Bitcoin trading shifts from spot to derivatives... Regulatory changes will reshape the cryptocurrency landscape by 2025.
The Bitcoin market is being restructured from a spot-focused approach to one centered on derivatives like ETFs (exchange-traded funds), options, and futures. Industry insiders predict that this structural shift, coupled with the regulatory environment, will fundamentally alter the landscape of the cryptocurrency market by 2025.
Zac Prince, who heads Galaxy One, a subsidiary of Galaxy Digital, recently stated in an interview that "the Bitcoin market has now completely shifted to focusing on ETFs and derivatives." Prince, a former co-founder and CEO of cryptocurrency lending platform BlockFi, currently oversees institutional lending and yield products at Galaxy One. His comments offer important insights into how regulation is changing investment strategies and profit structures.
Bitcoin still has a long way to go before yields are secured.
Prince pointed out that it's difficult for current Bitcoin investors to achieve the desired level of returns. He explained, "There's a lack of opportunities with attractive returns relative to risk." He analyzed that rising interest rates in recent years have made it more difficult to secure returns, necessitating a more diverse strategic approach.
Galaxy One offers "premium yield products" through its institutional lending desk. Prince emphasized, "Galaxy One differs from existing centralized finance (CeFi) platforms in that it has a large asset base and a rigorous risk management and regulatory response system."
Will regulatory changes completely reshape the cryptocurrency ecosystem?
Prince predicted that the cryptocurrency market in 2025 will look drastically different from 2021. "Changes in the political and regulatory environment will fundamentally alter market structure and investor behavior," he said. "Regulatory discussions in the US alone could impact diverse sectors, including DeFi (decentralized finance), stablecoins, and derivatives."
He particularly emphasized that the sustainability of cryptocurrency platforms is heavily dependent on regulation. Citing BlockFi's failed fundraising, he warned that regulatory uncertainty can be the biggest risk factor for corporate stability and growth. The fact that cryptocurrency-related fraud and hacking have been concentrated in offshore markets also underscores this point.
Funding is more difficult than traditional finance.
Prince noted that raising funds in the cryptocurrency industry remains more difficult and costly than in traditional finance. He analyzed that "in some areas of the crypto industry, limited funding may actually present opportunities for credit-based investors." This has led some institutions to develop specialized lending products for cryptocurrency companies.
Bitcoin corporate vault strategies also need a shift.
Prince advised that companies should first establish a solid business foundation before holding Bitcoin. "Corporate growth should be the priority, and then Bitcoin holdings should be considered as part of a financial strategy," he said. This also holds implications for companies like Strategy, Tesla, and Meta, which have incorporated Bitcoin into their asset classes.
A significant portion of Galaxy's current financial strategy relies on Bitcoin holdings, with the department managing it as a core portion of its portfolio.
After stablecoins, tokenized stocks follow.
He predicted that tokenized equities, next to stablecoins, will be the next biggest use case for blockchain. Prince emphasized that "investors outside the U.S. should also have equal access to Robinhood and Apple stocks," highlighting the potential for tokenization to "equalize" the investment environment.
On the other hand, he pointed out that regulatory clarity is essential for tokenized assets, like stablecoins, to achieve this. He explained that given that stablecoin adoption in the global market is still in its infancy, there are still many hurdles to overcome before tokenized stocks become widely available.
Economic cycles also influence platform growth.
Prince explained, "During boom times, consumers are more willing to try new financial platforms, but during recessions, they become more conservative." Similarly, macroeconomic variables like interest rates and economic sentiment significantly impact the crypto industry's user inflow and platform performance.
He emphasized that "Galaxy's income account product interest rate is also linked to the U.S. Treasury bond interest rate," and that it is structured to react according to conditions rather than a product that guarantees a fixed rate of return.
Crypto must be free from policy and politics
Finally, Prince emphasized the critical need for bipartisan support, stating, "Cryptocurrencies should not be a political issue for a particular faction." This message has become even more crucial with President Trump's recent announcement of his willingness to accept cryptocurrency donations and some Republicans taking pro-cryptocurrency stances.
He repeatedly emphasized that policy consistency and institutionalization are paramount for the continued growth of the cryptocurrency industry, where regulations, markets, and technologies are intricately intertwined. To gauge what the cryptocurrency market will look like in 2025, it's necessary to carefully observe the current regulatory landscape and market restructuring.
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The cryptocurrency market you'll encounter in 2025 could be completely different from today. The market, once centered on spot trading, is increasingly shifting to complex derivatives like ETFs, futures, and options, making it difficult to even secure returns. It's becoming increasingly difficult to survive with a strategy that simply involves "buying Bitcoin."
As Jack Prince of Galaxy One emphasizes, "strategic thinking and structural analysis are crucial especially when it's difficult to find attractive risk-to-return opportunities." Especially as the market expands to include corporate treasuries, stablecoins, and tokenized stocks, failing to understand the "structure" can lead to a poisoned chalice.
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TP AI Precautions
This article was summarized using a TokenPost.ai-based language model. Key points in the text may be omitted or inaccurate.
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