Galaxy Research 2025 Prediction: Bitcoin to Surge to $185,000, Ethereum to Break $5,500

Original Source: Galaxy Research

Original Translation: Deep Tide TechFlow

2025 Cryptocurrency Predictions from @glxyresearch covering Bitcoin and Ethereum price trends, ETHBTC ratio, Dogecoin and D.O.G.E., stablecoins, DeFi, L2 solutions, policy, venture capital, and more. Here is a summary of our predictions recently shared with @galaxyhq clients and partners:

Bitcoin Price Expected to Break $150,000 in the First Half of 2025 and Reach or Exceed $185,000 by Q4

Institutional, corporate, and national adoption will be a key driver for Bitcoin reaching new highs in 2025. Since its inception, Bitcoin has consistently outpaced all other asset classes in terms of value appreciation, especially the S&P 500 and gold, a trend that will continue in 2025. Bitcoin's market cap is expected to reach 20% of the total gold market cap.

- @intangiblecoins

Total Assets Under Management (AUM) for US Spot Bitcoin ETP Expected to Exceed $250 Billion in 2025

In 2024, Bitcoin ETP products attracted over $36 billion in net inflows, making it the best-performing ETP product suite in history. Many top global hedge funds (such as Millennium, Tudor, and D.E. Shaw) have opted for Bitcoin ETP, and according to 13F filings, the State of Wisconsin Investment Board (SWIB) also holds relevant positions. Within just one year, the AUM of Bitcoin ETP is only $24 billion (19%) away from surpassing the total size of all US physical gold ETPs.

- @intangiblecoins

Bitcoin Set to Once Again Be One of the Best-Performing Assets Globally on a Risk-Adjusted Basis in 2025

Bitcoin's outstanding performance is not only due to record-breaking capital inflows but also driven by the 2024 price surge. Based on risk-adjusted return metrics, Bitcoin ranks third globally among assets, trailing only a few top-tier assets. MicroStrategy, the self-proclaimed "Bitcoin Treasury" company, has particularly strong performance in terms of Sharpe ratio.

- @intangiblecoins

At Least One Top Wealth Management Platform Will Recommend Clients Allocate 2% or More of Their Portfolio to Bitcoin by 2025

Due to factors such as investment familiarity, internal education, and compliance requirements, currently no major wealth management firm formally includes a Bitcoin allocation in its investment advice portfolios. However, this situation will change by 2025, further driving inflows into U.S. physically-backed Bitcoin ETPs and AUM growth.

- @intangiblecoins

Five Nasdaq 100 Companies and Five Nations Will Announce Adding Bitcoin to Their Balance Sheet or Sovereign Wealth Fund

Whether for strategic needs, portfolio diversification, or considerations for trade settlement, Bitcoin will gradually enter the balance sheets of major corporations and national-level investors. Particularly, non-aligned nations with large sovereign wealth funds, or even nations in opposition to the U.S., will actively acquire Bitcoin through mining or other means.

- JW

Bitcoin Developers Will Reach Consensus on the Next Protocol Upgrade by 2025

Since 2020, Bitcoin core developers have been discussing how to enhance transaction programmability by introducing opcodes. By the end of 2024, the most supported opcodes include OP_CTV (BIP 119) and OP_CAT (BIP 347). Although soft fork consensus in Bitcoin is extremely rare and time-consuming, it is expected that consensus will be reached in 2025, collectively driving the introduction of OP_CTV, OP_CSFS, and/or OP_CAT. However, this upgrade will not be activated in 2025.

- @hiroto_btc

More Than Half of the Top 20 Market Cap Bitcoin Mining Companies Will Announce Transformation or Partnerships with Hyperscalers, AI, or HPC Companies by 2025

With the increasing computational demands of AI, Bitcoin miners will gradually transform existing facilities, build new infrastructure, or collaborate with HPC companies to deploy mining farms. This trend will constrain the annual growth rate of the global hash rate, with the global hash rate expected to reach 1.1 zetahash by the end of 2025.

These predictions outline a possible blueprint for the cryptocurrency market in 2025, full of opportunities and challenges.

- @intangiblecoins, @SimritDhinsa

The Bitcoin DeFi Market Size is Expected to Double by 2025

By the end of 2024, over $11 billion worth of wrapped Bitcoin (e.g., WBTC) has been locked in DeFi smart contracts. Of this, over 70% of the locked Bitcoin is used as collateral for lending protocols. Additionally, through Bitcoin's largest staking protocol, Babylon, there are around $4.2 billion in deposits. The current valuation of the Bitcoin DeFi market is $15.4 billion and is expected to experience significant growth by 2025. This growth will come from multiple directions, including existing DeFi protocols on Ethereum L1/L2, new DeFi protocols on Bitcoin L2, and staking layers similar to Babylon. Key drivers expected to double the market include a 150% year-over-year growth in cbBTC supply, a 30% increase in WBTC supply, Babylon reaching a TVL of $8 billion, and a new Bitcoin L2 network achieving a $4 billion DeFi TVL.

- @hiroto_btc

Ethereum Price Expected to Break $5,500 in 2025

With regulatory pressures easing in the DeFi and staking space, Ethereum is poised to hit a new all-time high in 2025. Collaboration between DeFi and traditional finance may unfold in a new regulatory sandbox environment, allowing traditional capital markets to dive deeper into public blockchains, with Ethereum and its ecosystem being the primary beneficiaries. Simultaneously, enterprises will gradually explore Ethereum-based Layer 2 networks. Some blockchain-based games may find product-market fit, and NFT trading volume will see a significant rebound.

Ethereum Staking Rate Expected to Exceed 50% by 2025

The U.S. government may provide clearer regulatory guidance for the crypto industry, such as allowing ETH held in spot ETH ETPs to be staked. The demand for staking will continue to grow next year, with the staked Ethereum amount potentially exceeding half of its circulating supply by the end of 2025. This will prompt Ethereum developers to consider adjusting the network's monetary policy more seriously. Additionally, the rise in the staking rate will further drive demand and value flow into staking pools (such as Lido and Coinbase) and re-staking protocols (such as EigenLayer and Symbiotic).

-@christine_dkim

ETH/BTC Ratio to Fall Below 0.03 in 2025 but Recover to Above 0.06 by Year End

The ETH/BTC ratio is one of the most closely watched trading pairs in the cryptocurrency market. Since Ethereum completed the "Merge" upgrade in 2022 and transitioned to proof of stake, this ratio has been consistently declining. However, a shift in the regulatory environment is expected to particularly support Ethereum and its application layer, especially DeFi, reigniting investor interest in the world's second-largest blockchain.

- @intangiblecoins

L2 Economic Activity to Surpass Other Alt L1 Networks in 2025

The fee proportion of L2 networks (currently in the mid-single digits) is expected to surpass 25% of the total fees of Alt L1 networks by the end of the year. As L2 networks near their scaling limits early in the year, transaction fees may spike frequently, prompting network adjustments to gas limits and blob market parameters. However, technical solutions such as the Reth client or alternative virtual machines like Arbitrum Stylus will enhance Rollup efficiency, keeping transaction costs within acceptable ranges.

- @FullNodeChuck

DeFi May Enter a "Dividend Era" in 2025, with On-Chain Applications Expected to Distribute at Least $1 Billion in Value to Users and Token Holders

As DeFi regulation gradually clarifies, the value-sharing mechanisms of on-chain applications will expand. Projects like Ethena and Aave have begun discussing or implementing fee mechanisms through proposals that will allow users to directly benefit. Other protocols that previously opposed such mechanisms (such as Uniswap and Lido) may reconsider their positions due to regulatory clarity and competitive pressures. A more relaxed regulatory environment and increased on-chain activity indicate that protocols may engage in buybacks and direct revenue distribution at a higher frequency.

- @ZackPokorny_

On-Chain Governance May Experience a Revival in 2025, as Applications Explore Governance Models Based on Futarchy

The total number of active voters in on-chain governance is expected to grow by at least 20%. On-chain governance has long faced two main issues: low participation and lack of voting diversity (most proposals pass with overwhelming support). However, with easing regulatory pressure and the success of Polymarket, these two issues are expected to improve by 2025. By then, more applications will transition from a traditional governance model to a futarchy governance model, enhancing voting diversity and optimizing governance effectiveness.

- @ZackPokorny_

- @FullNodeChuck

- @hiroto_btc

It is expected that the world's top four custodian banks will start offering digital asset custody services in 2025

The Office of the Comptroller of the Currency (OCC) plans to provide a policy path for national banks to custody digital assets, which will drive the world's top four custodian banks—BNY Mellon, State Street, JPMorgan Chase, and Citibank—to launch digital asset custody services in 2025.

- @intangiblecoins

It is expected that at least ten stablecoins supported by traditional finance will be launched in 2025

From 2021 to 2024, the stablecoin market has grown rapidly, with 202 projects currently existing, some of which have close ties to traditional finance (TradFi). Not only is the number of projects increasing, but the growth rate of their transaction volume far exceeds that of traditional payment networks, such as ACH (annual growth of about 1%) and Visa (annual growth of about 7%). By 2024, stablecoins are gradually integrating into the global financial system. For example, the US-chartered FV Bank already supports direct stablecoin deposits, and Japan's top three banks are cooperating with the Pax project and SWIFT to achieve faster and lower-cost cross-border fund transfers. Payment platforms are also actively building stablecoin infrastructure, such as PayPal launching the PYUSD stablecoin on the Solana blockchain, and Stripe acquiring Bridge company to natively support stablecoins. In addition, asset management giants like VanEck and BlackRock are also partnering with stablecoin projects, actively positioning themselves in this field. As the regulatory environment becomes clearer, traditional financial institutions will further integrate stablecoins into their operations to seize market opportunities and establish a foundation for future development.

- JW

Stablecoin Supply Expected to Double by 2025, Surpassing $400 Billion

Stablecoins are rapidly expanding their usage in the payment, remittance, and settlement sectors. With increasing regulatory clarity around existing stablecoin issuers and traditional banks, trusts, and custodians, the stablecoin supply is expected to experience explosive growth by 2025.

- @intangiblecoins

Tether's Market Share Expected to Drop Below 50% by 2025, Challenged by Yield-bearing Stablecoins

Tether allocates the yield income from its USDT reserves to fund its portfolio, but other stablecoin issuers and protocols are attracting users through revenue-sharing mechanisms, leading existing users to migrate from Tether to yield-bearing solutions. For example, Coinbase's USDC rewards on exchange and wallet balances will serve as a strong incentive, driving not only the entire DeFi sector but also potentially being integrated by fintech firms to enable new business models. In response, Tether may start distributing yield from collateral assets to USDT holders and might even introduce competitive yield-bearing products, such as a market-neutral stablecoin.

- @FullNodeChuck

Crypto Venture Capital (VC) Total Investment Expected to Exceed $150 Billion by 2025, with over 50% YoY Growth

As interest rates decline and the crypto regulatory environment improves, investor interest in venture capital is set to significantly rise, propelling VC activities. Crypto VC fundraising has historically lagged behind broader crypto market trends, but the next four quarters may witness a 'catch-up' phenomenon.

- @hiroto_btc, @intangiblecoins

Stablecoin Legislation Expected to Pass Both Houses of Congress and Be Signed by President Trump in 2025, But Market Structure Legislation May Remain Unpassed

Legislation creating a registration and regulatory framework for stablecoin issuers is expected to pass with bipartisan support and be signed into law before the end of 2025. The growth of USD-backed stablecoin supply will solidify the dollar's global dominance and further foster the development of the U.S. Treasury market. Coupled with relaxed restrictions on banks, trusts, and custodians, stablecoin adoption is expected to significantly rise. However, market structure legislation (such as establishing registration, disclosure, and regulatory requirements for token issuers and exchanges, or adjusting existing SEC and CFTC rules to cover these entities) is complex and may not be passed into law in 2025.

- @intangiblecoins

The U.S. Government is Not Expected to Purchase Bitcoin in 2025, but May Use Existing Reserves to Build Stockpile and Drive Discussions on Expanding Bitcoin Reserve Policy Across Government Departments and Agencies

- @intangiblecoins

The U.S. Securities and Exchange Commission (SEC) is Expected to Investigate Prometheum, a First-of-Its-Kind "Special Purpose Broker-Dealer"

Prometheum, a previously unknown broker-dealer, received a new type of broker-dealer license in 2023 and publicly endorsed SEC Chairman Gensler's views on the security status of digital assets, leading to widespread scrutiny. Its CEO faced questioning from Republican lawmakers in a congressional hearing, and according to FINRA records, Prometheum's alternative trading system (ATS) has not yet conducted any trades. Republicans have called for investigations by the Department of Justice and SEC into whether Prometheum has "ties to China," while some have pointed out irregularities in its fundraising and financial reports. Regardless of whether an investigation is launched, the "special purpose broker-dealer" license is expected to be revoked in 2025.

- @intangiblecoins

Dogecoin Could See Its First Breakthrough to $1 in 2025, with a Market Cap Expected to Reach $100 Billion

As the world's most famous and longest-running meme coin, Dogecoin's market performance is set to reach new heights in 2025. However, its market cap peak may be surpassed by the budget reduction amount from a "government efficiency department." This department is expected to identify and successfully implement cost-cutting measures in 2025 that exceed Dogecoin's market cap peak.

- @intangiblecoins

Disclaimer: Members of Galaxy and/or Galaxy Research hold Bitcoin, Ethereum, and Dogecoin. Many predictions have not been shared, and many more could be made. These predictions are not investment advice and do not constitute an offer, recommendation, or invitation to buy or sell any securities (including Galaxy securities). These predictions represent the views of the Galaxy Research team as of December 2024 and do not necessarily reflect the position of Galaxy or any of its affiliates. These predictions will not be updated.

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