryptocurrencies showed signs of sustained growth.
The Federal Reserve's hawkish stance triggered a broad sell-off in the U.S. stock market after a rebound last November, and Bitcoin was not spared, dropping about 15% from its peak in the last two weeks of this year. According to data collected by Bloomberg, there was also a massive outflow from the dollar spot ETF after the Fed officials released new interest rate guidance, losing a record $680 million that day.
Citigroup analysts said in a report on Monday, "Given that Ethereum is the only major cryptocurrency (besides Bitcoin) approved as a spot ETF base, it may be a rotation target."
Other cryptocurrencies performed even better, and their share of the total cryptocurrency market capitalization is also increasing. Citibank added that respondents in a recent survey believe that altcoins will perform particularly well in 2025.
Analysts stated, "The performance of other cryptocurrencies and altcoins is even more significant, indicating that some market participants expect a 'altcoin season' in 2025 following a strong year for Bitcoin."
Experts say that the different trends of Bitcoin and other cryptocurrencies stem from differences in the fundamental factors affecting the two markets.
Bitcoin has relatively robust regulatory support, including futures contracts, ETFs, options, etc. Therefore, Andrew Baehr of CoinDesk Indices stated that any rise in Bitcoin prices is a result of greater enthusiasm for Bitcoin's widespread adoption.
However, altcoins occupy a relatively gray area and have been a target of the U.S. Securities and Exchange Commission for years.
Thus, favorable crypto regulatory outlooks will be the main driving force behind altcoin price movements in 2025. The token XRP, which has been the focus of the SEC's litigation in recent years, surged significantly after Trump's victory and rose again after SEC Chairman Gensler announced he would resign after Trump took office.
Baehr stated that as the market generally expects the SEC to ease regulations in 2025, more crypto projects will be launched. Decentralized projects driven by stablecoins will need a blockchain to operate, and Ethereum has become a possible candidate.
Citigroup analysts stated that new policy support will help solidify the legitimacy of altcoins in the market, potentially driving up prices.
Citigroup analysts stated, "Bitcoin is classified as a commodity and has traditional financial trading instruments such as spot ETFs and futures. In contrast, the definition of other crypto assets is much less certain, and the range of investment options is more limited."
Analysts added that further policy support will provide significant momentum for altcoins compared to Bitcoin.