Bitcoin’s price is expected to remain elevated in 2025, supported by a more favorable regulatory and political environment in the US, increased institutional adoption and a looser Federal Reserve monetary policy, said Deutsche Bank.
Trump's pro-crypto administration to power marked a turning point for the regulatory landscape, the bank's analysts said, but at the tart of 2025 the crypto market "stands at the crossroads of innovation and scepticism poised for further growth in the evolving global financial landscape".
The appointment of Paul Atkins as chair of the Securities and Exchange Commission “signals a shift towards an innovation-friendly approach,” the bank said, highlighting Atkins’s expected repeal of crypto regulations introduced by his predecessor as a key development.
There had already been moves towards some "crucial regulatory clarity" before the election, with the Biden administration passing the Financial Innovation and Technology Act (FIT21) last May, which defined cryptocurrency classifications, exempting small transactions from taxation, and established a framework for tokenized assets.
Meanwhile, across the Atlantic the EU's Markets in Crypto-Assets (MiCA) regulation rolled out in 2024 “signaled enhanced legitimacy and security for the European crypto market.”
Bitcoin saw unprecedented momentum in 2024, Deutsche Bank noted, with the number of Bitcoin transactions rising to $19 trillion from $8.7 trillion in 2023, as institutional interest was a major driver, with holdings increasing to 31% of the total supply by December from 14% in 2023, and spot bitcoin ETFs contribution $16.5 billion in net inflows in Q4 alone as companies like MicroStrategy, KULR Technology, Rumble, and Genius Group adding bitcoin to their balance sheets.
Alongside the publicity for crypto with the launch of $TRUMP and $MELANIA cryptocurrencies in January, which coincided with bitcoin climbing to record highs of above $109,000, the note highlighted that prices have since fallen after the President’s anticipated unveiling of crypto priorities failed to materialize.
Indeed, challenges remain, Deutsche Bank said, citing “volatility, lagging retail adoption, and regulatory hurdles abroad,” particularly in countries such as India, Turkey, and China.
Criminal activity also remains a concern, with stolen funds rising to $2.2 billion in 2024 and stablecoins comprising 63% of illicit transaction volume.
Deutsche pointed to several expected developments in 2025:
- Lightchain AI (February 2025): This altcoin launch promises to disrupt decentralized computing by merging AI with blockchain technologies.
- Ethereum Pectra Upgrade (March 2025): This upgrade is expected to enhance user wallet experience, increase the maximum staking amount for validators, and delve other network improvements.
- US Federal Bitcoin Reserve (Q1 2025): The likelihood of President Trump fulfilling his campaign to create a federal Bitcoin stockpile to protect the US balance sheet will become clearer in the early weeks.
- UK Crypto Roadmap (Q1 onwards): The FCA is expected to publish its plan for stablecoins, custody, governance, and market-abuse guidance throughout 2025, with the new regime launching in 2026. This framework will introduce higher legal standards for market conduct in the crypto sphere.
- US Stablecoin legislation (Mid-Late 2025): With a Republican majority in the White House and Congress, progress on long-awaited stablecoin legislation is anticipated, potentially enhancing market confidence and fostering innovation.
- UK CBDC Pilot Launch (Late 2025): The UK is expected to launch the pilot phase of its CBDC in 2025, following the government announcement of a “dedicated digital pound lab”.