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 year of significance. Thanks to the launch of the US Bitcoin spot ETF (which has gathered $33.56 billion in assets), Bitcoin soared to a historic high of $103,992 (as of the writing of this article, Bitcoin's annual increase has reached 141.72%). Other major coins also achieved significant gains, with SOL up 127.71%, XRP up 285.23%, and Ethereum up 75.77%. Meanwhile, the stocks of MicroStrategy and Coinbase surged 525.39% and 97.57%, respectively. However, data is not the only development worth noting. In the 2024 US elections, the cryptocurrency industry emerged as one of the winners, making the regulatory outlook for cryptocurrency in the US much brighter. President-elect Trump firmly supported cryptocurrency during his campaign, vowing to establish a Bitcoin Strategic Reserve and reorganize the historically hostile US Securities and Exchange Commission (SEC) towards cryptocurrency. Additionally, he nominated Scott Bessent as Treasury Secretary, who had stated, "Cryptocurrency is about freedom, and the cryptocurrency economy will continue to exist." In 2024, Congress largely leaned 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 imminent stimulus policies from major central banks, rising institutional adoption rates, and rapid improvements in blockchain technology all make the cryptocurrency industry's prospects for 2025 look very bright. Recently, we gathered Bitwise's think tank 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, with increases of 141.72%, 75.77%, and 127.71%, respectively. Meanwhile, the S&P 500 index returned 28.07%, gold returned 27.65%, and bonds returned 3.40%. We expect this momentum to continue into 2025, with Bitcoin, Ethereum, and Solana all hitting new all-time highs.
Bitcoin: $200,000. The record inflow into Bitcoin spot ETFs has led Bitcoin to a historic high in 2024. We believe this trend will not slow down anytime soon. Combining this demand with the supply drop caused by the halving in April 2024, coupled with new buying from corporations and governments... you can all understand. (Note: If the US government implements the proposal to establish a strategic reserve of 1 million Bitcoins, $200,000 could turn into $500,000 or even higher.)
Ethereum: $7,000. Despite Ethereum rising by 75.77% in 2024, as the second-largest cryptocurrency, it has lost favor with many investors who have shifted their focus to Bitcoin or rapidly developing programmable blockchains competing with Ethereum. However, as Buffett said, "Be fearful when others are greedy, and be greedy when others are fearful." We expect that with the acceleration of L2 activities such as Base and Starknet, as well as billions of dollars flowing into Ethereum spot ETFs, Ethereum's narrative will shift in 2025. Additionally, the massive growth of stablecoins and tokenization 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 the frenzy around its ecosystem's Memecoins overshadowing the legend of GameStop. We believe the momentum for Solana 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 such as Render. We expect this trend to accelerate in the coming year.
Possible Catalysts
Institutional Investment
Corporate Purchases
Approval of integrated brokerage firms
US Bitcoin Strategic Reserve
Better regulatory/political environment
Bitcoin halving leads to supply crunch
L2 Expansion
Macro Unexpected Gains (Rate Cuts, Central Bank Stimulus Policies)
Expanded Distribution
Potential Adverse Factors
Unfulfilled commitments of the Washington government
Leverage Explosion
Government Sell-off
Memecoin Frenzy Failure
Disappointing Rate Cuts
Funds attracted by Bitcoin spot ETF in 2025 will surpass those in 2024
When the US Bitcoin spot ETF launches in January 2024, ETF experts predict that inflows in the first year will range from $5 billion to $15 billion. The reality is that these ETFs exceeded this upper limit in just the first six months. Since their launch, these ETFs have already gathered $33.6 billion in inflows. We expect the inflow amount for 2025 to exceed this figure for 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, which is the launch of the gold ETF in 2004. That year, the gold ETF garnered $2.6 billion in inflows immediately upon launch, exciting everyone. But look at the following years: Year 2 $5.5 billion, Year 3 $7.6 billion, Year 4 $8.7 billion, Year 5 $16.8 billion, Year 6 $28.9 billion (based on inflation-adjusted figures). The focus is that the inflow in Year 2 exceeds Year 1, and it is abnormal for the inflow to gradually decrease.
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 not yet unleashed their armies 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 begin to flow into Bitcoin ETFs.
Investors will double down: In the seven years that Bitwise has helped investment professionals access cryptocurrency, we have witnessed a clear pattern where most investors start with a small allocation and then gradually increase it. We believe that most investors who purchase Bitcoin ETFs in 2024 will double down in 2025.
Coinbase will become the most valuable brokerage, with a stock price exceeding $700
In 2023, investors could purchase Coinbase shares for $35. Today, its trading price has reached $344, nearly a tenfold increase. We believe it can rise even higher. We predict that by 2025, the trading price of Coinbase stock will exceed $700 per share (more than double today’s price). This will make Coinbase surpass Charles Schwab to become the world's most valuable brokerage. As for the reasons, Coinbase is not just a brokerage; three major catalysts will help it achieve this goal:
Stablecoins: Thanks to a partnership with Circle, the issuer of USDC, Coinbase's stablecoin business is thriving. To date, its stablecoin revenue has surged to $162 million (+31%). If our assessment of the trajectory of stablecoin development is correct, this trend should continue.
Base: Last year, Coinbase launched the Ethereum-based L2 Base. Now, it is a leader in L2 in terms of trading volume and total locked value. With growth comes significant 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 revenues to grow further.
Staking and Custody Services: As of the third quarter, these two business lines generated $589 million in revenue. Compared to the same period last year, this represents a growth of $304 million (+106%). Both businesses are driven by asset balances and net new asset flows. We expect both businesses to see significant growth in 2025, exceeding $1 billion in annual revenue.
2025 will be the "Year of Cryptocurrency IPOs," with at least five cryptocurrency unicorns going public in the US
In recent years, the cryptocurrency industry has been in a "cooling period" regarding IPOs. But we expect a surge of cryptocurrency unicorn IPOs in 2025. Why now? The current context is vastly different from previous years. Cryptocurrency prices are rising, investor demand is increasing, institutional adoption is skyrocketing, blockchain technology has become 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 may 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, coupled with its ongoing expansion into new financial services, could drive it to go public.
Figure: Figure is known for providing various financial services using blockchain technology, such as mortgages, personal loans, and asset tokenization. Reports indicate that the company has been exploring an IPO since 2023, and with Wall Street's increasing obsession with tokenization, now may be the right time.
Kraken: As one of the largest cryptocurrency exchanges in the US, Kraken has been considering an IPO at least since 2021. Due to market conditions, the company's plans were postponed but may be reactivated in 2025.
Anchorage Digital: Anchorage Digital provides infrastructure services for digital assets and has a diverse client base, including investment advisors, asset management firms, and venture capitalists. The company's status as a federally chartered bank and its comprehensive cryptocurrency services may facilitate its IPO.
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 a larger token frenzy than in 2024
Entering 2025, we will see a larger Memecoin frenzy than in 2024. We believe that tokens launched by AI agents will lead this trend. Recently, Marc Andreessen from a16z had an interaction with an autonomous chatbot named Truth Terminal, prompting the AI agent to promote GOAT. Soon, this AI Memecoin became an asset valued at over $1.3 billion. Undoubtedly, when we combine AI with the wild world of Memecoins, the potential is immense. 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 are useful in the real world? We think it's unlikely. Most of them will go to zero, but they represent an intriguing collision of two breakthrough technologies: artificial intelligence and encryption technology, which is worth watching.
The number of countries holding Bitcoin will double
Whether the US will establish a Bitcoin strategic reserve in 2025 remains to be seen, but it is certainly possible. A bill proposed by Senator Cynthia Lummis calls for the US to purchase 1 million Bitcoins within five years, and President-elect Trump has also supported this idea. However, the probability of this prediction on Polymarket is less than 30%. But we believe this is not important. The fact that the US is actively considering establishing a Bitcoin strategic reserve will trigger a global arms race, with governments competing to purchase Bitcoin. We have already seen legislators from Poland to Brazil proposing bills aimed at promoting the establishment of Bitcoin strategic reserves in their countries. According to data from BitcoinTreasuries.net, currently, nine countries hold Bitcoin (led by the US). 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 that many investors either do not understand or simply choose to ignore. However, almost every investor holds funds tracking the S&P 500 index or the Nasdaq 100 index. Many investors hold both indices simultaneously. However, so far, these indices have not tracked the largest cryptocurrency public companies, Coinbase and MicroStrategy. We expect this situation to change as early as this month, during the next major restructuring of these two indices, which could have a significant impact. Consider this: there are $10 trillion in assets directly tracking the S&P 500 index, with an additional $6 trillion in assets benchmarked to that index. If Coinbase joins the index, we expect funds to purchase approximately $15 billion in Coinbase shares. If funds benchmarked to that index also include Coinbase, the stock purchase volume will increase by another $9 billion. Considering the relative scale of funds tracking the Nasdaq 100 index, the impact on MicroStrategy is expected to be smaller but still considerable.
The US Department of Labor will ease guidance on cryptocurrency in 401(k) plans
In March 2022, the US Department of Labor issued guidance "reminding 401(k) plan fiduciaries of the significant risks associated with adding cryptocurrency investment options to plans." The Department even stated it would "launch an investigative program to protect plan participants from these risks." With the new administration in Washington, we expect the Department to ease this guidance. Why should we care? Because it involves $80 billion in capital. The 401(k) plans in the US hold $8 trillion in assets. More funds are flowing into these funds every week. If cryptocurrency accounts for 1% of 401(k) assets, that means $80 billion of new capital will enter the space, with a continuous influx thereafter. If the share reaches 3%, that’s $240 billion!
If the US passes stablecoin legislation, the stablecoin market cap will reach $400 billion
The stablecoin boom in 2025 will bring the market cap of stablecoins to reach or exceed $400 billion. The following four catalysts will drive this growth:
Stablecoin legislation: For new policymakers in Washington supporting cryptocurrency, passing comprehensive stablecoin legislation is the most likely outcome. At that time, major issues such as who will regulate stablecoins? Appropriate reserve requirements, etc., will be answered, and traditional banks like JPMorgan are also expected to enter this field.
Global trade and remittances: Stablecoins have been encroaching on the global payments and remittance market. We see that in 2024, stablecoin transaction volume has reached $8.3 trillion, second only to Visa's $9.9 trillion during the same period. In addition, stablecoin giant Tether recently financed a $45 million 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 continue to grow.
Integration of fintech giants: Payment giant Stripe spent $1.1 billion in October to acquire the stablecoin platform Bridge and called stablecoins the "superconductor of financial services." PayPal launched its own stablecoin (PYUSD) in 2023, and Robinhood recently announced plans to collaborate with some cryptocurrency companies to launch a global stablecoin network. As stablecoins penetrate popular fintech applications, we see the asset management scale and trading volume of stablecoins skyrocketing.
Bull market growth: Finally, there is the most obvious catalyst, which is the continuation of the bull market. When the cryptocurrency economy expands, the assets under management of stablecoins will also increase. We are optimistic about the cryptocurrency industry in 2025, so we are also optimistic about stablecoins.
By 2025, the market size of tokenized RWAs will exceed $50 billion
Three years ago, the cryptocurrency industry's tokenization of real-world assets (RWA) (such as private credit, US Treasuries, commodities, and stocks) was less than $2 billion. Today, this market has reached $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, costs much less than traditional securitization, and provides 24/7/365 liquidity while bringing transparency and risk exposure to almost all asset classes. This is why Larry Fink, CEO of BlackRock, has shifted from skepticism about Bitcoin to being the biggest advocate for tokenization. He says, "The next generation market will be the tokenization of securities." It's worth noting that this comes from the leader of the world's largest asset management company. We agree with this view. In our opinion, Wall Street has just started to realize this, which means substantial institutional funds will soon flow into tokenized RWAs. How big is it? We believe that by 2025, the tokenized RWA market will reach $50 billion and has the potential for exponential growth. Of course, we are not the only ones optimistic; 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 a price exceeding $1 million
When making predictions, people often focus on the next year. But why do that? 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 it cannot be guaranteed that this will continue, 2029 will mark the peak of the next cycle (and also the 20th anniversary of Bitcoin's birth). Surpassing gold in the 20 years following Bitcoin's inception would be quite an achievement, but we believe Bitcoin can do it. (Note: If the US announces the purchase of 1 million Bitcoins as a strategic reserve, we could reach the $1 million per Bitcoin target more quickly.)
Appendix: Bitwise's 2024 prediction results 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, setting a new all-time high: A
Bitcoin spot ETF will be approved: A
Coinbase's revenue will double, exceeding Wall Street's revenue growth expectations by at least 10 times: A
The amount settled using stablecoins will surpass 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 NFT: F
AI assistants will use cryptocurrency for online payments: A
Over $100 million will flow into prediction markets: A
Significant upgrades to Ethereum will lower average transaction costs to below $0.01: B
Additional predictions: By the end of 2024, 1 in 4 financial advisors will allocate cryptocurrency in client accounts: To be observed
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