Crypto Market Forecast: Top Trends That Will Affect Crypto in 2025

Economic landscape promising for crypto

“The current economic landscape is quite promising for the crypto market in the upcoming year,” Dean Skurka, president and CEO of Canadian financial firm WonderFi, told the Investing News Network (INN) in an email.

“The incoming pro-crypto Trump White House has given a lot of confidence to investors, both institutional and retail, and this should reduce the uncertainty that has held many investors back from the sector. Both Canadian and US crypto investors should see the benefits from this confidence in the asset class," he continued.

“Additionally, interest rate cuts in the US and Canada have sent a positive signal to investors in the back half of 2024. As we anticipate further cuts next year, many retail investors will feel the benefit from reduced borrowing costs, which should help increase the amount of money available for investment," Skurka added.

Also in play are Trump's plans to increase deportations and implement widespread tariffs, circumstances that could worsen existing worries like rising consumer debt and job market instability.

Further compounding these concerns is August's "un-inversion" of the yield curve, a historical precursor to recessions, as highlighted in an October report from Picton Mahoney Asset Management.

The report also points to rising Chapter 11 bankruptcy filings and a decline in manufacturing as warning signs for a potential economic downturn and a possible decline in equity prices.

Given these potential headwinds for the manufacturing sector and the broader economy, investors are increasingly exploring alternative assets that might offer protection. As Dean explained, “Many investors also view crypto as a hedge against inflation, similar to gold. If inflation does creep up, investors may decide to increase the proportion of their portfolio in crypto, to mitigate the risk of their savings decreasing in value over time."

In his view, institutional investors may particularly appreciate that crypto assets are more resistant to inflation.

Trump admin to improve regulatory environment

The regulatory landscape is expected to see major shifts after Trump’s inauguration on January 20.

Gary Gensler has already said he will step down from his post as chair of the US Securities and Exchange Commission (SEC) that day, potentially bringing an end to a years-long contentious relationship between the industry and regulators. Former commissioner Paul Atkins has been nominated as his replacement.

Crypto advocates are also optimistic about a united front between the SEC and the Commodity Futures Trading Commission (CFTC) when Trump takes the helm in the US.

“For a long time, the SEC and the CFTC have had something of a turf war over crypto and who is going to regulate and how,” Adam Garetson, partner at multinational law firm Gowling WLG, told INN in an interview.

"I think that the SEC is more resourced than the CFTC from an investigation and enforcement perspective, but I think the underlying asset class does lend itself well to consideration by commodities regulators, particularly Bitcoin and Ether," he continued. He expects to see the CFTC receive more resources dedicated to crypto regulation.

Fox Business has reported that Trump’s team is considering shifting digital asset regulation to the CFTC.

Crypto investment options to diversify and grow

Looser regulations could pave the way for a broader range of investment vehicles within the crypto space, including a wider selection of ETFs offering investors exposure to a diversified mix of digital assets.

“With 14 altcoin ETFs currently waiting for approval — and more joining the list all the time — it appears the market will be very receptive to these products,” noted Dean. “As these funds launch, the overall market benefits from diversification options, improved liquidity and easier access for a wider investor base will be apparent."

He added that internal WonderFi data shows that usage and adoption of Solana has seen a "meteoric rise" in the last 2024 months. At the time of this writing, there were four active applications for spot ETFs tracking Solana.

Heightened liquidity due to an increase in ETFs could spill over into the crypto derivatives market. Furthermore, a less restrictive regulatory environment could stimulate more growth.

“ETFs are a significant touch point between the traditional financial world and the emerging digital asset world,” said Garetson. “I think those touch points are going to continue to grow as the crypto environment matures and greater regulatory clarity comes for the industry, and I think derivatives are another domino in that line. I think we've seen futures products on crypto exist now for a while, so I think we're going to see more traditional financial products that are based on or reference crypto emerging, and certainly the derivative vehicle is a place where there's room to grow.”

DeFi set to attract increased attention

Looking at the technology side of crypto, Garetson said he's watching staking, especially liquid staking.

“Liquid staking allows for investors to maintain liquidity so that their assets can be used for lending, borrowing and trading while rewards are being generated,” he explained to INN.

“So I think this advancement is going to have a net positive implication, in particular for the ETF space as well, where assets such as Ether that are held in an ETF can still generate these staking passive returns.”

This rise of liquid staking has fueled increased activity in decentralized finance (DeFi), with several knock-on effects. As more users participate in liquid staking and DeFi protocols, demand for Ether rises — this has potentially contributed to its recent price surge. Additionally, liquid staking tokens can be used as collateral for borrowing, effectively increasing overall collateralization in DeFi and potentially leading to higher borrowing volumes.

Another key trend accompanying this growth is the rising prominence of stablecoins, particularly USDT (Tether) and USDC (Circle). These stablecoins play a crucial role in facilitating DeFi activity, enabling seamless transactions and providing stability within the volatile cryptocurrency market.

As CryptoQuant CEO Ki Young Ju observed recently in a post on X, formerly Twitter, "The surge in altcoin trading volume isn't driven by $BTC pairs but by stablecoin and fiat pairs, reflecting real market growth rather than asset rotation. Stablecoin liquidity better explains the altcoin market."

“In 2025 we're certainly seeing a push from a global regulatory perspective to take a closer look at DeFi and DeFi arrangements. So I expect this will be an area of regulatory focus in 2025,” said Garetson.

Crypto challenges and opportunities in 2025

The crypto market presents a landscape of both challenges and opportunities in 2025.

“To be sure, I think that the greatest advances that will help the crypto and digital asset sector will be greater regulatory clarity, and with that, greater institutional and retail adoption,” said Garetson.

Trump’s recent proposal to eliminate capital gains taxes on cryptocurrencies issued by American companies, such as Cardano and XRP, will likely attract more investors to the space and promote innovation in the industry.

As the market expands and diversifies, Bitcoin's position as the top cryptocurrency is likely to remain strong.

“It is hard to make (price) predictions, but the industry has never been better positioned," Dean told INN. “The pro-crypto US administration, the promise of a US strategic reserve of Bitcoin, the rising corporate, institutional and global jurisdictional adoption, coupled with the launch of the new Bitcoin ETFs, will all contribute to this baseline target."

Investor behavior is set to influenced by macroeconomic and geopolitical factors, similar to trends observed in traditional markets. Dean remarked, "There's no denying that macro conditions will contribute significantly to the supply and price of Bitcoin, so it will be worth watching as all these stories play out in 2025.”