Crypto trends 2025

2024 was marked by record-breaking highs and a flood of institutional participation, fueled by ongoing regulatory progress in the industry. Here are the key trends set to shape the crypto space in 2025.

Contents

1. The continued rise of digital assets
2. Regulation breeds confidence
3. The Trump effect 
4. AI and crypto convergence
5. Inflation and interest rates
6. The continued tokenisation of assets
7. Ethereum continues to adapt for Web3 and DeFi
8. Memecoins are finding their place

The continued rise of digital assets in traditional portfolios

This year saw a marked shift in the institutional adoption of cryptocurrency, with major financial institutions like JPMorgan Chase, Goldman Sachs, and others ramping up their crypto-related initiatives. Traditional asset managers, who once approached the space with scepticism, are now playing an active role in bringing digital assets into the mainstream financial ecosystem.

Among the key developments in 2024 was the approval of Bitcoin exchange-traded funds (ETFs) in January, making it much easier and more attractive for funds to diversify their activities into cryptocurrency. Multiple ETFs gained approval from the US Securities and Exchange Commission (SEC), marking the first time such investment products were cleared for launch in the US. Bitcoin ETFs now have total assets of approximately $113 billion, with $10 billion coming since Trump’s election alone. Will this pick up next year when he comes to power? 

Eight Ethereum ETFs were also approved in 2024. These saw less activity than their BTC counterparts, but it’s significant in that the SEC approved a cryptocurrency other than bitcoin for these types of traditional investment products. Will 2025 see other, smaller-caps receive approval? 

Regulation breeds confidence

Regulators globally have made significant strides in establishing frameworks that protect crypto investors. In South Africa, for example, crypto asset service providers (CASPs) like Luno were officially recognised as financial service providers in 2024, providing real clarity around the rules exchanges must abide by. Next year will also see additional legislation, with the upcoming exchange control regulation promising to further integrate digital assets into the broader South African financial system in 2025.

Solid regulatory foundations give institutions greater confidence to integrate crypto into their operations. This is a new asset class and many are still gauging how crypto assets can be integrated into their portfolios without exposing them to undue risk. The certainty that clear rules and guidance brings gives them a framework to work within.

For institutions, the primary challenges in entering the crypto space are expertise, risk management, and governance. How do they get into this space in a manner they can control? At an individual level, investors have their own risk appetite. But when you get into institutional-level investments, there are many layers: risk structure, governance, boards of directors, and so on. Many institutions we’ve talked to say simply that they don’t currently have the right knowledge or expertise to manage crypto assets.

If 2024 was the year institutions took the time to understand these regulations, how to integrate crypto, assess the risks and set up their operations properly, then 2025 will be the year we see a lot of this work come to fruition.

The Trump effect 

President-elect Donald Trump made crypto an important element of his campaign strategy, pledging to create a “strategic bitcoin reserve” and to position the US as the “crypto capital of the planet.” 

Since his election, he has seemingly come good on his pledges by nominating pro-crypto figures to several key federal roles, fueling optimism among crypto supporters. Most impactfully, Trump has nominated Paul Atkins to chair the Securities and Exchange Commission. Atkins, an SEC commissioner between 2002 and 2008, is considered supportive of the cryptocurrency industry and has been a member and co-chair of the Chamber of Digital Commerce’s Token Alliance, a blockchain trade association, since 2017.  

Atkins is replacing outgoing Chairman Gary Gensler. Under Gensler, the SEC took a combative stance, aggressively pursuing legal action against some of the largest cryptocurrency platforms and protocols. This approach positioned the regulator as an antagonist in the US crypto space. 

The first pro-crypto US President will continue to have a notable impact on the crypto industry one way or the other, whether he follows through with his campaign promises or not. 

AI and crypto convergence

“AI eats the world,” the technology trends expert Benjamin Evans recently wrote, highlighting how artificial intelligence is increasingly intertwined with sectors across the globe. AI’s strengths in automation and data analysis align perfectly with the foundations of cryptocurrency: programmable money, or data itself. AI adoption by users and its spread across industries is likely to continue in 2025, including throughout the crypto industry. 

A prime example of this is Barry Silbert’s new venture, Yuma, which is set to incubate Bittensor, a decentralised network designed to incentivise individuals to contribute data and computing power for compute-intensive tasks like gene-mapping and deep learning for computer models. The Yuma network tokenises computing resources and facilitates peer-to-peer model sharing, enabling alternatives to centralised AI providers like Google or Microsoft. Through these decentralised models, users can track AI model creators and their modifications, while also profiting from the computing power they share.

AI is also transforming decentralised systems. Machine learning algorithms are optimising smart contracts, enhancing network security, and even contributing to consensus mechanisms. Additionally, decentralised data marketplaces are emerging, allowing individuals to securely sell their data to train AI systems while maintaining control over how their information is used. This evolution marks a significant shift, where AI and decentralisation converge to build more efficient, transparent, and decentralised systems.

Inflation, interest rates, and an increase in money supply 

The US Federal Reserve cut interest rates by 0.5% in September, ending an extended period of aggressively high rate increases aimed at curbing rampant inflation. A further 0.25% reduction followed in November, and most investors, according to the CME FedWatch Tool, expect a sustained dovish stance into 2025. But it all depends on how inflation plays out, which saw a slight spike in the US again towards the latter part of the year. 

Historically, monetary easing has buoyed assets considered higher risk but with more attractive returns, such as stocks and crypto. However, the full impact of this policy shift remains to be seen. Its true effects could unfold well into next year, potentially creating a supportive backdrop for riskier assets. Or it could not, especially if inflation keeps ticking upward. The one certainty is that investors will be watching the Fed very closely to see how their decisions impact risk-on markets like crypto. 

The continued tokenisation of assets and everyday things

Tokenisation is the process of converting real-world assets like real estate, stocks or commodities into digital tokens on a blockchain. This makes traditionally hard-to-sell assets easier to trade and opens up investment opportunities for a wider range of investors. Big players like BlackRock are leading the charge, launching tokenised funds such as BUIDL, which raised $240 million in its first week. BUIDL operates on the Ethereum blockchain and allows investors to earn interest by investing in assets like cash and US Treasury bills. 

McKinsey notes in an article, From ripples to waves: The transformational power of tokenizing assets, “We expect that total tokenized market capitalization could reach around $2 trillion by 2030 (excluding cryptocurrencies like Bitcoin and stablecoins like Tether), driven by adoption in mutual funds, bonds and exchange-traded notes (ETN), loans and securitization, and alternative funds.” 

Ethereum continues to adapt for Web3 and DeFi

The first smart-contract cryptocurrency network has seen a huge increase in competition since it launched in 2015, with many of its rivals claiming to be faster and cheaper. Developers have been coming up with ideas about how to make the network more efficient as decentralised finance (DeFi) continues to evolve and gain adoption. Ethereum’s development trajectory in 2024 centred on the Pectra upgrade, which is expected to roll out sometime in 2025. This update focuses on improving scalability, security, and usability, addressing longstanding challenges for both developers and users.

The upgrade introduces key Ethereum Improvement Proposals (EIPs) aimed at refining the network’s functionality. EIP-3074 extends smart contract-like capabilities to wallets, enabling transaction bundling and sponsored transactions. EIP-7523 formalises the exclusion of empty accounts, enhancing network efficiency, while account abstraction EIPs simplify transaction processes, making asset management more accessible. Significant scalability improvements are also anticipated, with the introduction of Verkle Trees to optimise data availability and retrieval. These advancements are expected to support DeFi and NFT ecosystems by reducing transaction costs and improving efficiency. Enhanced cryptographic protocols will also provide stronger safeguards for smart contract execution.

As Ethereum continues to evolve, these updates are likely to solidify its position as a foundational layer for Web3 development, fostering growth in DeFi and other emerging use cases in 2025.

Memecoins are finding their place in crypto

Memecoins arguably claimed the headlines in the crypto landscape in 2024, with originals like Dogecoin more than tripling in price throughout the year (with help from support by influential people like Elon Musk). Spinoffs like Shiba Inu also saw substantial growth during this time. 

Despite their origins as a joke, these cryptocurrencies have steadily gained traction among investors, who argue they hold value despite their limited functionality. Dogecoin, now ranked among the top 10 cryptocurrencies by market cap, is a prime example. This shows no signs of slowing down, with Pepe, based on a frog meme, leapfrogging the well-established Litecoin to take its place in the top 20 cryptocurrencies by market capitalisation. 

There have also been a number of horror stories, though. Memecoins are highly-volatile and have seen a number of high-profile bust outs due to the low barriers to entry. Looking ahead, the coming year could bring further growth and adoption in this market if interest continues to rise at the same trajectory it did in 2024. It is, however, as with any crypto asset, important to do your own research before investing and never invest more than you can afford to lose. Even if it it does have an influencer’s face on it.

*This information should not be construed as a solicitation to trade. All opinions, news, research, analysis, prices or other information is provided as general market commentary for information purposes only and is not investment advice or recommendation. Luno always advises you to obtain your own independent financial advice before investing or trading in cryptocurrency.