Translated by | Wu Blockchain
Please note that VanEck may hold positions in the digital assets mentioned in the text, original link:
Before diving into the 2025 predictions, let's first review how our 2024 predictions fared. Out of the 15 predictions we made in December 2023, we scored 8.5/15. While a 0.566 batting average is not perfect, it's enough for us to keep "playing the game". With Bitcoin (BTC) breaking $100,000 and Ethereum (ETH) breaking $4,000, 2024 was undoubtedly a memorable year, even if we missed some of our calls.
VanEck is an investment management company founded in 1955 in New York, USA, by John van Eck, with a rich history and broad influence in the investment field. In January 2024, the SEC-approved Bitcoin spot ETF HODL and Ethereum spot ETF ETHV began trading, and VanEck also launched a Sui-based ETN in Europe and introduced staking rewards for the Solana ETN.
Review of 2024 Cryptocurrency Predictions:
1. Launch of Bitcoin Spot ETPs - (1 point)
2. Smooth Bitcoin Halving - (1 point)
3. Bitcoin Reaches a New All-Time High in Q4 2024 - (1 point)
4. Ethereum Remains Second to Bitcoin - (1 point)
5. L2 Dominates Ethereum Activity (but L2 TVL Still Below Ethereum) - (0.5 point)
6. Stablecoin Market Cap Reaches a New High - (1 point)
7. Decentralized Exchange (DEX) Spot Trading Volume Sets a Record - (1 point)
8. Solana (SOL) Outperforms Ethereum - (1 point)
9. DePIN Network Adoption Growth - (1 point)
Now, let's dive into the main event: Cryptocurrency Predictions for 2025.
Top 10 Cryptocurrency Predictions for 2025:
1. The Crypto Bull Market Reaches a Mid-Cycle Peak in Q1 and a New High by Q4.
2. The U.S. Embraces Bitcoin Through Strategic Reserves and Increased Adoption.
3. The Total Value of Securitized Tokens Exceeds $50 Billion.
4. Stablecoins Reach $300 Billion in Daily Settlement Volume.
5. On-Chain Activity by AI Agents Exceeds 1 Million Agents.
6. Bitcoin Layer 2 Total Value Locked (TVL) Reaches 100,000 BTC.
7. Ethereum Data Sharding (Blob Space) Generates $1 Billion in Fee Revenue.
8. DeFi Reaches New Highs, with DEX Trading Volume Reaching $4 Trillion and Total TVL Reaching $200 Billion.
9. The NFT Market Rebounds, with Trading Volume Reaching $30 Billion.
10. The Performance Gap Between Decentralized Application (DApp) Tokens and Layer 1 Tokens Narrows.
I. The Crypto Bull Market Reaches a Mid-Cycle Peak in Q1 and a New High by Q4
We expect the crypto bull market to continue in 2025, reaching a first peak in the first quarter. During this cycle peak, we expect the price of Bitcoin (BTC) to be around $180,000, while Ethereum (ETH) could exceed $6,000. Other prominent projects, such as Solana (SOL) and Sui (SUI), may break $500 and $10, respectively.
After this peak, we expect BTC to retrace by 30%, while Altcoins could see larger declines of up to 60%, with the market consolidating during the summer. However, a rebound is expected in the fall, with the major tokens regaining momentum and recovering to their previous all-time highs before the end of the year. To gauge when the market is nearing a top, we are monitoring the following key signals:
• Persistently High Funding Rates: When traders borrow to bet on BTC price increases and are willing to pay over 10% in funding rates for three months or more, this indicates overheated speculation.
BTC Perpetual Contract Funding Rates Above 10% for Months Will Be a Bearish Signal
Source: Glassnode, as of December 8, 2024.
• Excessive Unrealized Profits: If a large proportion of BTC holders have substantial paper gains (profit-to-cost ratios of 70% or higher) and maintain these levels, it suggests a frothy market.
• High Market Cap Relative to Realized Value: When the MVRV (market value to realized value ratio) exceeds 5, it indicates BTC prices are far above average purchase prices, typically signaling an overheated market.
• Declining Bitcoin Dominance: If Bitcoin's share of the total crypto market cap falls below 40%, it suggests speculative money is flowing into higher-risk Altcoins, a classic late-cycle behavior.
• Mainstream Speculative Phenomena: Receiving a flood of inquiries from non-crypto friends about dubious projects is often a reliable top signal.
These indicators have historically proven to be reliable signals of market froth and will guide our outlook within the expected 2025 market cycle.
Example: "Top Signal" Text from a Friend 5 Years Ago
II. The U.S. Embraces Bitcoin Through Strategic Reserves and Increased Adoption
The election of Donald Trump as president has injected significant momentum into the crypto market, with his administration appointing numerous crypto-friendly leaders to key positions, including Vice President JD Vance, National Security Advisor Michael Waltz, Commerce Secretary Howard Lutnick, Treasury Secretary Mary Bessent, SEC Chair Paul Atkins, FDIC Chair Jelena McWilliams, and HHS Secretary RFK Jr. These appointments not only signal the end of anti-crypto policies, such as the systemic "debanking" of crypto companies and their founders, but also the beginning of a policy framework that positions Bitcoin as a strategic asset.
Crypto ETP Developments: Physical Redemption, Staking, and New Spot Approvals
The new SEC leadership or the Commodity Futures Trading Commission (CFTC) is expected to approve various new spot crypto exchange-traded products (ETPs), including a VanEck Solana product. Ethereum ETP functionality will be expanded to support staking, further enhancing its utility for holders, while both Ethereum and Bitcoin ETPs will support physical redemption/creation. Additionally, the SEC or Congress may rescind SEC Accounting Bulletin 121 (SAB 121), paving the way for banks and brokers to custody spot crypto assets, further integrating digital assets into traditional financial infrastructure.
Sovereign Bitcoin Adoption: Federal, State, and Mining Expansion
We predict that by 2025, the federal government or at least one state (such as Pennsylvania, Florida, or Texas) will establish a Bitcoin reserve. At the federal level, this could be achieved through an executive order leveraging the Treasury Department's Exchange Stabilization Fund (ESF), while bipartisan legislation remains uncertain. Meanwhile, state governments may act independently, viewing Bitcoin as a hedge against fiscal uncertainty or a means to attract crypto investment and innovation.
In Bitcoin mining, the number of countries utilizing government resources for mining is expected to increase from the current 7 to double digits, driven by the trend of BRICS nations adopting the practice. Russia has explicitly stated it will settle international trade in cryptocurrencies, further highlighting Bitcoin's importance in global economic strategy.
Number of Countries Using Government Resources for Mining
Source: VanEck Research, as of December 2024.
Here is the English translation of the text, with the specified terms translated as instructed:We expect this pro-Bitcoin stance to expand to a broader US crypto ecosystem. With increased regulatory clarity and incentives, the US share of global crypto developers will rise from 19% to 25%, attracting more talent and businesses back. Meanwhile, US Bitcoin mining activity will thrive, with its global mining power share increasing from 28% in 2024 to 35% by the end of 2025, thanks to cheap energy and potential tax incentive policies. These trends will collectively consolidate the US's leadership position in the global Bitcoin economy.
US-listed company Bitcoin hash rate share to reach 35%
Source: JP Morgan, VanEck Research, as of December 6, 2024.
Corporate Bitcoin holdings: expected to grow 43%
On the corporate adoption front, we expect companies to continue accumulating Bitcoin from retail. Currently, 68 publicly-listed companies have Bitcoin on their balance sheets, a number expected to grow to 100 by 2025. Notably, we boldly predict that by next year, the total Bitcoin held by private and public companies (currently 765,000 BTC) will exceed Satoshi's holdings (1.1 million BTC). This implies a significant 43% growth in corporate Bitcoin holdings over the next year.
Gold vs. Bitcoin holdings: Corporates and governments still have room to grow
Source: VanEck Research, as of December 2024
III. Security tokenization total value exceeds $50 billion
On-chain securities grew 61% in 2024
Source: RWA.xyz, Defillama, as of December 6, 2024.
Crypto networks promise a superior financial system through enhanced efficiency, decentralization, and transparency. We believe 2025 will be the year of security tokenization takeoff. Currently, the total value of security tokens on the blockchain has reached around $12 billion, with the majority ($9.5 billion) being private debt securities on the semi-permissioned Provenance blockchain of the Figure platform.
We see tremendous potential for security tokenization to be launched on public blockchains. We speculate that investors have many motivations to drive the tokenization of stocks or bond securities to be issued solely on-chain. Within the next year, we expect institutions like DTCC to enable seamless conversion of tokenized assets between public blockchains and private closed-loop infrastructures. This dynamic will drive the establishment of AML/KYC standards for on-chain investors.
As a bold prediction, we expect Coinbase to take the unprecedented step of tokenizing its own stock (COIN) and deploying it on its BASE blockchain.
IV. Stablecoins reach $300 billion in daily settlement volume
Monthly stablecoin transfers (USD) grow 180% YoY (2024)
Source: Artemis XYZ, as of December 6, 2024.
Stablecoins will transition from a niche role in crypto trading to become a core component of global commerce. By the end of 2025, we expect stablecoins to reach $300 billion in daily transfer volume, equivalent to 5% of DTCC's current trading volume, far exceeding the ~$100 billion in November 2024. This growth will be driven by the adoption of stablecoins by large tech companies (like Apple and Google) and payment networks (like Visa and Mastercard), redefining the economics of payments.
Beyond transactions, the remittance market will see explosive growth. For example, stablecoin transfers between the US and Mexico could grow 5-fold from $80 million per month to $400 million, driven by faster transfers, cost savings, and increasing user trust in stablecoins as a practical tool rather than an experiment.
While the discussion around blockchain adoption is heated, stablecoins are undoubtedly the "Trojan horse" of this trend.
V. Over 1 million on-chain activities by AI agents
AI agents generate $8.7 million in revenue in 5 weeks
Source: Dune @jdhpyer, as of December 6, 2024.
We believe AI agents will be one of the most compelling narratives driving mass adoption in 2025. AI agents are specialized AI bots designed to help users achieve specific goals, such as "maximize returns" or "boost X/Twitter engagement". These agents can autonomously adjust their strategies to optimize outcomes, typically trained and specialized on domain-specific data.
Currently, protocols like Virtuals provide users with tools to create AI agents to execute on-chain tasks. Virtuals enables non-technical users to access the decentralized AI agent ecosystem, including fine-tuners, data providers, and model developers, allowing regular users to create their own AI agents. This mechanism will spur the emergence of a multitude of agents, whose creators can rent them out to generate income.
While AI agent development has primarily focused on DeFi so far, we believe their applications will extend beyond financial activities. Agents can serve as social media influencers, in-game computer players, and interactive companions or assistants in consumer apps. For example, AI agents like Bixby and Terminal of Truths have already become significant X/Twitter influencers, with 92,000 and 197,000 followers respectively. Given the immense potential of AI agents, we expect over 1 million new AI agents to emerge by 2025.
VI. Bitcoin Layer-2 total value locked (TVL) reaches 100,000 BTC
Bitcoin L2 TVL reaches 30,000 BTC in 2024, up 600% YTD
Source: Defillama, as of December 6, 2024.
We are closely watching the rise of Bitcoin Layer-2 (L2) blockchains, which have immense potential to transform the Bitcoin ecosystem. By expanding Bitcoin's functionality, these L2 solutions can achieve lower latency and higher transaction throughput, addressing the limitations of the underlying blockchain. Furthermore, Bitcoin L2 solutions, by introducing smart contract capabilities, enhance Bitcoin's abilities and support the development of a robust decentralized finance (DeFi) ecosystem around Bitcoin.
Currently, Bitcoin can be bridged or wrapped to smart contract platforms, but these methods rely on third-party systems, vulnerable to hacks and security vulnerabilities. Bitcoin L2 solutions aim to address these risks by integrating directly with the Bitcoin base layer, reducing dependence on centralized intermediaries. While liquidity constraints and adoption barriers still exist, Bitcoin L2 solutions, through enhanced security and decentralization, allow BTC holders to engage more confidently in the decentralized ecosystem.
Data shows that Bitcoin L2 solutions experienced explosive growth in 2024, with a total value locked (TVL) exceeding 30,000 BTC, equivalent to around $3 billion, up 600% year-to-date. Currently, over 75 Bitcoin L2 projects are in development, but only a few are expected to achieve significant adoption in the long run.
This growth reflects the strong demand from BTC holders for yield generation and broader utility. As layer abstraction technologies and Bitcoin L2 mature, Bitcoin will become a core component of DeFi, providing practical products for end-users. For example, platforms like Ika on Sui or the Near layer abstraction used by Infinex demonstrate how innovative multi-chain solutions can enhance Bitcoin's interoperability with other ecosystems.
Through the implementation of secure and efficient on-chain lending and other permissionless DeFi solutions, Bitcoin L2 and abstract technology have transformed Bitcoin from a passive store of value tool into an active participant in the decentralized ecosystem. As adoption scales, these technologies will unlock massive on-chain liquidity, cross-chain innovation opportunities, and drive a more integrated financial future.
VII. Ethereum Data Sharding (Blob Space) Generates $1 Billion in Fee Revenue
Daily Ethereum Data Sharding Volume
Data source: Dune @hildobby, as of December 6, 2024.
The Ethereum community is actively discussing its ability to capture value through the Layer-2 (L2) network's data sharding (Blob Space), which is a key part of its scaling roadmap. Blob Space is a dedicated data layer where L2s compress their transaction history and submit it to Ethereum, paying ETH fees per data shard. This architecture supports Ethereum's scalability, but currently L2s' value payback to the mainnet is low, with a gross margin of around 90%. This has raised concerns about Ethereum's economic value potentially over-shifting to L2s, leading to underutilization of the underlying network.
Although Blob Space growth has recently slowed, we forecast its usage will see a significant expansion by 2025, driven by three key factors:
1. Explosive L2 Adoption
Transaction volume on Ethereum L2s is growing at over 300% annualized, as users flock to them for lower costs and higher throughput in DeFi, gaming, and social applications. As consumer-facing dApps proliferate on L2s, more transactions will flow back to Ethereum for final settlement, significantly increasing demand for Blob Space.
2. Rollup Technology Optimization
Advances in Rollup technology, such as improved data compression and lower costs of submitting data to Blob Space, will encourage L2s to store more transaction data on Ethereum, unlocking higher throughput without sacrificing decentralization.
3. High-Fee Use Cases Emerge
The rise of enterprise-grade applications, finance solutions driven by zk-Rollups, and tokenized real-world assets will drive the development of high-value transactions. The prioritized need for security and immutability of these applications will increase the willingness to pay Blob Space fees.
By the end of 2025, we expect Blob Space fee revenue to grow from its currently negligible level to over $1 billion. This growth will solidify Ethereum's position as the final settlement layer for decentralized applications, while also strengthening its ability to capture value from the rapidly expanding L2 ecosystem. Blob Space will not only scale the Ethereum network, but also become a critical revenue source, balancing the economic relationship between the mainnet and L2s.
VIII. DeFi Reaches New Highs: DEX Trading Volume Hits $4 Trillion, TVL Reaches $200 Billion
DeFi Total Value Locked (TVL) Trend
Data source: Defillama, as of December 6, 2024.
While Decentralized Exchange (DEX) trading volume has hit new all-time highs in both absolute value and relative to Centralized Exchanges (CEX), the Total Value Locked (TVL) in Decentralized Finance (DeFi) remains 24% below its peak. We expect that by 2025, DEX trading volume will surpass $4 trillion, accounting for 20% of CEX spot trading volume. This growth will be driven by the proliferation of AI-related Tokens and the emergence of new consumer-facing dApps.
Furthermore, the tokenization of securities and the influx of high-value assets will further propel DeFi growth, injecting new liquidity and expanding its functionalities. As decentralized finance infrastructure sees rising demand in the evolving digital economy, we forecast DeFi TVL to rebound to over $200 billion by the end of 2025.
IX. NFT Market Rebounds, Reaching $30 Billion in Trading Volume
2024 NFT Trading Volume Dip, Expected Rebound in 2025
Data source: as of December 6, 2024.
The 2022-2023 bear market has severely impacted the NFT space, with trading volume declining 39% since 2023 and a staggering 84% drop from the 2022 peak. While fungible Token prices began rebounding in 2024, most NFTs have lagged, with weak prices and low activity until a turnaround in November. Despite these challenges, some projects with strong community ties have outperformed, transcending speculative value.
For example, Pudgy Penguins successfully transformed into a consumer brand through collectible toys, while Miladys gained cultural recognition in the ironic internet culture. Similarly, Bored Ape Yacht Club (BAYC) continues to evolve as a dominant cultural force, attracting widespread attention from brands, celebrities, and mainstream media.
With the recovery of crypto wealth, we expect new high-net-worth users to diversify into NFTs, not only as speculative assets but also as assets with enduring cultural and historical significance. Well-known collections like CryptoPunks and Bored Ape Yacht Club (BAYC) will benefit from this shift, given their strong cultural value and relevance, despite still being well below their historical trading peaks (down around 90% and 66% in ETH terms, respectively). Other projects like Pudgy Penguins and Miladys have already surpassed their previous price highs.
Ethereum still dominates the NFT market, hosting most of the important collections. In 2024, it accounted for 71% of NFT trading volume, a share expected to rise to 85% by 2025. This dominance is also reflected in the market cap rankings, with 16 of the top 10 and top 20 collections being Ethereum-based, further emphasizing the blockchain's core position in the NFT ecosystem.
While NFT trading volume may not return to the frenetic highs of previous cycles, we believe an annual trading volume of $30 billion is achievable, around 55% of the 2021 peak. The market will shift more towards sustainability and cultural relevance, rather than speculative frenzy.
X. Decentralized Application (DApp) Tokens Narrow Performance Gap with Layer 1 Tokens
2024 Layer 1 Tokens Outperform Mainstream DApps by 2x
Data source: Market Vectors, as of December 8, 2024.
A notable theme of the 2024 bull market has been the significant outperformance of Layer 1 (L1) blockchain Tokens over Decentralized Application (DApp) Tokens. For example, the MVSCLE index tracking smart contract platforms is up 80% year-to-date, while the MVIALE index for application Tokens has only risen 35% over the same period.
However, we expect this trend to reverse by the end of 2024, as a wave of new DApps are launched, bringing innovative and practical products that will drive value for their associated Tokens. AI is a standout category of DApp innovation. Additionally, Decentralized Physical Infrastructure Network (DePIN) projects show immense potential, not only attracting investor and user interest but also facilitating a broader rebalancing of performance between L1 Tokens and DApp Tokens.
This shift underscores the importance of utility and product-market fit in determining the success of application Tokens within the evolving crypto ecosystem.
