Written by: Matt Hougan, Chief Investment Officer of Bitwise, Ryan Rasmussen, Head of Research at Bitwise
Compiled by: Yangz, Techub News
For the cryptocurrency industry, 2024 is a landmark year. Thanks to the launch of the U.S. Bitcoin Spot ETF (which has amassed $33.6 billion in assets), Bitcoin soared to an all-time high of $103,992 (as of this writing, Bitcoin's annual increase has reached 141.72%). Other major cryptocurrencies have also seen significant gains, with SOL up 127.71%, XRP up 285.23%, and Ethereum up 75.77%. Meanwhile, stocks of MicroStrategy and Coinbase surged by 525.39% and 97.57%, respectively. However, data is not the only development worth noting. In the 2024 U.S. elections, the cryptocurrency industry emerged as one of the winners, making the regulatory outlook for cryptocurrencies in the U.S. much brighter. Elected President Trump firmly supported cryptocurrencies during his campaign, vowing to establish a Bitcoin Strategic Reserve and restructure the historically hostile U.S. Securities and Exchange Commission (SEC) towards cryptocurrencies. He also nominated Scott Bessent as Treasury Secretary, who has stated, 'Cryptocurrency is about freedom; the cryptocurrency economy will persist.' In 2024, Congress tilted significantly towards the cryptocurrency industry, with pro-cryptocurrency candidates defeating opponents in several key races. We also look forward to seeing favorable legislation for the industry in the coming months. The upcoming stimulus policies from major central banks, rising institutional adoption rates, and rapid advancements in blockchain technology make the outlook for the cryptocurrency industry in 2025 very bright. Recently, we convened a think tank at Bitwise to look ahead to 2025. We believe we are entering the golden age of cryptocurrency.
Bitcoin, Ethereum, and Solana will reach new all-time highs, with Bitcoin breaking the $200,000 mark
The three giants of cryptocurrency, Bitcoin, Ethereum, and Solana, will outperform all major asset classes in 2024, rising by 141.72%, 75.77%, and 127.71%, respectively. Meanwhile, the S&P 500 index will yield 28.07%, gold will yield 27.65%, and bonds will yield 3.40%. We expect this momentum to continue into 2025, with Bitcoin, Ethereum, and Solana all reaching new all-time highs.
Bitcoin: $200,000. The record inflows into the Bitcoin Spot ETF have propelled Bitcoin to a historical high in 2024. We believe this trend will not slow down anytime soon. Combining this demand with the supply reduction from the halving in April 2024, along with new buying from corporations and governments... you get the idea. (Note: If the U.S. government follows through on its proposal to establish a strategic reserve of 1 million Bitcoins, $200,000 could become $500,000 or even higher).
Ethereum: $7,000. Despite Ethereum's 75.77% rise in 2024, as the second-largest cryptocurrency, it has lost favor among many investors, who have either turned to Bitcoin or fast-growing competing programmable blockchains. However, as Buffett says, 'Be fearful when others are greedy, and greedy when others are fearful.' We expect that with the acceleration of L2 activities like Base and Starknet, along with billions flowing into Ethereum Spot ETFs, the narrative around Ethereum will shift in 2025. Additionally, the massive growth of stablecoins and tokenized projects based on Ethereum will also serve as catalysts.
Solana: $750. Like a phoenix rising from the ashes, Solana reached new heights in 2024 after experiencing the market crash of 2022, with its ecosystem's Memecoin frenzy overshadowing even the legends of GameStop. We believe Solana's momentum is just beginning. The introduction of 'serious' projects will complement its dominance in the Memecoin space, becoming a catalyst for the network in 2025. Currently, we have already seen early examples like Render. We expect this trend to accelerate in the coming year.
Possible Catalysts
Institutional Investment
Corporate Purchases
Approval of Comprehensive Brokerage Firms
U.S. Bitcoin Strategic Reserve
Better Regulatory/Political Environment
Bitcoin Halving Leads to Supply Tightening
L2 Scaling
Macro Windfalls (Rate Cuts, Central Bank Stimulus)
Expanded Distribution
Potential Downsides
Unfulfilled Promises of the Washington Government
Leverage Blowout
Government Sell-off
Memecoin Frenzy Failure
Disappointing Rate Cut
Funds attracted by Bitcoin Spot ETF in 2025 will surpass those in 2024
When the U.S. Bitcoin Spot ETF launches in January 2024, ETF experts predict inflows will reach $5 billion to $15 billion in the first year. In fact, these ETFs exceeded this upper limit in the first six months. Since their launch, these ETFs have gathered $33.6 billion in inflows. We expect the inflow for 2025 to exceed this figure. Here are three reasons:
The first year is usually the slowest for ETF development: When it comes to the launch of Bitcoin ETFs, we have the best historical analogy from the launch of gold ETFs in 2004. That year, gold ETFs attracted $2.6 billion in inflows right from the start, exciting everyone. But look at the subsequent years: Year 2 saw $5.5 billion, Year 3 $7.6 billion, Year 4 $8.7 billion, Year 5 $16.8 billion, Year 6 $28.9 billion (adjusted for inflation). The point is that Year 2's inflows exceeded Year 1's, and a gradual decline in flows would be abnormal.
Large brokerage firms will engage with Bitcoin ETFs: Speaking of Bitcoin ETFs, the world's largest brokerage firms, including Morgan Stanley, Merrill Lynch, Bank of America, and Wells Fargo, have yet to unleash their army of wealth managers, who largely cannot access these products. We believe this will change in 2025, as trillions of dollars managed by these firms will start flowing into Bitcoin ETFs.
Investors doubling down: In the seven years that Bitwise has helped professionals gain exposure to cryptocurrencies, we have witnessed a clear pattern where most investors start with a small allocation and gradually increase it. We believe that most investors buying Bitcoin ETFs in 2024 will double their investments in 2025.
Coinbase will become the most valuable brokerage, with stock prices exceeding $700
In 2023, investors could purchase Coinbase stock for $35. Today, its trading price has reached $344, nearly a 10-fold increase. We believe it can rise even higher. We predict that in 2025, the trading price of Coinbase stock will exceed $700 per share (more than double today's price). This would surpass Charles Schwab, making Coinbase the most valuable brokerage globally. As for the reasons, Coinbase is not just a brokerage; three major catalysts will help it achieve this:
Stablecoins: Thanks to the deal with USDC issuer Circle, Coinbase's stablecoin business is thriving. To date, its stablecoin revenue has surged to $162 million (+31%). If our judgment on the trajectory of stablecoin development is correct, this trend should continue.
Base: Last year, Coinbase launched Base, an L2 solution based on Ethereum. Now, it is a leader in trading volume and total locked value among L2s. With growth comes substantial revenue. Base now generates tens of millions of dollars in revenue each quarter, and as more developers, users, and funds flow into the Base ecosystem, we expect revenue to continue to grow.
Staking and Custody Services: As of the third quarter, these two business lines generated $589 million in revenue, an increase of $304 million (+106%) compared to the same period last year. Both businesses are driven by asset balances and net new asset flows. We expect both businesses to grow significantly in 2025, making their annual revenues exceed $1 billion.
2025 will become the 'Year of Cryptocurrency IPOs,' with at least five cryptocurrency unicorns going public in the U.S.
In recent years, the cryptocurrency industry has been in a 'cold period' regarding IPOs. However, we anticipate a surge of cryptocurrency unicorn IPOs in 2025. Why now? The backdrop today is vastly different from previous years. Cryptocurrency prices are rising, investor demand is growing, institutional adoption is surging, blockchain technology has gone mainstream, the macro environment has become favorable, and most importantly, the political climate has warmed. This creates favorable conditions for many industry giants to go public. Here are five companies that might go public in 2025:
Circle: As the issuer of USDC, one of the largest stablecoins, Circle has been actively preparing for an IPO for some time. Circle's strong position in the stablecoin market, along with its continuous expansion in new financial services, could prompt it to go public.
Figure: Figure is known for providing various financial services using blockchain technology, such as mortgage loans, personal loans, and asset tokenization. The company has reportedly been exploring IPO since 2023, and with Wall Street's growing obsession with tokenization, now might be the right time.
Kraken: As one of the largest cryptocurrency exchanges in the U.S., Kraken has been considering an IPO since at least 2021. Due to market conditions, the company's plans were postponed, but they may come back on the agenda in 2025.
Anchorage Digital: Anchorage Digital provides infrastructure services for digital assets, with a diverse client base including investment advisors, asset management companies, and venture capital firms. Its status as a federally chartered bank and its comprehensive cryptocurrency services may facilitate its public listing.
Chainalysis: As a market leader in blockchain compliance and intelligence services, Chainalysis is likely to go public in 2025. The company's unique products and growth trajectory make it a strong candidate for an IPO, especially considering the increasing importance of compliance in the cryptocurrency industry.
Tokens launched by AI agents will lead to an even bigger token frenzy in 2024
As we enter 2025, we will see a Memecoin frenzy greater than that of 2024. We believe tokens launched by AI agents will lead this trend. Recently, a16z's Marc Andreessen interacted with an autonomous chatbot named Truth Terminal, prompting the AI agent to promote GOAT. Soon, this AI Memecoin became an asset worth over $1.3 billion. Undoubtedly, the potential is huge when we combine AI with the wild world of Memecoins. The most exciting breakthrough is Clanker. As an AI agent, it allows users to autonomously deploy tokens on Coinbase's L2 scaling solution, Base. Users simply tag Clanker in a post on Farcaster, telling the AI agent the given token name and image, and it automatically deploys the token. In less than a month, Clanker has launched over 11,000 tokens (generating over $10.3 million in fees). We believe that tokens launched by AI will drive a new Memecoin boom in 2025. As for whether these Memecoins will have real-world utility? We think it's unlikely. Most of them will go to zero, but they represent an interesting collision of two breakthrough technologies: artificial intelligence and cryptocurrency, which is worth watching.
The number of countries holding Bitcoin will double
Whether the U.S. will establish a Bitcoin strategic reserve in 2025 remains uncertain, but it is certainly a possibility. Senator Cynthia Lummis introduced a bill calling for the U.S. to purchase 1 million Bitcoins within five years, and elected President Trump also supports this idea. However, Polymarket indicates that the likelihood of this prediction is below 30%. We believe this is not the important part. The fact that the U.S. is actively considering establishing a Bitcoin strategic reserve will initiate an arms race globally, prompting governments to compete to acquire Bitcoin. We have already seen legislators from Poland to Brazil proposing bills aimed at establishing Bitcoin strategic reserves in their countries. According to BitcoinTreasuries.net, nine countries currently hold Bitcoin (led by the U.S.). We expect this number to double by 2025.
Coinbase will enter the S&P 500 index, and MicroStrategy will enter the Nasdaq 100 index
Ordinary American investors do not have exposure to cryptocurrency risks. Cryptocurrency is a new asset class, and many investors are either unaware of it or choose to ignore it entirely. However, almost every investor holds funds tracking the S&P 500 index or the Nasdaq 100 index. Many investors hold both indices simultaneously. Yet, so far, these indices have not tracked the largest cryptocurrency public companies, Coinbase and MicroStrategy. We expect this to change as early as this month, during the next significant rebalancing of these two indices, and this could have a substantial impact. Consider this: there are $10 trillion in assets tracking the S&P 500 index, with another $6 trillion benchmarked against it. If Coinbase joins this index, we anticipate funds will purchase about $15 billion of Coinbase stock. If funds benchmarked against this index also include Coinbase, the stock purchase volume will increase by another $9 billion. Given the relative scale of funds tracking the Nasdaq 100 index, the impact on MicroStrategy is expected to be smaller but still considerable.
The U.S. Department of Labor will relax guidance on cryptocurrencies in 401(k) plans
In March 2022, the U.S. Department of Labor issued guidance, 'reminding 401(k) plan fiduciaries of the significant risks of adding cryptocurrency investment options to their plans.' The Department even stated that it would 'launch an investigation program to protect plan participants from these risks.' With the new government in Washington, we expect the Department to relax this guidance. Why care? Because it involves $80 billion in capital. America's 401(k) plans hold $8 trillion in assets. More money flows into these funds weekly. If cryptocurrencies occupy 1% of 401(k) assets, that would bring in $80 billion in new capital into the field, flowing continuously thereafter. If the share reaches 3%, that would be $240 billion!
If the U.S. passes stablecoin legislation, the stablecoin market cap will reach $40 billion
The stablecoin boom in 2025 will raise the market cap of stablecoins to or exceed $40 billion. The following four catalysts will drive growth:
Stablecoin Legislation: For the new policymakers supportive of cryptocurrency in Washington, passing comprehensive stablecoin legislation is the most likely outcome. At that time, some significant questions, such as who regulates stablecoins? What are the appropriate reserve requirements? will be answered, and large traditional banks like JPMorgan are also expected to enter this space.
Global Trade and Remittances: Stablecoins have already been eating into the global payments and remittances market. We see that stablecoin trading volume has reached $8.3 trillion in 2024, second only to Visa's $9.9 trillion during the same period. Additionally, stablecoin giant Tether recently funded a $45 million crude oil transaction through its USDT, clearly demonstrating the potential of stablecoins to facilitate large-scale global trade. As the digital dollar continues to disrupt these massive markets, the demand for stablecoins will keep growing.
Integration of fintech giants: Payment giant Stripe acquired stablecoin platform Bridge for $1.1 billion in October and referred to stablecoins as 'superconductors of financial services.' PayPal launched its own stablecoin (PYUSD) in 2023, and Robinhood recently announced plans to collaborate with several cryptocurrency companies to launch a global stablecoin network. As stablecoins penetrate popular fintech applications, we see their asset management scale and trading volume soaring.
Bull Market Growth: Lastly, there is the most obvious catalyst, the continuation of the bull market. As the cryptocurrency economy expands, the scale of stablecoin asset management will also increase. We are optimistic about the cryptocurrency industry in 2025, and therefore we are also optimistic about stablecoins.
By 2025, the market for tokenized RWAs will exceed $50 billion
Three years ago, the 'tokenization' of real-world assets (RWA) in the cryptocurrency industry (such as private credit, U.S. treasuries, commodities, and stocks) was worth less than $2 billion. Today, this market has grown to $13.7 billion. What is the reason for this massive growth? Why tokenize RWAs or represent real assets on the blockchain? Simply put, tokenization is better. It offers instant settlement, is much cheaper than traditional securitization, provides 24/7/365 liquidity, and brings transparency and risk exposure to nearly all asset classes. This is why Larry Fink, CEO of BlackRock, transitioned from skepticism about Bitcoin to being the biggest advocate for tokenization. He stated, 'The next-generation market will be the tokenization of securities.' It's important to note that this statement comes from the head of the world's largest asset management company. We also agree with this view. In our opinion, Wall Street has just begun to realize this, meaning large institutional funds will soon flood into tokenized RWAs. How big could this be? We believe that by 2025, the tokenized RWA market could reach $50 billion and potentially grow exponentially. Of course, we are not the only ones optimistic about this; venture capital firm ParaFi recently predicted that by 2030, the tokenized RWA market will grow to $2 trillion, while the Global Financial Markets Association predicts it will reach $16 trillion.
By 2029, Bitcoin will surpass the gold market, with prices exceeding $1 million
When making predictions, people often look to the next year. But why? As long-term investors in cryptocurrency, we want to look further ahead. We believe Bitcoin will surpass the gold market by 2029. Based on gold's current market value, this means Bitcoin will rise to over $1 million. Why 2029? Historically, Bitcoin has fluctuated in four-year cycles. While we cannot guarantee this will continue, 2029 will mark the peak of the next cycle (also the 20th anniversary of Bitcoin's creation). Surpassing gold in the 20 years following Bitcoin's creation would be quite an achievement, but we believe Bitcoin can do it. (Note: If the U.S. announces the purchase of 1 million Bitcoins as a strategic reserve, we could reach the $1 million per Bitcoin target faster).
Appendix: Bitwise 2024 Forecast Rating. Last November, the Bitwise research team made 10 predictions for 2024 (plus one additional prediction). Now, we are pleased to report that we were not bullish enough!
Bitcoin price will break $80,000, reaching a new all-time high: A
Bitcoin Spot ETF will be approved: A
Coinbase's revenue will double, exceeding Wall Street's growth expectations by at least 10 times: A
The amount settled using stablecoins will exceed Visa: To be observed
JPMorgan will tokenize a fund and launch it on-chain: F
Ethereum revenue will reach $5 billion: F
Taylor Swift will launch NFTs: F
AI assistants will use cryptocurrency for online payments: A
Over $100 million will flow into prediction markets: A
Ethereum's significant upgrade will bring average transaction costs below $0.01: B
Additional prediction: By the end of 2024, 1 in 4 financial advisors will allocate cryptocurrency in client accounts: To be observed
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