PakGazette — Cryptocurrencies are poised to continue their momentum after nearly doubling their total market capitalization in 2024, but broader adoption in 2025 will depend on how effectively the crypto-friendly Trump administration can establish a clearer regulatory path for cryptocurrencies to thrive.
“This year [2024] “was strong for cryptocurrencies, recording an increase of more than 90% in total market capitalization,” noted Citi Research in its outlook for 2025. “Markets are optimistic on the regulatory front given the cryptocurrency-friendly opinions and staff.” cryptocurrencies of the incoming US administration”.
The spectacular gains in 2024 were driven by the launch of ETFs and spot, which together attracted $36.4 billion and $2.4 billion in net inflows through December 19, respectively. These flows have been the most important driver of cryptocurrency returns, Citi said, and it expects this trend to continue in 2025.
But the picture is far from simple. While the incoming administration of President-elect Donald Trump is widely viewed as pro-crypto, the potential for significant regulatory reform remains uncertain.
“The ‘Trump push’ from a regulatory standpoint is not necessarily a deregulation story… some market participants believe the incoming administration may seek to replace more regulators it views as having a crypto-skeptical track record, and promote those whose views better align with that of his administration,” Citi said.
Trump had expressed his willingness to move away from the current administration’s “anti-cryptocurrency crusade,” which he criticized for stifling innovation. His proposed policies include a shift from enforcement-focused regulation to a more legislation-based approach, with the aim of reducing uncertainty for both investors and issuers.
In a sign that the winds of change are in motion, Trump has nominated crypto-friendly Paul Atkins to replace SEC Director Gary Gensler, who will leave office on January 20.
The regulatory environment influences cryptocurrency adoption, Citi said, pointing to several other metrics, including operations/flows, on-chain metrics, and total value locked in decentralized finance, as key measures to monitor.
The regulatory framework will be an important determinant of adoption,” Citi said, pointing to the prospect of greater transparency in regulation that will bring other cryptocurrencies into the investor spotlight.
“A consequence of the potential change in the regulatory regime is that cryptocurrencies can mean much more than just Bitcoin,” Citi added.
Citi warns, however, that macroeconomic factors could disrupt this optimistic narrative, as political uncertainty threatens to cause volatility in risk assets.
“ Macro (BCBA 🙂 may become less favorable during the rest of the year [2025] given increased US political uncertainty and expected stock market volatility,” he said.
