With the development of the regulatory and technological environment, the wider adoption of Cryptos will drive the Industry closer to realizing its full potential, and significant changes in the crypto ecosystem are expected. Breakthroughs and advancements in 2025 are likely to determine the long-term trajectory of the crypto industry for decades to come. Next year will be a pivotal year.

Stablecoins have only just begun.

As of December 1, 2024, the market cap of stablecoins has grown by 48%, reaching a new historic high of 193 billion USD, and some analysts predict that this number may rise to 3 trillion USD within the next five years. Since the beginning of this year, the volume of stablecoin trades has exceeded 27 trillion USD, approximately three times that of the same period in 2023.

Stablecoins provide a verified role for a wide range of users, from micro-enterprises to the world's largest companies, by facilitating faster and cheaper payments on a global scale. With the market cap and volume of stablecoins continuing to surge, we are rapidly approaching a day when the primary and main use case of stablecoins will be global capital flow and commerce, rather than trading.

The tokenization of real-world assets is expected to see significant growth.

According to rwa.xyz, as of December 1, the tokenization of Real World Assets (RWA) continued to make significant progress in 2024, with the scale of tokenized assets excluding stablecoins growing by over 60%, reaching 13.5 billion dollars. Enterprises are attempting to use tokenized assets as collateral for Other Finance transactions (such as derivatives trading), which may simplify operations and reduce risk.

Additionally, the RWA trend is extending beyond assets like US Treasuries and Money Market Funds and has gained traction in private Crediting, CSI Commodity Equity Index, CSI Enterprise bond Index, Real Estate, and Insurance.

Although these efforts face unique challenges, the cumulative effect of continued investment and technological advancements in 2025 should lay the foundation for tokenization to become a cornerstone of the current crypto market cycle. Ultimately, tokenization could simplify the construction and investment process of entire portfolios, although this may still take several years.

ETFs have permanently changed the supply and demand dynamics of the crypto market.

After the record-breaking success of spot Bitcoin ETFs in the USA, the entire crypto market has undergone a transformation. Almost every type of Institution investor—including endowments, retirement funds, hedge funds, investment advisors, and family offices—now holds crypto ETFs. As the adoption rate among Institutions continues to rise, these holders will provide a long-term stable source of demand for this asset class.

Looking ahead, the focus of the Industry is on tokens like XRP, SOL, LTC, and HBAR, which may be approved for the issuance of spot ETFs in the USA.

Conversely, what is more interesting is what would happen if the USA Securities and Exchange Commission (SEC) were to lift its requirement that ETF share creations and redemptions must be conducted in cash rather than physical form, or allow these products to incorporate staking functionalities. These changes could enhance the potential returns for ETF holders, help narrow bid-ask spreads, and improve consistency between share prices and net asset values (NAVs), making ETFs more attractive to investors.

Centralized finance will propel cryptocurrencies into a new era.

Decentralized Finance (DeFi) encountered some setbacks in the previous cycle, but a more sustainable and resilient ecosystem has emerged.

The Total Value Locked (TVL) has reached an all-time high, while the trading volume of Decentralized Exchanges (DEXs) has also reached unprecedented levels compared to Centralized Exchanges (CEXs). Innovative user applications, such as Decentralized Physical Infrastructure (DePIN) and prediction markets, are leveraging DeFi to provide novel experiences. Additionally, changes in the USA regulatory environment and the adoption of on-chain verification provide a clear path for traditional Institutions to participate in DeFi.

All of this indicates that DeFi may expand its influence in the near future.

Regulation will ultimately shift from a headwind to a tailwind.

After years of unclear and inconsistent regulatory battles, the situation has changed, and the USA is about to welcome the most crypto-friendly Congress. The bipartisan majority support for cryptocurrencies in both the House and Senate means that regulation in the USA in 2025 will become an ally for crypto performance.

The emergence of Cryptos as one of the election issues highlights policymakers' urgent need to align with the changing demands of this influential voting bloc, making the likelihood of new legislative milestones in the USA very high.

Specifically, investors expect to see the USA establish a comprehensive regulatory framework, introduce robust stablecoin legislation, and end the era of regulation through enforcement. Moreover, the USA is not the only jurisdiction likely to make progress in regulation. Many G20 countries and major financial centers are developing rules to accommodate digital assets, which should help create a more favorable environment for innovation and growth.

Overall, these initiatives can open the door for more people and institutions to confidently participate in the cryptoeconomy.

Editor/Jeffy