Cryptocurrencies are set to make a strong comeback in 2024, with even more success expected in 2025.
The cryptocurrency winter? Over. The decline of the crypto empire and courtroom dramas? Things of the past. Survivors? Tested in battle, with a vision as bright as ever, it’s as if this is a new gold rush.
After years of conflict with the U.S. Securities and Exchange Commission (SEC), Bitcoin and Ethereum exchange-traded funds (ETFs) have finally arrived. According to cryptocurrency research firm K33 Research, as of December 16th, the assets held by Bitcoin ETFs in the U.S. have reached $129 billion, surpassing the $125 billion of gold ETFs.
With the post-U.S. election market excitement and Donald Trump’s promise to make the U.S. the “world capital of cryptocurrencies” and establish a strategic Bitcoin reserve, the price of Bitcoin has surpassed $100,000.
Solana is experiencing development opportunities thanks to the rise of memecoin speculation and new narratives like DePIN. DePIN is a network that uses blockchain technology to decentralize control and ownership of physical infrastructure. Platforms like Polymarket (where users can bet on the outcome of the U.S. presidential election) and the battle royale game Off The Grid have already found success in the mainstream market. A new wave of “degens” is betting on tokens like fartcoin and dogwifhat, both of which currently have market values exceeding $1 billion.
Rob Hadick, a general partner at the San Francisco-based cryptocurrency venture capital firm Dragonfly, said, “Cryptocurrencies have entered the mainstream consciousness in unprecedented ways this year and are now a sustainable long-term asset class that will have a voice and play a significant role.” He added, “If you look at the impact of cryptocurrencies on elections, whether it’s cryptocurrency political donations or promotion among legislative bodies and presidential candidates, it’s unprecedented and a major step towards cryptocurrency legalization.”
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Donald Trump attending the 2024 Bitcoin Conference in Nashville, Tennessee.
Image/Courtesy of The Washington Post
With Trump and a group of cryptocurrency-supporting officials preparing to take office, what industry insiders call the “golden age of cryptocurrencies” has arrived. Here are some upcoming trends:
Record highs and America’s Bitcoin reserve
The art of making bold price predictions is back in vogue. Bitwise, a cryptocurrency asset management company, predicts that if the U.S. establishes a strategic reserve similar to oil or gold, the price of Bitcoin could reach $200,000 or even $500,000. The logic is that the official Bitcoin reserve of the U.S. will trigger global FOMO.
At the Nashville Bitcoin Conference in July, Trump proposed using 200,000 Bitcoins seized from criminals (worth $21 billion) to launch the reserve. However, it is unclear whether this requires congressional approval or if the executive branch can take action unilaterally.
Senator Cynthia Lummis, a supporter of cryptocurrencies, proposed a reserve plan operated by the Treasury Department in July. Skeptics believe that the volatility of Bitcoin could disrupt financial stability. Trump has remained silent on whether the U.S. will continue to buy more Bitcoin openly in the market, adding another layer of uncertainty.
Resetting cryptocurrency regulation: Crypto-friendly Washington
The new administration is expected to be the most crypto-friendly government to date. Some key government appointments related to cryptocurrencies include:
Securities and Exchange Commission (SEC): Former SEC commissioner and cryptocurrency supporter Paul Atkins is set to replace cryptocurrency nemesis Gary Gensler, who was known for litigation and enforcement actions against crypto companies during his tenure.
Commodity Futures Trading Commission (CFTC): Brian Quintenz, the policy chief of Andreessen Horowitz and former CFTC commissioner, is a popular candidate to lead the agency.
Treasury Department: Scott Bessent, a billionaire hedge fund manager and Bitcoin advocate, is Trump’s pick for Treasury Secretary.
Department of Commerce: Howard Lutnik, CEO of Cantor Fitzgerald (the main custodian of Tether’s USDT reserves), will lead the department.
Artificial Intelligence and Cryptocurrency Czar: David Sacks, a long-time venture capitalist who previously worked with Elon Musk at PayPal, will oversee two key areas of policy to enhance America’s competitiveness.
House Financial Services Committee: Republican Congressman French Hill from Arkansas, along with outgoing committee chairman Patrick McHenry, advocates for crypto-friendly legislation. Hill plans to prioritize the consideration of cryptocurrency market structure bills within the first 100 days and investigate the so-called “Choke Point 2.0,” which many believe unfairly targeted the crypto industry through de-banking practices.
“This is a real opportunity to create good policies for the industry,” said Kristin Smith, CEO of the Blockchain Association, based in Washington, D.C., representing over 100 cryptocurrency companies. “The White House has indicated this is a priority. I think we will see a concerted effort across government departments, legislation driving market structure and stablecoins, and a significant shift of innovation returning to the U.S.,” she added.
New crypto IPOs and venture capital influx
The process of cryptocurrency IPOs is heating up. Bitwise lists five companies that could go public next year:
Circle: The issuer of the second-largest stablecoin USDC secretly applied for an IPO in January of this year.
Figure: The company is known for its blockchain-based financial services, such as mortgage loans, personal loans, and asset tokenization, and has been exploring going public since last year.
Kraken: The U.S.-based cryptocurrency exchange has been planning an IPO since 2021.
Anchorage Digital: With its status as a federally chartered bank, it may pave the way for an IPO.
Chainalysis: A leader in blockchain compliance and intelligence services, is also expected to go public.
In addition, Hadick of Dragonfly said, “I expect the LP (limited partners of cryptocurrency venture capital firms) market to improve, with more funds wanting to invest in cryptocurrencies. Many traditional Web2 crossover funds will return to the Web3 space. We’re already seeing this trend in certain areas, such as stablecoins and payments.” He added that venture capital transactions often lag behind the price increases in the public market by one or two quarters.
Cryptocurrency-related companies included in major stock indices
MicroStrategy’s stock price has risen over 400% this year. With new accounting rules allowing companies to reflect their Bitcoin investments in their financial statements, the company has now become part of the Nasdaq 100 index, and analysts predict that the company will be included in the S&P 500 index in the near future.
This change could allow MicroStrategy to enter index-tracking funds and become part of countless U.S. investors’ portfolios.
Michael Saylor, co-founder and CEO of MicroStrategy, with his “Bitcoin treasury” strategy (selling bonds and stocks to accumulate Bitcoin), has propelled the $86 billion company into the top 100 companies in the S&P 500 index.
Analysts suggest that Coinbase, which has seen a 70% increase in value this year, may also join this coveted index.
Stablecoin surge
With the highly anticipated stablecoin legislation expected to be implemented in the U.S., the stablecoin industry is poised for explosive growth, with a market capitalization expected to double to $400 billion. According to data from Bitwise, stablecoin trading volume is projected to reach $8.3 trillion in 2024, nearly matching Visa’s $9.9 trillion payment volume.
Tether and Circle still dominate the market. However, Hadick warns that if they continue to operate as asset management companies rather than payment companies, their growth may quickly stagnate.
Stripe’s $1.1 billion acquisition of stablecoin platform Bridge in October sends a signal that stablecoins could become the cornerstone of fintech. Stripe calls it the “superconductor of financial services” and touts its unparalleled speed, low cost, and global impact. Robinhood is also following suit, exploring the creation of a global stablecoin network.
Meanwhile, the next generation of “stablecoins 2.0” models is quietly emerging. Ceteris, research director at New York-based cryptocurrency analysis firm Delphi Digital, explains, “There are many new stablecoin models that are attracting token holders or users of applications with revenue feedback. I think these models are disruptive.”
Acceleration of traditional asset tokenization
BlackRock CEO Larry Fink has been advocating for tokenization for years. From real estate to artwork, everything may soon have tokens. The biggest advantage of tokenization is instant settlement, lower costs than traditional securitization, 24/7 liquidity, and transparency.
Three years ago, the cryptocurrency industry tokenized only $2 billion of real-world assets (RWAs), including private credit, U.S. debt, commodities, and stocks. Today, that number has reached nearly $14 billion. Venture capital firm ParaFi predicts that the market size of tokenized RWAs could soar to $2 trillion by 2030, signaling a significant shift in asset ownership and trading.
New applications and better infrastructure
The buzzword at the end of 2024 is AI agents. Get ready to witness the fusion of artificial intelligence and cryptocurrencies, a fusion that is closer to science fiction.
This trend is already showing its potential. Take TruthTerminal, for example. This AI agent not only received $50,000 from Marc Andreessen but also became a millionaire through X social media. Its success came from promoting a token based on an early 2000s meme (the anonymous creator of the token transferred a large sum of money to TruthTerminal’s wallet managed by Andy Ayrey).
But analysts are cautious. Practical AI agents (such as those attempting to execute complex transactions across blockchains on behalf of users) are few in number and still in the early stages. “Agents are exciting because they are so novel,” said Ceteris from Delphi. “But for better or worse, it could be the biggest bubble of this cycle.”
While the blockchain industry is still fragmented and most decentralized applications have yet to become mainstream, the work of building robust infrastructure continues. “Solana has set the trend for the era of high-throughput blockchains, and almost every new chain is launching under this trend, creating a lot of cheap block space,” explained Ceteris.
And so, the narrative of cryptocurrencies has shifted from survival to prosperity. This is just a part of the surprises that await next year. You can choose to prepare popcorn for this show or open your wallet for this opportunity. Caution is essential as the market will experience highs and lows. But this time, the stakes seem higher than ever before.
This article is a collaborative reprint from Deep Morning.