According to BlockBeats news on December 22, Coinbase released its 2025 cryptocurrency market outlook, stating that 'the crypto market achieved unprecedented success in 2024, and it was not easy to get here. While it is easy to see these successes as the culmination of years of work, more and more people believe they are actually just the beginning of a larger endeavor.' The report focuses on the following five areas:
1. Stablecoins are the killer application in the crypto space. As of December 1, 2024, the market capitalization of stablecoins has grown by 48%, reaching a historic high of $193 billion, and this figure could grow to $3 trillion in the next five years. We will soon see that their most important use case will be global capital flows and commerce, rather than trading.
2. RWA tokenization is expected to achieve 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 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. The RWA trend is moving beyond assets like U.S. Treasury bonds and money market funds, gaining attention in private credit, commodities, corporate bonds, real estate, and insurance.
3. The cryptocurrency ETF has forever changed the supply and demand dynamics of cryptocurrencies. After the record success of the spot Bitcoin ETF in the United States, the entire cryptocurrency market has transformed. Almost every type of institutional investor (including endowment funds, pension funds, hedge funds, investment advisors, and family offices) now holds cryptocurrency ETFs. We are more interested in what would happen if the SEC allows cash creation and redemption of ETF shares or allows ETFs to include staking. These changes could enhance the potential returns for ETF holders, making ETFs more attractive to investors.
4. The DeFi revival will push it into a new era. DeFi faced some challenges in the last cycle, but a more sustainable and resilient ecosystem has emerged. The total value locked (TVL) in lending protocols has reached an all-time high, while the trading volume share of DEXs (relative to CEXs) has peaked. Additionally, the shift in the regulatory landscape in the United States and the adoption of on-chain verification may help provide a clear pathway for traditional institutional investors to participate in DeFi. All of this indicates that DeFi may expand its influence in the near future.
5. Regulation will eventually shift from headwinds to tailwinds. For years, the crypto market has suffered from regulatory uncertainty in the United States, but the situation has now reversed. The U.S. Congress is about to experience the most crypto-friendly Congress in history. Both the House and Senate support cryptocurrencies, and we believe there is a high likelihood of achieving new legislative milestones. The U.S. is expected to establish a comprehensive regulatory framework, introduce sound stablecoin legislation, and end the era of enforcement-based regulation. Breakthroughs and progress in 2025 are likely to determine the long-term trajectory of the crypto industry for decades to come. This will be a pivotal year.
