Forbes: In 2025, cryptocurrency will be redefined

Original Title: "7 Reasons Why 2025 Could Redefine Crypto"

Author: Nina Bambysheva, Forbes

Translated by: Luffy, Foresight News

The cryptocurrency winter? It's over. The decline of the crypto empire and courtroom dramas? They are now in the past. Survivors? Battle-tested, with a keen eye, as if this is a new gold rush.

After years of conflict with the U.S. Securities and Exchange Commission (SEC), Bitcoin and Ethereum exchange-traded funds (ETFs) have finally arrived. According to crypto research firm K33 Research, as of December 16, the assets held by U.S. Bitcoin ETFs reached $129 billion, surpassing the $125 billion held by gold ETFs.

The market's excitement following the U.S. elections, combined with Donald Trump's promise to make America the "world's cryptocurrency capital" and establish a strategic Bitcoin reserve, led to Bitcoin prices briefly breaking the $100,000 mark.

Solana is seizing development opportunities, thanks to the hype around memecoins and the rise of new narratives like DePIN. DePIN is a network that uses blockchain technology to decentralize control and ownership of physical infrastructure. Platforms like Polymarket (where users can bet on the outcome of the U.S. presidential election) and the battle royale game Off The Grid have achieved success in mainstream markets. A new wave of "degens" is betting on tokens like fartcoin and dogwifhat, both of which currently have market capitalizations exceeding $1 billion.

Rob Hadick, a general partner at San Francisco-based crypto venture capital firm Dragonfly, stated, "This year, cryptocurrency has entered mainstream consciousness in a way not seen since 2021; it is now a sustainable long-term asset class that will have a voice and play an important role." "If you only look at the impact of cryptocurrency on elections, whether through political donations or promoting it among legislators and presidential candidates, this is unprecedented and a significant step towards the legitimization of cryptocurrency."

Donald Trump attends the 2024 Bitcoin Conference in Nashville, Tennessee. Photo credit: The Washington Post

With Trump and a group of pro-crypto officials preparing to take office, what industry insiders are calling the "golden age of cryptocurrency" has arrived. Here are the trends brewing:

Historical Highs and U.S. Bitcoin Reserves

The art of bold price predictions is back in vogue. Crypto asset management firm Bitwise predicts that if the U.S. establishes a strategic reserve similar to oil or gold, Bitcoin's price could reach $200,000, or even $500,000. The logic is that an official U.S. Bitcoin reserve would trigger global FOMO.

Trump proposed using 200,000 Bitcoins (worth $21 billion) seized from criminals to kickstart the reserve at the Nashville Bitcoin conference in July. However, the legal pathway remains unclear—will it require Congressional approval, or can the executive branch act unilaterally? Pro-crypto Senator Cynthia Lummis proposed a reserve plan operated by the Treasury in July. Skeptics argue that Bitcoin's volatility could undermine financial stability. Trump's silence on whether the U.S. will purchase more Bitcoin on the open market adds another layer of uncertainty.

Crypto Regulation Reset: A Friendly Washington

The new administration is expected to be the most pro-crypto government to date. Some key government appointments related to cryptocurrency include:

• SEC: Former SEC commissioner and crypto supporter Paul Atkins is set to replace crypto adversary Gary Gensler, who was known for suing and enforcing against crypto firms during his tenure.
• CFTC: Andreessen Horowitz policy director and former CFTC commissioner Brian Quintenz is a leading candidate to head the agency.
• Treasury: Hedge fund billionaire and Bitcoin advocate Scott Bessent is Trump's pick for Treasury Secretary.
• Commerce Department: Howard Lutnik, CEO of Cantor Fitzgerald (the main custodian of Tether's USDT reserves), will lead the department.
• AI and Crypto Czar: David Sacks, a long-time venture capitalist who previously worked with Elon Musk at PayPal, will oversee policies in two key areas of Trump's strategy to enhance national competitiveness.
• House Financial Services Committee: Arkansas Republican Congressman French Hill, along with outgoing committee chairman Patrick McHenry, advocates for crypto-friendly legislation, planning to prioritize crypto market structure bills and investigate the so-called "Choke Point 2.0," which many believe unfairly targets the crypto industry through de-banking practices.

"This is a real opportunity to craft good policy for the industry," said Kristin Smith, CEO of the Blockchain Association based in Washington, D.C., which represents over 100 cryptocurrency companies. "The White House has indicated this is a priority. I believe we will see a collaborative effort across government departments, legislative pushes for market structure and stablecoins, and a significant shift of innovation returning to the U.S.," she added.

New Crypto IPOs and Venture Capital Influx

The process for crypto IPOs is heating up. Bitwise has listed five companies that may go public next year:

• Circle: The issuer of the second-largest stablecoin USDC, which secretly filed for an IPO in January.
• Figure: Known for blockchain-based financial services (like mortgages, personal loans, and asset tokenization), the company has been exploring an IPO since last year.
• Kraken: The U.S.-based cryptocurrency exchange's IPO plans date back to 2021.
• Anchorage Digital: Its status as a federally chartered bank may pave the way for its IPO.
• Chainalysis: A leader in blockchain compliance and intelligence services, is expected to go public.

Additionally, Hadick from Dragonfly stated, "I expect the LP (limited partners in crypto venture capital firms) market to improve, as they will want to allocate more funds to cryptocurrency. Many traditional Web2 crossover funds will return to the Web3 space. We are already seeing this trend in certain areas, such as stablecoins and payments." He added that venture capital deals often lag behind public market price increases by one or two quarters.

Crypto-Related Companies Added to Major Stock Indices

MicroStrategy's stock has risen over 400% this year. With new accounting rules allowing companies to reflect their Bitcoin investments at market value on financial statements, the company is now a component of the Nasdaq 100 index, and analysts predict it will soon be added to the S&P 500 index. This change could allow MicroStrategy to enter index-tracking funds, thereby joining the portfolios of countless U.S. investors. MicroStrategy co-founder and executive chairman Michael Saylor's "Bitcoin treasury" strategy (selling bonds and stocks to accumulate Bitcoin) has pushed its $86 billion company into the top 100 of the S&P 500. Analysts also suggest that Coinbase, which has risen 70% this year, may join this coveted index.

Surge in Stablecoins

With the U.S. poised to introduce much-anticipated stablecoin legislation, the stablecoin industry is expected to experience explosive growth, with market capitalization likely to double to $400 billion. According to Bitwise, stablecoin transaction volume is projected to reach $8.3 trillion in 2024, nearly matching Visa's $9.9 trillion payment volume.

Tether and Circle continue to dominate. However, Hadick warns that their growth may soon stagnate if they continue to operate like asset management firms rather than payment companies.

Stripe's $1.1 billion acquisition of stablecoin platform Bridge in October sends a message: stablecoins may become the cornerstone of fintech. Stripe calls it "the superconductor of financial services," boasting its unparalleled speed, low cost, and global reach. Robinhood is also exploring the creation of a global stablecoin network.

Meanwhile, a new generation of "stablecoin 2.0" models is quietly emerging. Ceteris, research director at New York-based crypto analysis firm Delphi Digital, explains, "There are many new stablecoin models that are returning income to token holders or actual user-attracting applications. I believe these models are disruptive."

Acceleration of Traditional Asset Tokenization

Larry Fink, CEO of BlackRock, has been promoting tokenization for years. Everything from real estate to art could soon be tokenized. The biggest benefits of tokenization include instant settlement, lower costs than traditional securitization, 24/7 liquidity, and transparency.

Three years ago, the crypto industry had only tokenized $2 billion of real-world assets (RWAs), including private credit, U.S. debt, commodities, and stocks. Today, that figure is nearing $14 billion. Venture capital firm ParaFi predicts that by 2030, the market size for tokenized RWAs could soar to $2 trillion, signaling a significant transformation in asset ownership and trading.

New Applications, Better Infrastructure

The buzzword at the end of 2024 is AI agents. Get ready to witness the fusion of artificial intelligence and cryptocurrency, a blend closer to science fiction.

This trend is already taking shape. Take TruthTerminal, for example; this AI agent not only secured $50,000 from Marc Andreessen but also became a millionaire using X social media. Its success stems from promoting a token based on an absurd meme from the early 2000s (the token's anonymous creator transferred a large sum into TruthTerminal's wallet, which is managed by Andy Ayrey).

However, analysts are cautious. Practical AI agents (like those attempting to execute complex transactions across blockchains on behalf of users) are few and still in early stages. "The excitement around agents is due to their novelty," says Ceteris from Delphi, "but whether good or bad, it could be the biggest bubble of this cycle."

Despite the blockchain industry still being fragmented, with most decentralized applications not yet mainstream, work continues on building robust infrastructure. Ceteris explains, "Solana has set the trend for the high-throughput blockchain era, and almost every new chain is launched under this trend, leading to a plethora of cheap block space."

Thus, the narrative of cryptocurrency has shifted from survival to prosperity. This is just part of what may bring surprises next year. You can choose to prepare popcorn for the show or pull out your wallet for this opportunity. Caution is essential, as the market will experience highs and lows. And this time, the stakes seem higher than ever.