2025 Cryptocurrency Positive Factors Overview

Author: Invesco | Plain Language Blockchain

Invesco is a leading global independent investment management company, founded in 1935 and headquartered in the United States. As of 2024, Invesco manages assets exceeding $1.8 trillion, with operations in over 20 countries worldwide. In recent years, the company has actively engaged in blockchain and cryptocurrency asset investments, aiming to explore investment opportunities in Bitcoin and other crypto assets.

This article is written by Ashley Oerth, Assistant Global Market Strategist at Invesco. In this article, Oerth discusses the strong performance of crypto assets in 2024 and believes that with an improved regulatory environment and more favorable policymakers, the cryptocurrency industry will continue to reach new heights in 2025.

The main text is as follows:

We believe that the cryptocurrency industry will continue to reach new heights in 2025, primarily benefiting from the gradual clarification of regulatory policies and more favorable policymakers.

Positive developments following the U.S. presidential election, a shift in investor attitudes towards the crypto industry, and a supportive market backdrop may drive the performance of crypto assets. President Trump has expressed a desire to establish a strategic Bitcoin reserve and has appointed policymakers who support the crypto industry.

Crypto assets performed strongly in 2024. With the Republican Party winning the House, Senate, and presidential elections, Bitcoin broke through the $100,000 mark, and as of January 31, 2025, the total market value of all crypto assets reached $3.5 trillion. U.S. large-cap stocks have risen 4.8% since the election, with Bitcoin up 47.6% and Ethereum up 37.4%. We expect this momentum to continue into 2025, as a series of positive news and legislative progress appear likely.

In our view, crypto assets are largely influenced by the macroeconomic environment and market sentiment, which can lead to significant price volatility. Currently, the market environment and sentiment are shifting towards a more favorable stance for crypto assets, including some positive developments following the U.S. elections, a more friendly attitude from investors towards the crypto industry, and an overall supportive backdrop due to central bank interest rate cuts and a return to normal growth conditions in the global economy.

We have outlined the following five prominent factors indicating why crypto assets may continue to perform well in 2025.

 01  Crypto-friendly U.S. policymakers take office

President Trump has indicated that he will continue to roll out a series of crypto-friendly policies, including a desire to establish a strategic Bitcoin reserve and appointing policymakers who support the crypto industry in key regulatory agencies such as the SEC and CFTC. However, support for crypto assets does not solely come from the president. According to a group supporting the crypto industry, a total of 294 bipartisan candidates supporting the crypto industry were elected to the U.S. Congress in the 2024 elections.

This may mean that Trump's policies will differ significantly from those of the Biden administration, which has traditionally held a hostile stance towards crypto assets. For example, the SEC, under Chairman Gary Gensler, has repeatedly sued crypto companies without clearly outlining the specific framework to follow, leading to criticism for adopting an "enforcement over policy" approach. Biden himself has also opposed the crypto industry, despite bipartisan support for the Financial Innovation and Technology Act (FIT21), which he still opposes.

One key point of contention is SAB 121—an announcement issued by the SEC in 2022 requiring publicly traded institutions to strictly adhere to regulations when holding crypto assets for clients. SAB 121 requires these institutions to list crypto assets on their balance sheets, which not only triggers capital regulatory requirements but also prevents most banks from participating in the digital asset ecosystem. Because SAB 121 mandates that publicly traded institutions include crypto assets on their balance sheets, and most banks lack sufficient capital or relevant risk management measures to support this additional burden, they are unable to participate in the crypto asset ecosystem.

Due to the lack of effective custody solutions from banks, many crypto investors have had to turn to expensive and often unreliable alternatives. Now that SAB 121 has been repealed, it opens new avenues for more large institutions to provide custody services for crypto assets.

With changes in U.S. policy regarding crypto assets, we expect more investors to begin accepting crypto assets, which could drive the crypto market into a bull market. Since the November elections, interest from investors in U.S. Bitcoin CEX trading products (ETP: Exchange-Traded Product) has continued to rise.

Total asset growth and fund inflow trends of U.S. Bitcoin ETP since its listing on January 11, 2024

 02 
Investing in crypto assets is becoming easier

In 2024, the U.S. and Hong Kong launched spot Bitcoin products (ETFs), which, according to Bloomberg data, attracted a net inflow of $34.6 billion by the end of 2024. It is expected that by 2025, more countries may allow a broader range of investors to participate in spot ETF trading, and more crypto assets may also become easier to invest in through ETFs. According to the latest regulatory filings from the U.S. Securities and Exchange Commission (SEC) as of the end of January, several ETF plans have begun to invest in other crypto assets. With the launch of more investment products attracting more investors, we expect the prices of crypto assets may rise as a result.

 03 
Perception of Bitcoin is changing

As Bitcoin's market capitalization continues to grow, investor attitudes towards this leading crypto asset are also evolving. In January 2024, the U.S. launched widely accessible spot Bitcoin trading products (ETFs), marking an important milestone that provides investors in the world's largest capital market with a convenient way to easily invest in Bitcoin (and potentially Ethereum in the future). For example, as of January 11, 2024, U.S. investors had invested $40.6 billion in the spot Bitcoin ETF, and by the end of 2024, the total assets of this product reached $101.8 billion. In comparison, the managed assets of gold ETFs stand at $124.2 billion.

One year after the launch of the Bitcoin ETF, its asset scale is approaching that of the U.S. gold ETF.

 04 
Market environment appears more favorable

Interest rate cuts in major economies such as the U.S., Eurozone, and the UK suggest that 2025 may become a "risk appetite year" for global markets. In fact, we are more optimistic about cyclical sectors in the market for 2025, such as stocks and credit. As investors become more willing to take risks, crypto assets may receive support, as they are typically significantly influenced by the macroeconomic environment.

 05 
Tokenization is gradually advancing

Tokenization is the process of recording an asset or information in the form of tokens on a blockchain, bringing numerous benefits to asset management and exchange. We believe that the current financial system can achieve various potential advantages through tokenization, such as reducing counterparty risk, speeding up payment and settlement processes, and enhancing the personalization of customer investment experiences.

In the past five years, pilot projects for central bank digital currencies and asset tokenization have gradually made progress, including tokenized money market funds, tokenized bonds, and tokenized fundraising market products. The UK government plans to issue tokenized government bonds for the first time within the next two years. Meanwhile, in the Eurozone, the European Central Bank is preparing to launch a digital euro, which is expected to further promote the development of tokenization applications. As this technology becomes more widespread, we expect crypto assets may also benefit from it.

 06 
Conclusion: 2025 is a year to watch

Crypto assets are a highly volatile investment that can fluctuate significantly due to changes in news events. Overall, we believe that the cryptocurrency market will continue to reach new heights in 2025, primarily due to increased regulatory transparency and more favorable policies, which bring positive news for digital assets (e.g., price fluctuations in the crypto market following Trump's election, news of Trump's nomination of the SEC chairman, and the U.S. approval of spot Bitcoin and Ethereum ETFs). We also expect that interest rate cuts in many major economies may stimulate demand for risk assets.

Note: The views expressed above represent the author's personal opinion as of February 14, 2025, and should not be considered investment advice, for reference only. Forward-looking statements do not guarantee future results, and the risks, uncertainties, and assumptions involved may lead to actual results differing from expectations.

Original Title: Digital Assets: Is The Bitcoin Bull Run Just Getting Started?
Original Link: https://seekingalpha.com/article/4758712-bitcoin-bull-run-just-getting-started?utmcampaign=%7Cloginnowlink&utmmedium=email&utmsource=seekingalpha
Original Author: Ashley Oerth, Invesco US
Translation: Plain Language Blockchain

Article Link: https://www.hellobtc.com/kp/du/02/5679.html

Source: https://mp.weixin.qq.com/s/UVpttxW56GHxKvOiMPiNbw

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