Recently, Coinbase released a report showcasing their predictions for the cryptocurrency market in 2025. The report focuses on key areas such as stablecoins, Tokenization, ETFs, DeFi and developments in regulations.
Reports from other industry participants also suggest a positive outlook for the cryptocurrency market in 2025.
Favorable Regulatory Environment Will Drive Market Growth
The first notable prediction is that the regulatory changes will benefit the entire cryptocurrency market. Coinbase calls the upcoming US Congress “The Most Pro-Crypto Congress of the Era.” Among possible developments, the establishment of a Strategic Bitcoin Reserve could become a reality.
Notably, pro-cryptocurrency moves are not limited to the US; Regions such as Europe, G20, UK, UAE, Hong Kong and Singapore are actively developing regulations to support digital assets.
Binance CEO Richard Teng also predicted that regulatory changes in the US will be a catalyst for growth in 2025, and it is likely that other countries will follow suit.
Positive Developments for Cryptocurrency ETFs
Coinbase highlights the importance of Bitcoin ETF and Ethereum in attracting new capital. Data shows net inflows have reached $30.7 billion since they were introduced.
The report also suggested that asset-related ETFs such as XRP, SOL, LTC and HBAR could be approved, although the benefits may be short-term.
More importantly, Coinbase predicts the SEC could approve staking in ETFs or eliminate the requirement to create and redeem ETFs for cash, expanding the ETF market. SEC Commissioner Hester Peirce suggested that these developments could happen “soon.”
Global Acceptance of Stablecoins
Coinbase predicts a very optimistic scenario for stablecoin adoption. With a market capitalization exceeding $190 billion, stablecoins currently represent 0.9% of the US M2 money supply.
The report predicts that stablecoins could grow to account for 14% of America’s $21 trillion M2 supply, thanks to their speed and cost-effectiveness compared to traditional methods.
“Indeed, we may be getting closer to the day when the first and primary use cases for stablecoins are not just transactions but global capital flows and trade.” Coinbase predicts.
Tokenization Will Grow Amid Regulatory Challenges
Coinbase expects that Tokenized assets will continue to grow in 2025. The capitalization of Real Tokenized Assets (RWA) has grown more than 60% over the past year, reaching nearly $14 billion.
Estimates suggest that RWA capitalization could grow by at least $2 trillion over the next five years, backed by large traditional financial firms such as BlackRock and Franklin Templeton.
The Tokenization trend extends beyond traditional assets such as US Treasury bonds and money market funds to areas such as private credit, commodities, corporate bonds, real estate and insurance.
“Ultimately, we think Tokenization can simplify the entire portfolio building and investing process by bringing it on-chain, although this may be a few years away. Of course, these efforts face unique challenges, including liquidity fragmentation between different chains and ongoing regulatory difficulties.” Coinbase predicts.
A report from Messari echoes these sentiments, predicting that Bitcoin and tokenized RWAs will be the focus of discussion in 2025.
DeFi Will Recover In 2025
Although market capitalization has peaked at over $3.7 trillion, DeFi’s total value locked (TVL) has yet to return to its previous high of $200 billion; it now stands at $120 billion.
Coinbase believes that DeFi faced significant challenges in the past cycle, as many protocols posted unsustainable returns. However, regulatory changes in the US could allow DeFi protocols to share revenue with Token shareholders, creating momentum for a recovery.
The report also cited comments from Federal Reserve Governor Christopher Waller, who stated that DeFi could complement centralized finance (CeFi) with distributed ledger technology (DLT), improving Efficient data storage.