For a lot of people who have invested in cryptocurrency and held on to their crypto cards for dear life through an extremely chaotic last few years, 2024 is likely to be a very happy festive season.
With flagship token Bitcoin having reached the gargantuan valuation heights of $107,000 after reaching an astonishing six-figure sum, it is almost impossible to believe that as early as this year it was trading at a relatively modest $42,000 and was barely two years removed from sub $20,000 valuations.
A lot can and has been said about what this means and how it happened, but it means that, at least for the moment, investors who kept hold of their decentralised assets have reaped the reward and can enjoy the rest of the year in the spirit of the season.
Of course, one of the main reasons why so many people invest in crypto is also a reason to contemplate what might come to the market in 2025.
In a season known for powerful sentiments, the mood is extremely good right now, but what might happen to the crypto market in the new year?
Whilst DeFi’s tendency to turn on a satoshi means that it is impossible to truly know, here are some of the most likely stories to dominate the blockchain in 2025.
After The Big Bang
Bitcoin has made it. It reached the $100,000 valuation that almost nobody in 2009 believed it would be capable of. Even the enigmatic Satoshi Nakamoto when writing the original Bitcoin White Paper would be unlikely to have believed it could reach the levels it did.
Nobody on Bitcoin Pizza Day believed that just shy of 15 years later that the 10,000 BTC spent by Laszlo Hanyecz on two large pizzas would be worth $10.7bn today. At the same time, if everyone hoarded these tokens like dragons back then, would Bitcoin have ever reached this point?
However, with such an astonishing epochal moment such as this, the inevitable question will arise about what comes next. After this huge supernova moment, what happens next for Bitcoin, and by extension for crypto as a whole?
It is basically an impossible question to answer at this point, as all bets are off on the potential future for crypto, and where its place is in the wider economy.
It could be the prelude to a new financial universe, or it could just as quickly collapse. Nobody predicted the events of 2022 following the constant sunshine the previous year, after all, and so 2025 will be a fascinating year.
Digital Gold Or Parallel Economy?
Amidst a bull run, as well as wider legitimisation and regulation surrounding blockchain assets, cryptocurrency is seeing a shift not only in how it is perceived in the wider financial world but in the motivations for investing in it.
The volatility of digital assets in general but cryptocurrency, in particular, makes it currently less than ideal as a unit of currency, much like how very few purchases are made in gold sovereigns.
However, much like gold, it is an excellent store of value and has even in its short history worked as a hedge against foreign exchange dips and currency movements.
The establishment of spot Bitcoin ETFs lays bare exactly how traditional finance sees Bitcoin and Ethereum; they are closer to a commodity in terms of the type of asset they are.
This is a subtle but fundamental difference compared to the 2013, 2017 and 2021 bull runs, which were based in no small part on the pursuit of utility and treating cryptocurrencies more akin to a fiat currency than a digital commodity.
The early goal of a lot of evangelists in the cryptocurrency space was to create a parallel economy, free of the huge monolithic institutions that set monetary policy and through extremely reckless gambles in lucrative short-term investments crashed the world economy.
Those same institutions are part of the reason for the crypto bull run, and this integration of cryptocurrency into the world of traditional finance will have ramifications that will persist far beyond 2025.
Shifting Sands
A lot of the reason why it is so unpredictable is because a lot of the world itself is somewhat unpredictable.
Whilst several national financial conduct authorities are working on legislation to assist the integration of cryptocurrency into the wider economy and political events in 2024 would potentially lead to a regulatory environment more friendly to crypto in a lot of countries, nothing is a guarantee.
In unstable, uncertain times, investors tend to fly to quality. This is part of the reason why gold has been an effective hedge against the market for centuries, but time will tell if the new cryptocurrency market has the same insulatory effect.