Citi analysts think the crypto market will blow through 2025 as a bunch of things come together – Trump policies, ETFs and innovation in the stablecoin space. All of this is on top of a 2024 that saw Bitcoin hit $100,000 for the first time ever. An achievement that shows how high it can go.
Trump’s Policies and Appointments
Trump’s re-election in 2024 signs at a total crypto regulatory overhaul. The actual pivot came when Paul Atkins was appointed head of the U.S. Securities and Exchange Commission. This change in leadership is set to open the door for the years-long approved spot Bitcoin and Ethereum ETFs.
Citi analysts, led by Alex Saunders, said 2024 was “a strong one year for crypto, registering a 90%+ increase in total market cap.” Much of that growth was due to the money flowing into those new ETFs, making crypto more accessible to traditional investors. The analysts noted, “These flows have been the biggest driver of crypto returns, and we expect that to continue in 2025.”
In addition to the ETFs, the Trump administration is working to make the U.S. a hub for digital asset innovation. The plans to create a strategic Bitcoin reserve and the nomination of venture capitalist David Sacks as White House AI and crypto czar will create a more crypto-friendly environment.
Sacks has been tasked with drafting a broad regulatory framework for digital assets, not the enforcement-focused regulation of previous administrations. Citi analysts have called this a “less de-regulation; a removal of headwinds”. So, while there will be oversight, the policies will reduce the barriers that have always held back the crypto industry.
Citi Predicts Crypto Boom in 2025 as Trump Policies and ETFs Take Hold
The ETF Inflows
The Spot Bitcoin and Ethereum ETFs are some of the ingredients that have been hitting the crypto market. When approved this year-2024, institutional and retail investors had an easy way into the digital assets and, hence, huge inflows into the market. Citi analysts didn’t miss that, they said “these have been the biggest driver of crypto returns” and will continue to be so in 2025.
They also noted Bitcoin’s volatility and added that for it to be in a portfolio, high returns would need to justify the risks. “For a 5% allocation, performance needs to be higher-double digits using the S&P’s longer-term risk-reward trade-off or 21% using recent returns where the high reward/risk means investors need to be compensated well for taking extra risks.”
Stablecoin Innovation and Market Resilience
The stablecoin market could also grow in 2025, driven by innovation and competition. Citi’s report highlights new entrants and partnerships as the factors that are challenging Tether’s dominance and diversifying the market. This is a good thing, reducing the systemic risk of being over reliant on one issuer.
Beyond crypto trading, stablecoins are getting into decentralized finance platforms and payment systems that could drive wider adoption of digital assets.
Citi analysts said, “Stablecoin adoption beyond crypto trading will enhance decentralized finance and drive more engagement in the space.”
Citi Predicts Crypto Boom in 2025 as Trump Policies and ETFs Take Hold
Broader Adoption and Global Impact
While Citi acknowledges institutional participation through ETFs and stablecoin innovation, they say broader adoption is needed for the long-term success of crypto. Economically troubled countries like Turkey, Argentina and Venezuela are starting to use digital assets as a hedge against inflation and currency instability which will drive global adoption in big ways.
Citi analysts also predict Trump’s policies will break down the barriers that have held back the full development of digital assets so far. They also said the road ahead is not without its challenges, such as Bitcoin’s well-known price volatility and uneven global regulatory landscape. However, that will require a balance between regulation-friendly innovation and risk management mechanisms.
Conclusion
Citi’s 2025 outlook is looking good for the crypto market. With Trump’s policies supporting innovation, ETFs providing easy access and stablecoin innovation making the market more resilient, the industry is set for another big year.
However, volatility and regulatory uncertainty are the challenges that need to be managed for this momentum to continue. Focus on real adoption and value-driven use cases, and crypto can find its place as a financial tool in the global economy.
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FAQs
1. What are the key drivers of crypto growth in 2025?
Citi analysts point to Trump’s policies, inflows into ETFs and stablecoin innovation as the drivers of crypto growth in 2025.
2. Why are ETFs important for the crypto market?
ETFs make crypto investing easier for institutional investors; huge inflows into the space have made the market more accessible and liquid.
3. What’s happening with stablecoins?
Stablecoins are moving beyond trading, getting into DeFi and payment systems that enhance their utility and reduce systemic risk.
4. What changes in regulation can investors expect under Trump’s administration?
The administration is expected to move from enforcement-driven regulation to a legislative framework, removing barriers while maintaining oversight.
