Vijay Valecha, Khaleej Times, January 2, 2025
As cryptocurrency traders take a breather at the end of year, the overall outlook for the sector remains highly bullish, experts say.
The biggest boost to cryptocurrency in 2024 has been US president-elect Donald Trump’s announcement of a bitcoin strategic reserve, and the gradual green light for bitcoin exchange traded funds by the worlds major market regulators.
On Tuesday, bitcoin rose 2 per cent to $93,848, well below the record high of $108,379.28 it touched on December 17, Reuters reported. The world’s best known and biggest cryptocurrency is set for a bumper 120 per cent rise for the year, and analysts say $150,000 is not far away.
Crypto markets have exhibited a strong performance this year, supported by strong ETF inflows and various fundamental positives. Ethereum was up 50 per cent YTD, while Bitcoin rallied 127 per cent YTD, reaching an all-time high of $108,000 in December. The move was driven by immense ETF inflows, valued at $913 billion this year. Moreover, interest rate cuts, Trump’s victory, Bitcoin halving, and anticipation of the Ethereum upgrade further provided tailwinds for cryptocurrencies.
“Cryptocurrencies have been boosted by the re-election of Donald Trump, with markets feeling optimistic about his support for digital assets. Trump aims to make the US a crypto capital and wants to create a Bitcoin reserve. He also plans to ease regulations on the crypto market, which could create further growth opportunities for the asset. His approach, along with the Republican Party’s pro-crypto stance, signals a shift toward greater acceptance of cryptocurrencies,” said Vijay Valecha, chief investment officer, Century Financial.
Many expect that by 2025, new laws will modernise the US financial system to better include cryptocurrencies. One of these could give the Commodity Futures Trading Commission (CFTC) more power to regulate crypto, reducing the SEC’s role. “This shift could be good for the future of cryptocurrencies and for companies involved in the crypto industry. If the SEC eases its strict rules on cryptocurrencies, it could make things easier for crypto investors and businesses,” Valecha said.
Since Bitcoin ETFs launched in January, they’ve already seen over $500 billion in daily trading volume and $36 billion in net inflows, with BlackRock’s iShares Bitcoin Trust being a standout success. “Bitcoin ETFs are expected to attract more flows in 2025 for three key reasons: the first years are typically the slowest for ETFs, large powerhouses like Morgan Stanley, Merrill Lynch, etc. are expected to come up with their own ETFs, and investors will gradually increase their allocation,” Valecha said.
The launch of Bitcoin ETF options this year is a big step for cryptocurrencies as it may lead to reduced volatility, boosting investor confidence and creating positive price momentum. “As more crypto ETFs, beyond Bitcoin and Ether, are expected to launch under Trump’s administration, the category could see even larger amounts of assets under management (AUM), especially with growing investor interest, a more stable trading environment, and lower absolute values associated with ETFs,” Valecha said.
In 2025, the industry will watch a few key areas: SAB 121, stablecoins, greater regulatory openness to digital asset innovation, and movement around a US strategic Bitcoin reserve. Crypto mining companies like Riot, Mara, Coinbase, and CLSK are also expected to benefit from proposed deregulations, analysts say.
Increased adoption of cryptocurrencies is expected by corporations that could use this technology to innovate and establish their position in the market. “This can be seen from MicroStrategy Inc., the largest corporate holder of Bitcoin, which has integrated crypto into its portfolio and could potentially merge the financial technology in the gaming world,” Valecha said.
Further, decentralised artificial intelligence (deAI) is set to reshape how AI operates by leveraging blockchain to distribute computation and data storage across a decentralised network. The integration of deAI with blockchain is expected to unlock potential across industries like healthcare, finance and logistics.
Multiple Central Bank Digital Currency (CBDC) projects are being introduced to modernise payment systems and promote financial inclusion. This could further benefit the crypto sector and create promising growth avenues.
Source
Khaleej Times