currencyjournals — Cryptocurrencies are poised to proceed their momentum after almost doubling their complete market capitalization in 2024, however widespread adoption in 2025 stays to be seen in crypto's favor. A lot will rely on how successfully the Trump administration is ready to set up a clearer regulatory path for cryptocurrencies to thrive.

“This 12 months (2024) has been a powerful 12 months for cryptocurrencies, with market capitalization rising by greater than 90%,” Citi Analysis stated in its 2025 outlook. “Given the incoming US administration's crypto-friendly views and appointments, the market is optimistic on the regulatory entrance.”

The dramatic positive aspects in 2024 had been pushed by spot and ETF launches, with complete internet inflows of $36.4 billion and $2.4 billion, respectively, via Dec. 19. Citi stated these flows have been an important driver of crypto returns and expects this pattern to proceed into 2025.

Nonetheless, the outlook stays unsure. The incoming administration of President-elect Donald Trump is broadly seen as pro-crypto, however the prospects for significant regulatory reform stay unclear.

“The ‘Trump push’ from a regulatory perspective just isn’t essentially about deregulation… Some market contributors consider the incoming administration will additional take away regulators they see as having a observe document of being skeptical of cryptocurrencies. “And I believe there's a chance that they may attempt to promote regulators that maintain that opinion,” Citi stated. “There ought to be extra alignment with the administration's coverage.”

President Trump has criticized the present administration for stifling innovation and has indicated his intention to withdraw from the present administration's “anti-cryptocurrency motion.” His proposed insurance policies embrace a shift from enforcement-focused regulation to a extra legislatively-based method, aimed toward lowering uncertainty for each buyers and issuers.

In an indication that the winds of change are blowing, President Trump has nominated crypto-friendly Paul Atkins to interchange SEC Commissioner Gary Gensler, who is about to resign on January twentieth.

Citi stated the regulatory surroundings is impacting the adoption of cryptocurrencies, and stated a number of different key metrics to watch embrace transactions/flows, on-chain metrics, and the entire quantity pegged in decentralized finance. I listed the indications.

“Regulatory frameworks will probably be a key determinant of adoption,” Citi stated, warning of the prospect of different cryptocurrencies gaining investor consideration as regulatory transparency will increase.

“One consequence of potential adjustments within the regulatory regime is that cryptocurrencies may imply extra than simply Bitcoin,” Citi added.

Nonetheless, Citi warns that macroeconomic components may disrupt this optimistic narrative, as coverage uncertainty may trigger volatility in danger belongings.

” macro (BCBA:) The rest of this 12 months (2025) could also be much less favorable given heightened US coverage uncertainty and anticipated inventory worth volatility.”