Source: Galaxy; Compiled by: Deng Tong, Golden Finance

In 2024, Bitcoin and digital assets have undergone tremendous changes. 2024 brings new products, record inflows, dramatic shifts, growing adoption, and the consolidation of Bitcoin’s status as an institutional asset.

Two major developments occurred this year: the launch of a spot-based Bitcoin ETP in the United States, and the election of Donald Trump to a second non-consecutive presidential term. Between these events, the market spent 237 days in a volatile, indecisive sideways movement. While these events served as both a catalyst and backdrop for the 2024 market, 2025 will see the market breadth and narrative expand. Without further ado, here are some predictions for 2025 from Galaxy Research.

Bitcoin will break through $150,000 in the first half of the year and test or reach a maximum of $185,000 in the fourth quarter of 2025. The combination of institutional, corporate and adoption will drive Bitcoin to new heights in 2025. Bitcoin has appreciated faster than all other asset classes since its existence, especially the S&P 500 and gold, and this trend is set to continue in 2025. Bitcoin will also reach 20% of gold’s market capitalization.

By 2025, the total assets of US spot Bitcoin ETPs will exceed US$250 billion. In 2024, Bitcoin ETPs absorbed a total net inflow of more than $36 billion, becoming the largest ETP issued in history. 13F filings show that many of the world’s major hedge funds have purchased Bitcoin exchange-traded products, including Millennium, Tudor, and D.E. Shaw, while the Wisconsin State Investment Board (SWIB) has also purchased Bitcoin exchange-traded products. Just one year later, the asset size of Bitcoin exchange-traded products (ETFs) is only 19% ($24 billion) short of the asset size of all physical gold exchange-traded products in the United States.

By 2025, Bitcoin will once again be one of the best risk-adjusted performers among global assets. The above AUM comparison is due to record inflows and rising Bitcoin prices in 2024. In fact, Bitcoin is the third-best performing asset on a risk-adjusted basis. Notably, the best Sharpe ratio belongs to MicroStrategy – a company that calls itself the “Bitcoin Finance Company.”

At least one top wealth management platform will announce a recommendation for a 2% or higher Bitcoin allocation. For various reasons, including maturity, internal education, compliance requirements, etc., no large wealth management firm or asset management firm has officially added Bitcoin allocation recommendations to investment advice model portfolios. This situation will beThat changes in 2025, which will further increase USD flows and AUM.

Five Nasdaq 100 companies and five are set to announce that they have added Bitcoin to their balance sheets or sovereign wealth funds. Whether for strategic, portfolio diversification or trade settlement reasons, Bitcoin will begin to find a place on the balance sheets of major corporate and sovereign allocators. Competition among countries, particularly those that are not aligned, have large sovereign wealth funds, or are even hostile to the United States, will drive the adoption of strategies to mine or otherwise acquire Bitcoin.

Bitcoin developers will reach consensus on the next protocol upgrade in 2025. Since 2020, Bitcoin Core developers have been debating which operations can safely enhance transaction programmability. As of December 2024, the two most supported pending operations for transaction programmability include OP_CTV (BIP 119) and OP_CAT (BIP 347). Reaching consensus on soft forks has been a time-consuming and rare feat since the inception of Bitcoin, and the next soft fork upgrade includes OP_CTV, OP_CSFS, and/or OP_CAT -Gabe Parker.

More than half of the top 20 publicly traded Bitcoin miners by market capitalization will announce transitions to or partnerships with hyperscalers, artificial intelligence or high-performance computing companies. The growing demand for AI computing will lead to Bitcoin miners increasingly retrofitting, building, or collocating HPC infrastructure with Bitcoin mining farms. This will limit year-over-year hashrate growth, which will reach 1.1 zetahash by the end of 2025.

Bitcoin DeFi (considered to be the total amount of BTC locked in DeFi smart contracts and deposited into staking protocols) will almost double by 2025. As of December 2024, over $11 billion worth of wrapped BTC is locked in DeFi smart contracts. Notably, over 70% of locked BTC is used as collateral on lending protocols. There are approximately $4.2 billion in additional deposits through Babylon, Bitcoin’s largest staking protocol. The Bitcoin DeFi market is currently worth $15.4 billion and is expected to expand significantly by 2025 across multiple areas, including existing DeFi protocols on Ethereum L1/L2, new DeFi protocols on Bitcoin L2, and staking layers such as Babylon. The current doubling of market size is likely driven by several key growth factors: 150% year-over-year cbBTC supply growth, 30% growth in WBTC supply, Babylon’s TVL reaching $8 billion, and new ratiosBitcoin L2 achieves $4 billion in DeFi TVL.

By 2025, Ethereum will trade above $5,500. Easing regulatory headwinds for DeFi and staking will push Ethereum to new all-time highs in 2025. New partnerships between DeFi and TradFi, perhaps within a new regulatory sandbox environment, will finally allow traditional capital markets to seriously try public blockchains, with Ethereum and its ecosystem seeing the largest share of usage. Enterprises will increasingly experiment with their own layer 2 networks, primarily based on Ethereum technology. Some games utilizing public blockchains will find product-market fit, and NFT trading volume will rebound significantly.

The pledge rate of Ethereum will exceed 50%. Trump is likely to provide clearer regulation and guidance for the crypto industry. Demand for staking will continue to rise next year and could exceed half of Ethereum’s circulating supply by the end of 2025, prompting Ethereum developers to more seriously consider changes to the network’s currency. What’s more, the increase in staking will drive greater demand and value through Ethereum staking pools like Lido and Coinbase and restaking protocols like EigenLayer and Symbiotic.

The ETH/BTC ratio is one of the most closely watched pairs among all cryptocurrencies, ever since Ethereum moved to Proof-of-Stake in its September 2022 "merge" upgrade. The ETH/BTC ratio has been on a dangerous downward trend. However, expected regulatory shifts will help Ethereum and its application layer, especially DeFi, reignite investor interest in the world's second-largest blockchain network by value.

By 2025, L2 as a whole will generate more economic activity than Alt L1. L2 fees as a percentage of Alt L1 fees (currently in the mid-single digits) will exceed 25% of total Alt L1 fees by the end of the year. L2 will approach scaling limits early this year, resulting in frequent spikes in transaction fees that will require changes to gas limits and blob market parameters. However, other technical solutions (e.g. Reth clients or altVMs like Arbitrum Stylus) will provide greater efficiency for aggregation to keep transaction costs at usable levels.

DeFi will enter the "dividend era" as on-chain applications will distribute to users and token holders through treasury funds and revenue sharing At least $1 billion. As DeFi regulation becomes clearer, value sharing for on-chain applications will expand. Applications such as Ethena and Aave have initiated discussions or passed proposals to implement their fee switches, which assign value to users.infrastructure. Other protocols that have previously rejected such mechanisms, including Uniswap and Lido, may reconsider their positions due to regulatory clarity and competitive dynamics. The combination of a loose regulatory environment and increased on-chain activity suggests that the protocol may be able to conduct buybacks and direct revenue sharing at a higher rate than previously observed.

On-chain governance will revive, and applications will experiment with future governance models. The total number of active voters will increase by at least 20%. On-chain governance has historically faced two problems: 1) lack of participation and 2) lack of voting diversity, with most proposals passing overwhelmingly. However, the easing of regulatory tensions has been a limiting factor for on-chain voting, and Polymarket’s recent success suggests both will improve in 2025. By 2025, applications will begin to shift from traditional governance models to future governance models, improving voting diversity, and regulatory tailwinds will facilitate governance participation.

The U.S. Office of the Comptroller of the Currency (OCC) will create a path for banks in various countries to custody digital assets and guide the world’s four major custodian banks to provide Digital asset services: Bank of New York, State Street, JPMorgan Chase and Citibank.

TradFi partners will support the launch of at least 10 stablecoins. From 2021 to 2024, stablecoins have experienced rapid growth, with the current number of projects reaching 202, including several projects closely related to traditional finance (TradFi). In addition to the number of stablecoins launched, its transaction volume growth has exceeded that of major payment networks such as ACH (~1%) and Visa (~7%). In 2024, stablecoins will be increasingly integrated into the global financial system. For example, U.S.-licensed FV Bank now supports direct stablecoin deposits, while three major Japanese banks are partnering with SWIFT through Project Pax to enable faster, more cost-effective cross-border fund flows. Payment platforms are also building stablecoin infrastructure. For example, PayPal launched its own stablecoin, PYUSD, on the Solana blockchain, while Stripe acquired Bridge to natively support stablecoins. Additionally, asset managers such as VanEck and BlackRock are partnering with stablecoin projects to establish a foothold in the space. Going forward, as regulations become increasingly clear, TradFi players are expected to integrate stablecoins into their operations to stay ahead of the trend, while first movers prepare to gain an advantage by building infrastructure for future business development.

The total stablecoin supply will double to over $400 billion by 2025. Stablecoins are increasingly finding product markets suitable for payments, remittances and settlements. Supervision of existing stablecoin issuers as well as traditional banks, trusts and depository institutionsIncreasing clarity on regulation will lead to explosive growth in stablecoin supply in 2025.

Tether’s long-term market dominance will fall below 50%, challenged by yield alternatives like Blackrock’s BUIDL, Ethena’s USDe, and even Coinbase/Circle Pay’s USDC Rewards . As Tether internalizes yield revenue from USDT reserves to fund portfolio investments, the marketing spend by stablecoin issuers/protocols to pass on revenue will drive existing users away from Tether and new users towards their yield solutions . USDC rewards for users’ Coinbase exchange and wallet balances will serve as a powerful peg that will drive growth across the DeFi space and may be integrated by fintech companies to enable new business models. In response, Tether will begin passing on revenue from collateral holdings to USDT holders and may even offer new competitive yield products such as delta-neutral stablecoins.

Total cryptocurrency venture capital investment will exceed $150 billion, a year-on-year increase of more than 50%. The surge in venture capital activity will be driven by increased allocator interest in risky activities, given falling interest rates and increased transparency in cryptocurrency regulation. Cryptocurrency venture capital funding has historically lagged broader cryptocurrency market trends, and there will be some degree of “catch-up” over the next four quarters.

Stablecoin legislation will pass both houses of Congress and be signed by President Trump in 2025, but market structure legislation will not. Legislation to formalize and establish a registration and oversight regime for U.S. stablecoin issuers is set to pass with bipartisan support and be signed into law by the end of the year, coupled with expected easing of restrictions on banks, trusts, and depository institutions. Will lead to significant growth in stablecoin adoption. Market structure – establishing registration, disclosure and oversight requirements for token issuers and exchanges, or adjusting existing SEC and CFTC rules to incorporate them – is more complex and will not be completed, adopted and signed in 2025 become law.

The United States will not buy Bitcoin in 2025, but will use the Bitcoin it already holds to create inventories, and there will be some action within departments and agencies to review expanded Bitcoin reserves.

The U.S. Securities and Exchange Commission will investigate Prometheum, the first so-called "special purpose broker-dealer." A previously unknown broker-dealer popped up that happened to be in line with the SEC's overall view. Chairman Gensler’s views on the status of digital assets as securities raise eyebrows in 2023, especially as the unknown company acquiresWhen the first new category of broker-dealer license was issued. The CEO was rebuked in Congress by Republican members of the House Financial Services Committee, according to FINRA records. Republicans have called on the Justice Department and the Securities and Exchange Commission to investigate Prometheum's "ties to ," while others have pointed to irregularities in its fundraising and reporting. Regardless of whether Prometheum is investigated, the special purpose broker-dealer license will likely be revoked in 2025.

Dogecoin will eventually reach $1, and the world’s largest and oldest Meme coin will have a market capitalization of $100 billion. However, Dogecoin’s market cap will be overshadowed by the Ministry of Efficiency, which will identify and successfully implement reductions in amounts that exceed Dogecoin’s 2025 high-water market cap.