Coin Metrics: Crypto Market Outlook for 2025

Author: Tanay Ved, Cooper Duschang Source: Coin Metrics Translation: Shan Ouba, Golden Finance

Introduction

2024 is a milestone year for the digital asset industry, starting with the long-awaited approval of the spot Bitcoin ETF and ending with the US presidential election. Institutional capital entered the market, driving Bitcoin prices to new highs and boosting the entire ecosystem. Stablecoins soared to over $200 billion, risk asset tokenization gained momentum, and corporate demand for Bitcoin accelerated at an unprecedented rate. Bitcoin experienced its quadrennial halving, Ethereum expanded in the form of blobs, and Solana's ecosystem expanded rapidly. At the same time, old stories faded to make way for emerging themes.

Not long ago, the cryptocurrency industry faced strict scrutiny from the U.S. Securities and Exchange Commission and an uncertain interest rate hike cycle. Now, optimism is back. Bitcoin surged past $100,000 after the election, supported by a pro-crypto U.S. government and renewed enthusiasm across the ecosystem. These developments put the industry on firm footing as it heads into 2025, ready to explore transformative trends and opportunities ahead.

Market Outlook

Assets, Themes, and Sectors

Outlook: Through 2025, we expect selective outperformance in emerging and established categories, such as decentralized finance (DeFi) on layer 1 blockchains, Ethereum, Solana, and Base, as well as the evolving intersection of crypto and AI. Bitcoin (BTC) Outlook: Bitcoin (BTC) will test the $140,000 to $170,000 range in 2025, supported by cyclical growth trends and accelerating structural adoption. On the back of a declining supply, continued inflows into ETFs, corporate funding adoption, and potential national adoption will drive demand for BTC. Ethereum (ETH) Outlook: Ethereum’s underperformance will disappear as the ETH/BTC ratio reverses to 0.055. We expect Ethereum (ETH) to reach a price range of $7,500-10,000, driven by increasing institutional demand, a maturing layer 2 ecosystem, and Ethereum’s continued dominance in stablecoins, RWA tokenization, and DeFi.

Airdrop Trend

Outlook: Although airdrops may continue to disappoint speculators in 2025, a new round of airdrops and an adjusted distribution structure and process may allow more satisfied users to be rewarded for their participation.

Industry

Exchange Traded Funds (ETFs)

Outlook:With a loosened regulatory environment under the new administration, the digital asset space will have more clarity, and we expect broader institutional participation to sustain strong inflows into U.S. spot Bitcoin ETFs. Assets under management (AUM) are expected to more than double, with Bitcoin holdings exceeding 2.5 million BTC by 2025.

Infrastructure

Layer 1

Outlook for 2025:The Layer 1 technology landscape will expand beyond the EVM, and demand for block space will consolidate around the EVM, Ethereum, and Solana ecosystems as base layers and scaling solutions continue to advance. The “Layer 1 premium” will remain strong.

Layer 2

Outlook:Blob space will play an increasingly important role in Ethereum scalability. As more institutional (Ink Chain, Soneium) and custom (Unichain) Layer 2s are built on Ethereum, expect Blob fees to become a larger portion of total fees paid on Ethereum.

With plans to increase the target blob rate in Ethereum’s Pectra upgrade, Layer-2s will need to continue to monitor their blob inclusion while ensuring fees are minimized relative to alternative data availability solutions.

Applications

Stablecoins

Outlook #1:Stablecoins grow by about 50% in 2024 to over $200 billion, with total transfer volume exceeding $12 trillion. We expect stablecoin supply to exceed $400 billion and settlement volume to grow to over $20 trillion in 2025, driven by a bull run, issuer entry and network expansion, passage of stablecoin legislation, and adoption by consumers and businesses for payments and financial services. Outlook #2: USDT and USDC are likely to maintain their position as the top two stablecoins in 2025, exceeding their 2024 growth rates and maintaining market dominance. However, “other” stablecoins — driven by new issuance and growth in existing alternatives — are expected to close the gap in total supply and capture an increasing share (~30%) of the stablecoin market. Tokenization of Real World Assets (RWAs) Tokenization of Real World Assets (RWAs) Outlook: As the regulatory environment evolves and institutions seek more accessible capital and liquidity rails, we expect tokenized assets to flood onto major blockchains. As a result, the RWA market assets entering public blockchain rails will double. We expect at least one company listed on the NYSE or NASDAQ to tokenize its shares on the blockchain.

Conclusion

While there is still a lot of positive momentum heading into 2025, it is important to acknowledge that certain macroeconomic and crypto-specific risk factors remain. Inflation, while better than before, remains elusive, and slowing revenues at the “Big Seven” could have knock-on effects on the crypto industry. Failure of pro-crypto regulations to take shape as expected and idiosyncratic factors such as MicroStrategy’s reversal of its Bitcoin accumulation strategy could create headwinds heading into 2025. Therefore, we remain cautiously optimistic about the coming year.