Translated by: Vernacular Blockchain
Invesco is a leading global independent investment management company founded in 1935 and headquartered in the United States. Invesco manages more than $1.8 trillion in assets (as of 2024) and operates in more than 20 countries around the world. In recent years, it has actively deployed blockchain and crypto asset investments and is committed to exploring investment opportunities in Bitcoin and other crypto assets.
This article was written by Ashley Oerth, assistant global market strategist at Invesco. In this article, Oerth discusses the strong performance of crypto assets in 2024 and believes that the crypto industry will continue to hit new highs in 2025, driven by an improved regulatory environment and more friendly policymakers.
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We believe that the crypto industry will continue to hit new highs in 2025, mainly benefiting from the gradual clarification of regulatory policies and more friendly policymakers.
Positive developments after the US presidential election, changes in investors' attitudes towards the crypto industry, and a supportive market backdrop may drive the performance of crypto assets. President Trump has expressed his desire to establish a strategic Bitcoin reserve and has appointed policymakers who are supportive of the crypto industry.
Crypto assets have performed strongly in 2024. With the US Republican Party winning the House, Senate and presidential elections, Bitcoin has surpassed the $100,000 mark, and the total market value of all crypto assets has reached $3.5 trillion as of January 31, 2025. US large-cap stocks have risen 4.8% since the election, Bitcoin has risen 47.6%, and Ethereum has risen 37.4%. We expect this momentum to continue in 2025 as a series of positive news and legislative developments look likely.
In our view, crypto assets are largely influenced by the macroeconomic environment and market sentiment, which can lead to large fluctuations in their prices.Currently, the market environment and sentiment are shifting in a direction that is more favorable to crypto assets, including some positive developments after the US election, investors' more friendly attitude towards the crypto industry, and the overall supportive background of the market due to central bank rate cuts and the global economy returning to a normal growth environment.
We have listed below five prominent factors that show why crypto assets may continue to perform well in 2025.
President Trump has indicated that he will continue to roll out a series of crypto-friendly policies, including his desire to establish a strategic Bitcoin reserve and appoint pro-crypto policymakers to key regulatory agencies such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). However, support for crypto assets does not come from just the president. According to data from a pro-crypto group, a total of 294 pro-crypto candidates from both parties were elected to the House of Representatives and Senate of the U.S. Congress in the 2024 election.
This may mean that Trump's policies will be very different from those of the Biden administration, which has always been hostile to crypto assets. For example, the Securities and Exchange Commission under SEC Chairman Gary Gensler has filed lawsuits against crypto companies on many occasions, but has not clearly stated the specific framework followed, and has therefore been criticized for taking the approach of "using law enforcement instead of policy." Biden himself is also against the crypto industry, and he still opposes the 21st Century Financial Innovation and Technology Act (FIT21) despite the fact that it has received bipartisan support.
One of the key points of contention is SAB 121 - a 2022 announcement by the SEC that requires publicly traded institutions to strictly follow regulations when custodying crypto assets for customers.SAB 121 requires these institutions to include crypto assets on their balance sheets, which not only triggers capital regulatory requirements, but also prevents most banks from participating in the digital asset ecosystem.Because SAB 121 requires publicly traded institutions to include crypto assets on their balance sheets, most banks lack sufficient capital or relevant risk management measures to support this additional burden and are therefore unable to participate in the crypto asset ecosystem.
Due to the lack of effective custody solutions from banks, many crypto investors have been forced to turn to some alternatives that are both expensive and often unreliable.Now that SAB 121 has been repealed, it has opened a new path for more large institutions to provide crypto asset custody services.
With the change in US policy in the field of crypto assets, we expect more investors to begin to accept crypto assets, which may drive the crypto market into a bull market. Since the November election, investor interest in US Bitcoin CEX trading products (ETP: Exchange-Traded Product) has continued to rise.
US Bitcoin ETP total asset size growth and fund inflow trend since listing on January 11, 2024
In 2024, the United States and Hong Kong launched spot Bitcoin products (ETFs), which, according to Bloomberg data, had attracted $34.6 billion in net inflows by the end of 2024. By 2025, more countries may allow a wider range of investors to participate in spot ETF trading, and more crypto assets may become more investable through ETFs. According to the latest regulatory filings from the U.S. Securities and Exchange Commission (SEC) as of the end of January, several ETFs have begun to invest in other crypto assets. As more investment products are launched and attract more investors, we expect that the prices of crypto assets may rise as a result.
As the market value of Bitcoin continues to grow, investors' attitudes towards this leading crypto asset are also changing. In January 2024, the United States launched a widely accessible spot Bitcoin exchange-traded product (ETF), marking an important milestone, providing investors with a convenient way for the world's largest capital market to easily invest in Bitcoin (and possibly Ethereum in the future). For example, as of January 11, 2024, U.S. investors have invested $40.6 billion in spot Bitcoin ETFs, and by the end of 2024, the total assets of this product reached $101.8 billion. In comparison, gold ETFs have $124.2 billion in assets under management.
A year after the launch of Bitcoin ETFs, its asset size is close to that of US gold ETFs.
Rate cuts in major economies such as the United States, the eurozone, and the United Kingdom suggest that 2025 may become a "risk-on year" for global markets. In fact, our expectations for 2025 are more optimistic about the more cyclical areas of the market, such as stocks and trust. Crypto assets may see support as investors are more willing to take risks, as they are generally more affected by the macroeconomic environment.
Tokenization is the recording of a certain asset or information on the blockchain in the form of a token, which brings many benefits to asset management and exchange. We believe that the current financial system can achieve a variety of potential benefits through tokenization, such as reducing counterparty risk, speeding up payment and settlement, and enhancing the personalization of customer investment experience.
Over the past five years, pilot projects for central bank digital currency and asset tokenization have gradually made progress, including tokenized money market funds, tokenized bonds, and tokenized private market products. The UK government plans to issue tokenized government bonds for the first time in the next two years. In the eurozone, the European Central Bank is preparing to launch a digital euro, which is expected to promote the further development of tokenization applications. As this technology becomes more popular, we expect crypto assets to benefit from it as well.
Crypto assets are highly volatile investments that may fluctuate significantly due to changes in news events. Overall, we believe that the crypto market will continue to hit new highs in 2025, mainly due to the improvement of regulatory clarity and more friendly policies, which have brought positive news to digital assets (for example, the volatility of crypto market prices after Trump's election, the news that Trump nominated the chairman of the US Securities and Exchange Commission (SEC), and the decision of the US to approve spot Bitcoin and Ethereum ETFs). We also expect that interest rate cuts in many major economies may stimulate demand for risky assets. Note: The above views only represent the personal opinions of the author as of February 14, 2025, and cannot be regarded as investment advice. Forward-looking statements are not guarantees of future results, and the risks, uncertainties and assumptions involved may cause actual results to differ from expectations.
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