Dispatch #225: 2025: The year ahead

In this patch of your weekly Dispatch:

• Bitcoin’s gains in 2024
• Crypto adoption leaders
• The biggest trend in TradFi

The big idea

Bitcoin’s 2025 strategy: more of the same energy?

While Bitcoin didn’t leave surprise gifts under the Christmas tree, it has stood tall globally throughout the year, setting the stage for outperformance in 2025. A $250,000 Bitcoin projection, shared by Nexo’s Chief Product Officer and echoed by other industry voices, has drawn attention from news outlet CNBC. With high expectations almost palpable, could next year bring even greater rewards? Let’s look at 2025’s potential tailwinds:

Bitcoin as a strategic reserve asset

The idea of Bitcoin as a strategic reserve asset is gaining momentum worldwide. In the U.S., Senator Cynthia Lummis’ proposal for a national Bitcoin reserve has sparked interest. BTC’s decentralized nature, robust security, and capped supply make it a strong contender for “digital gold.” This shift could trigger a global domino effect – if the U.S. adopts Bitcoin as a reserve, other nations will likely follow suit, as Dispatch editors discussed with the media.

Macroeconomic factors driving Bitcoin’s growth

Macroeconomic trends are creating a promising environment for Bitcoin in 2025. On one hand, central bank interest rate cuts are expected to continue next year. They are historically a bullish sign for Bitcoin, boosting investor confidence by lowering borrowing costs. On the other hand, recession fears are prompting investors to look for alternative assets. Here, Bitcoin’s inflation-resistant qualities shine, aligning with the broader trend of diversifying portfolios to include digital assets.

The rise of Bitcoin ETFs

Since their landmark approval in January 2024, Bitcoin ETFs have reshaped how institutional and retail investors access Bitcoin. This is especially true for traditional, conservative investors like pension funds and state institutions. These funds provide a familiar vehicle that bridges traditional finance and crypto. If these investors enter Bitcoin en masse in 2025, it could be the biggest tailwind for the asset. 13-F filings from 2024 show major institutions already increasing their Bitcoin allocations, with firms like BlackRock and Fidelity leading the charge. 

If these drivers unfold as expected, Bitcoin might surpass all 2025 forecasts. One thing is clear – it will continue to drive the big idea in crypto in 2025. And that’s not a bad thing.

Ethereum

ETH’s time for an upgrade

Ethereum enthusiasts have plenty to look forward to in 2025, with major upgrades and growing institutional interest setting the stage for a standout year.

Pectra upgrade to enhance scalability

The early 2025 Pectra upgrade is set to tackle Ethereum’s scalability issues, increasing the validator balance from 32 ETH to 2048 ETH. This will reduce network strain and improve performance, especially with EIP-7702, which enhances staking and decentralization.

Ethereum ETFs attract institutional interest

Ethereum’s recent ETF inflows, totaling $1.5 billion in two weeks, signal rising institutional interest. These funds are expected to drive price momentum, positioning Ethereum for potential new highs in 2025.

Pro-crypto SEC and Ethereum’s growing role

Under the potential Trump administration, the SEC is expected to foster a more crypto-friendly environment. Ethereum’s dominance in stablecoins and tokenization could make it a major beneficiary, further boosting adoption in 2025.

Solana

SOL serious in 2025?

Memecoins may have defined Solana in 2024, but 2025 could mark a shift as more serious developments take center stage, positioning the blockchain for a brighter future. The odds of a spot Solana ETF approval have risen to 71% – yes, it is all to do with the more crypto-friendly SEC expected. This is what Bloomberg’s leading crypto analysts predict too.

The blockchain ecosystem is also booming, with Solana ranking as the second-largest in the space. Its DEX protocols are driving significant trading volumes, further fueling investor optimism. If Solana ETFs gain approval, the asset could see significant capital inflows, following Ethereum’s successful ETF path.

Adoption

Crypto’s bird’s-eye view to 2025

The key trends for 2025 are becoming increasingly clear, as outlined in a recent Citi report, which predicts significant growth in the cryptocurrency market. Here are the main drivers identified:

Stablecoin adoption

Stablecoins are central to digital asset finance applications such as lending and borrowing. As stablecoins grow in market capitalization, they are becoming essential tools for onboarding new participants. Ethereum’s network activity, particularly through layer-2 scaling solutions, saw a 210% increase in 2024, reflecting this trend.

Growth of crypto ETFs

Bitcoin and Ethereum ETFs have attracted billions in institutional inflows, driving significant price movements. By 2024, Bitcoin ETFs surpassed $100 billion in net assets, with each $1 billion of ETF inflows contributing to 4.7% of Bitcoin’s price increase. The institutional interest is expected to continue, enhancing market liquidity and accessibility for traditional investors.

Global demand and regulation

Countries facing economic instability, like Turkey, Argentina, and Venezuela, are expected to drive increased adoption of digital assets. Alongside favorable regulation, these factors will contribute to the expansion of the crypto market, despite potential challenges like macroeconomic instability and regulatory uncertainty.

Macroeconomic roundup

Striking the economic balance

As the world’s largest economy, the U.S. will continue to shape global markets, including Bitcoin. It all revolves around balancing interest rates and sustained economic growth.

USA: With inflation nearing the 2% target, economic strength is driven by supply-side factors, strong growth, and full employment, signaling potential continued outperformance in 2025.

Eurozone: Europe faces slow growth due to weak productivity and trade disruptions. The European Central Bank may cut rates further in 2025 to stimulate growth, though structural risks persist, hampering long-term prospects.

China: China’s growth recovery is fragile, supported by easing policies but hindered by property sector challenges and structural issues. Long-term growth remains uncertain despite short-term stabilization efforts.

The week’s most interesting data story

The most awaited season in crypto

After Bitcoin’s historic surge past $100,000, altcoins are stepping into the spotlight in 2025. With rising market caps, new technologies, and increasing institutional interest, the stage is set for an exciting altcoin season that could outshine Bitcoin’s dominance. Could this chart be a prelude to a defining year for altcoins, driven by emerging narratives like AI, tokenized real-world assets, and decentralized infrastructure?

The numbers

Top 5 stats of the year

$300 billion – Stablecoin market cap could hit this milestone in 2025, fueled by growth in crypto trading, payments, and DeFi.

560 million – The estimated number of cryptocurrency owners worldwide in 2024, highlighting rapid global adoption.

$8 trillion – The projected total cryptocurrency market cap for 2025, driven by ETF inflows and institutional interest.

1 million BTC – The amount of Bitcoin the U.S. government could hold if it adopts a proposal to buy 200,000 annually for five years.

$42 trillion – The potential reduction in U.S. debt by 2049 if a Bitcoin reserve strategy is implemented, per VanEck’s analysis.

Hot topics

Count us in.

Another journey for Bitcoin.

Is that a to-do list?

As we close out 2024, we want to extend our heartfelt thanks to you, our readers, for being part of this journey. Your engagement and curiosity inspire us to keep delivering insights that matter. We look forward to continuing to bring you the most important stories in crypto on a weekly basis. Here’s to navigating an exciting 2025 together!

Dispatch is a weekly publication by Nexo, designed to help you navigate and take action in the evolving world of digital assets. To share your Dispatch suggestions and comments, email us at [email protected].