After struggling through the end of 2024, cryptocurrencies are in the green at the start of 2025, with enthusiasm returning to the sector from several sources. Treasury yields are also down this morning, a good sign for crypto.
The world’s second-largest cryptocurrency, Ethereum ( ETH 3.86%), is up 4% since late afternoon yesterday, as of 10:58 a.m. ET. XRP ( XRP 7.07%) and Shiba Inu ( SHIB 6.90%) are also up 4.3% and 5.4%, respectively.
Excitement kicks off at the start of 2025
Since President-elect Donald Trump won the election in early November, cryptocurrency prices have been on the rise. The market slowed down over the past few weeks of the year, but it seems that excitement is starting to build again.
The price of the world’s largest cryptocurrency, Bitcoin (CRYPTO:BTC), an industry benchmark, has jumped above $96,400, and many experts and analysts are predicting more in 2025. Investment bank HC Wainwright recently released a report saying that Bitcoin could more than double again this year and reach $225,000, an increase from its previous price target of $145,000.
One of the main reasons Wainwright is optimistic has to do with the more favorable regulatory landscape under the Trump administration, which includes the passage of several major bills in Congress that will lead to more institutional adoption. One of the bills that Wainwright is optimistic about is the 21st Century Financial Innovation and Technology Act. The bill, which is set to pass the U.S. House of Representatives in mid-2024, will provide a set of criteria for determining whether cryptocurrencies are a security or a commodity, one of the biggest debates in crypto right now.
The SEC has argued that many cryptocurrencies that are traded as speculative assets should be treated as securities and therefore subject to securities laws. Cryptocurrency advocates favor the idea of cryptocurrencies as commodities and the oversight of the Commodity Futures Trading Commission (CFTC). This law would at least set the standard, which would help many financial institutions and brokerage firms better determine which cryptocurrencies are securities and which are not.
Additionally, the BlackRock Bitcoin ETF ( IBIT 4.26%) has taken in over $37 billion in assets in its first year of trading, making it among the top three crypto ETFs in 2024. More crypto ETFs are expected to be approved in 2025. Ethereum already has one, and many suspect that XRP could get one as well if the SEC lawsuit against the token comes to an end, which could happen this year.
Can Cryptocurrencies Ride Another Big Wave This Year?
After such a huge price surge until the end of 2024, there are more risks to cryptocurrencies. However, it is very likely that the crypto market will remain bullish. The passage of major crypto legislation will create more clarity around the sector, while more spot crypto ETFs will increase adoption among institutions and investors.
Additionally, Treasury yields and inflation may play a role. Recently, investors have become more concerned about inflation, and Treasury yields have remained elevated. Softening inflation expectations and lower yields are likely to push the crypto market higher, while the opposite could hurt crypto.
I am bullish on both Bitcoin and Ethereum in the long term, and I think Ethereum could play a catch-up role with Bitcoin this year. I have a smaller, more speculative position in XRP, but I have no interest in Shiba Inu at the moment.
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