Crypto investors are ready for the new year, and for bullish post-election market themes – notably a pro-crypto government and the promise of easier regulation – to drive capital into the industry. Bitcoin and other cryptocurrencies rocketed after the November election – boosted by President-elect Donald Trump's promise to embrace the industry in his new term – only to be smacked last week when the Federal Reserve indicated fewer interest rate cuts in 2025 than previously anticipated. The support of the new administration, however, is seen as overwhelming any central bank obstacles, potentially spurring bitcoin to double its current price. "The broad macroeconomic picture looks fine for crypto and for broader markets and shouldn't stand in the way of further appreciation," said Zach Pandl, head of research at Grayscale Investments. "The big questions are now going to be the practical topics of governing and politics and legislation around crypto in the United States. The election was a huge breakthrough and it's difficult to overstate how different the regulatory environment is likely to be in the coming years for the digital assets industry in the U.S. than where it was over the last couple of years." Increased regulatory clarity through Congressional legislation (crypto market structure and stablecoins are viewed as the lowest hanging fruit), new capital entering the sector and the prospect of a national strategic bitcoin reserve (another election campaign talking point), will outweigh the macroeconomic risks next year, Devin Ryan, Citizens JMP senior research analyst, told CNBC. "Don't fight the flow of money coming in; that will far outweigh some of the ebbs and flows and nuances around whether there's one or two fewer rate cuts over the course of the year," Ryan said. In addition to the poltical embrace, financial institutions' adoption of bitcoin – and to a lesser extent, ether – will help drive bitcoin to $200,000 in 2025, according to Bitwise Asset Management's chief investment officer, Matt Hougan. Ether, arguably a bigger beneficiary of the Trump 2.0 trade, could rally to $7,000. Both have already gained more than 40% this year. "The record-setting flows into bitcoin ETFs sent bitcoin to new all-time highs in 2024," Hougan said in an investor note. "We don't see that slowing down any time soon. Combine that demand with the reduction in new supply thanks to the April 2024 halving , plus new buying from corporations and governments," the money manager said. Bitcoin is in "an intermediate stage" of the current cycle and there's "no reason from the experience of past cycles or from valuations or from the macroeconomic environment to think that the cycle is close to finished," Grayscale's Pandl said. A four-year bitcoin cycle historically looks like three positive years followed by a down year. The catch is that the legislative process is slow, and any real policy effect may not be felt until the end of the year, said JPMorgan analyst Kenneth Worthington in a mid-December report. "Although the new Trump administration will begin on Inauguration Day … it is likely we may not see immediate policy impacts until (at least) 9-12 months into his term," Worthington said. "Key crypto-adjacent positions like a SEC/CFTC chair will follow the prioritized Cabinet Secretary positions, which suggests approval in late spring/early summer." Here are three other crypto-related assets to watch in 2025: Ethereum Ether , the digital silver to bitcoin's gold, suffered for much of the year as investors started to lose their understanding of its investment case. But it's poised for a big comeback in 2025, according to Bitwise's Juan Leon. "One of the biggest and most overlooked opportunities centers on tokenization: the process of bringing the massive market for real-world assets (RWAs) onto a blockchain. And that market today is dominated by Ethereum," he said in a recent note to investors. For Wall Street banks interested in engaging with crypto, Ethereum is the natural place for to start because it has "a certain regulatory clarity" and an almost 10-year-old track record, Grayscale's Pandl said. "What you're going to see next year is more traditional finance integration with crypto and I think that that process will begin with Ethereum," he said. Plus, a new pro-crypto government could spur a stablecoin boom in the new year, and "the number one way to express a view on continued stablecoin adoption is through Ethereum," Pandl added. Coinbase Expect a smoothed regulatory environment to increase the number of coins listed on exchanges like Coinbase and Robinhood , and promote greater product innovation, says JPMorgan's Worthington – like staking , for example. Regulatory clarity in 2025 will favor those "ancillary businesses that have been held back," Ryan of Citizens JMP said. "We think there's big revenue upside to come in the industry with more staking. Stablecoins, we expect, are going to gain a lot more traction in 2025 which will be an important theme for Coinbase … it's really turning back on some areas of blockchain technology that have been turned off." "The flip side is people will be talking more about more competition for firms like Coinbase … We're not concerned about that for Coinbase; they're really going to benefit from the pie growing," he added. Owen Lau, an analyst at Oppenheimer, said the biggest development for Coinbase could come from its potential addition to the S & P 500 next year. "They are the largest financial company not in S & P 500 right now; the best case scenario is they will be included in the first quarter of 2025," Lau said. "To me that's the big driver for the stock," in addition to continued adoption and trading of cryptocurrencies. Lau also highlighted that stablecoins are likely to explode next year, and that Coinbase has a 50/50 revenue sharing agreement with Circle, the issuer of USD Coin (USDC), for the interest income of the reserves backing the stablecoin. MicroStrategy On Monday, bitcoin proxy MiroStrategy joined the Nasdaq-100 index and, on the same day, filed a ceiling request to its shareholders that would pave the way for the company to continue its aggressive bitcoin buying strategy in the two years. "What was originally contemplated was that MicroStrategy would issue $10 billion, $14 billion, and then $18 billion in securities over the next three years … in the last couple of months the company has exceeded $18 billion in issuance … so now the question is: what comes next?," Benchmark analyst Mark Palmer told CNBC. MicroStrategy has been on a tear since the election – up 57% since then and more than 400% for the year – yet has drawn its share of skeptics worried it going the way of meme stocks. "At the end of the day, MicroStrategy is a levered play on bitcoin, and if the price of bitcoin drops significantly, then that is a significant negative for MicroStrategy shares, which likely will trade accordingly," Palmer said. "With that said, if the price of MicroStrategy stock falls below its net asset value, then the company can buy back its shares, and hence create a new accretive approach to shareholder value." —CNBC's Michael Bloom contributed reporting.
