Cryptocurrencies are set to build on their strong performance in 2024, when the total market capitalization nearly doubled. However, broader adoption in 2025 will hinge on the ability of the crypto-friendly Trump administration to establish clearer regulatory guidelines to foster growth.
“2024 was a standout year for crypto, with total market cap surging by over 90%,” Citi Research highlighted in its 2025 outlook. “Optimism is running high on the regulatory front, thanks to the incoming U.S. administration’s supportive stance and key appointments.”
The impressive gains in 2024 were primarily driven by the introduction of spot Bitcoin and Ethereum ETFs, which attracted $36.4 billion and $2.4 billion in net inflows, respectively, by December 19. According to Citi, these inflows were the dominant factor behind crypto’s strong performance, a trend expected to continue in 2025.
Still, the path ahead is not without challenges. While the Trump administration is widely regarded as crypto-friendly, the extent of meaningful regulatory reform remains uncertain.
“The ‘Trump boost’ from a regulatory perspective doesn’t imply sweeping deregulation,” Citi observed. “Some market participants believe the administration may prioritize replacing regulators with crypto-skeptical records, favoring those more aligned with its vision.”
Trump has signaled a departure from the prior administration’s enforcement-heavy approach, which he criticized for hindering innovation. His proposed policies emphasize a shift toward legislative clarity, aiming to reduce uncertainty for investors and crypto issuers.
In a significant move, Trump has nominated Paul Atkins, known for his crypto-friendly stance, to succeed SEC Chair Gary Gensler, who is stepping down on January 20.
Citi emphasized that the regulatory landscape will play a pivotal role in shaping crypto adoption, alongside other metrics like trading activity, on-chain data, and total value locked in decentralized finance.
“The regulatory framework will be crucial for driving adoption,” Citi noted, suggesting that clearer guidelines could broaden the spotlight to include cryptocurrencies beyond Bitcoin.
However, macroeconomic factors could temper this optimism. Citi warned that uncertainty in U.S. policy and potential equity market volatility might disrupt the narrative.
“Macroeconomic conditions may become less favorable as 2025 progresses, with policy uncertainty and heightened risk asset volatility posing potential challenges,” the report concluded.
