Trending
Buoyed by an array of catalysts, including the long-awaited debuts of US-listed spot bitcoin exchange traded funds in January, 2024 has been a banner year for the largest cryptocurrency. In fact, as of Dec. 15, bitcoin had more than doubled on a year-to-date basis and was flirting with all-time highs.
As is the case with any other asset, asking for a doubling in a second consecutive year is asking for a lot. Then again, bitcoin isn’t any other asset. It’s got a well-documented and deserved reputation for volatility. It can give and take in rapid fashion. Alone, that keeps some investors at bay and makes it difficult to predict that 2025 will be a sequel to what was seen this year.
On the other hand, data indicate that, helped by the aforementioned spot ETFs, bitcoin adoption is soaring. Those funds have increased institutional participation in the crypto market and have made easier for registered investment advisors to get clients into the bitcoin game. That could augur well for the digital currency in 2025 as could a favorable regulatory climate.
“Another contributing factor is the expected clarity in crypto regulation following Donald Trump’s win in the 2024 U.S. presidential elections. President Trump and Vice President Vance will likely lead a regulatory overhaul of the crypto industry in 2025,” reports Joel Lim for The Defiant.
Expect Corrections, Volatility for Bitcion in 2025
As things stand today, it’s not unreasonable to expect that bitcoin will continue rising next year. Perhaps not to the extent that was seen this year, but the stars have aligned for extension of the current bull market.
That said, the cryptocurrency’s aforementioned penchant for volatility and expected corrections ensure that bitcoin will not move higher in straight line fashion and it’s likely to test some investors’ nerves over the course of 2025. Translation: several things can simultaneously be true. Bitcoin can be volatile and have uncertain outlook and still deliver positive returns next year.
“In 2025, bitcoin’s future looks promising yet uncertain,” said John Plassard, senior investment specialist at Mirabaud Group, in an interview with Morningstar. “The growing integration of bitcoin into mainstream finance through spot ETFs and institutional adoption suggests it could consolidate its position as a legitimate asset class.”
That’s a fairly sanguine outlook and it accounts for the fact that bitcoin can be turbulent, but other factors need to be taken into consideration regarding the digital currency’s 2025 potential. Those include the extent to which the Federal Reserve can continue lowering interest rates and the ability of the Trump Administration to not disappoint on the regulatory front.
Speaking of Crypto Regulations…
Trump has already appointed David Sacks as “crypto czar” – not a cabinet position in the traditional sense, but nonetheless a move that affirms Trumps commitment to making the U.S. the epicenter of the cryptocurrency universe. Gary Gensler’s departure at the Securities and Exchange Commission (SEC) helps the regulatory outlook for bitcoin and friends, too.
Additionally, Trump’s appointments (they’ve yet to be confirmed) to lead the Commerce and Treasury departments are viewed as potential boons for crypto in the U.S. However, favorable crypto regulations could be implemented at a slow pace that doesn’t satisfy demanding investors, but overall, the outlook could prove attractive.
“These moves suggest a possible streamlining of regulatory processes and greater integration of digital assets into traditional financial systems, potentially fostering innovation and growth,” Adrian Fritz, head of research at 21Shares, told Morningstar.