Crypto Changes Ahead: What’s Next for Bitcoin and Beyond?
2024 is proving to be a pivotal year for the crypto industry, highlighted by the introduction of new spot Bitcoin (CRYPTO: BTC) ETFs in January. For the first time, both individual and institutional investors can access Bitcoin directly without using a crypto trading platform. This regulatory approval provides a straightforward avenue for investment.
Changes in the crypto landscape may escalate in 2025, driven in part by the upcoming presidential election, which has also brought cryptocurrency into political discussions. Below are three significant developments likely to occur, ranked from most probable to least probable.
Upcoming Crypto ETFs
The recent spot Bitcoin ETFs have exceeded expectations, attracting over $30 billion from investors. Although there was a slowdown in August when inflows seemed to diminish, the trend has since turned positive, now drawing interest from both retail investors and major hedge fund managers.
Given this success, the launch of additional crypto ETFs in 2025 seems inevitable. Following the introduction of spot Ethereum (CRYPTO: ETH) ETFs in July, there’s anticipation around the possible introduction of ETFs for other high-market-cap cryptocurrencies, such as Solana and XRP, which are both within the top 10 largest cryptocurrencies.
Evolving Crypto Regulations
The U.S. currently lacks a clear regulatory framework for cryptocurrency, but changes could be on the horizon in 2025. There is bipartisan support for establishing a framework, indicating a growing political momentum for reform.
Presently, the regulation of cryptocurrency is somewhat ambiguous and inconsistently applied, a point frequently highlighted by cryptocurrency exchange Coinbase Global (NASDAQ: COIN), which has faced numerous challenges from the SEC. The existing regulatory structure stems from a 1946 Supreme Court case linked to citrus grove disputes in Florida, a context that feels increasingly outdated for modern crypto business practices.
Thus, 2025 could witness new legislation clarifying how cryptocurrency should be regulated and determining the appropriate regulatory bodies. While the SEC currently holds this role, many crypto advocates believe the Commodity Futures trading Commission (CFTC) would be a more suitable regulator. Furthermore, a shift in leadership at the SEC, potentially ousting Gary Gensler, may occur in 2025 in favor of someone more amenable to crypto.
Bitcoin and National Strategy
In 2025, Bitcoin might evolve into a national strategic asset for the U.S. government. Some officials are advocating for increased government support for Bitcoin mining and suggesting that America could find itself in a Bitcoin “arms race” with nations like China and Russia.
Image source: Getty Images.
Certain politicians have proposed that Bitcoin be part of a solution for the staggering $35 trillion national debt. The reasoning is straightforward: If Bitcoin’s price can rise quicker than the national debt increases, there may be a pathway to addressing this financial challenge. However, with U.S. debt growing at $1 trillion every 100 days—approximately the current market cap of Bitcoin—realistically achieving this will be challenging.
Senator Cynthia Lummis (R-Wyoming) has already put forth legislation proposing a strategic Bitcoin reserve with the goal of acquiring 1 million BTC over a span of years, which could eventually be used to mitigate national debt.
The feasibility of these ideas closely ties to the electoral success of Donald Trump, who claims to be the first “pro-Bitcoin” president. He has expressed intentions to establish America as the “crypto capital of the planet.” While this prospect might unsettle some, it sparks excitement for many crypto investors.
Investing Strategies Amid Change
Investors face a crucial question in 2025: How can they best position their portfolios to capitalize on these potential developments? A straightforward approach is to invest in Bitcoin itself, as it remains the centerpiece of current political and regulatory discussions, accounting for over half of the entire crypto market cap. Consequently, any changes in regulation will likely have a significant impact on Bitcoin first.
Predicting the real-world effects of new crypto legislation proves more complex. However, observing other countries’ attempts to implement crypto regulations may provide insights. For instance, the European Union’s Markets in Crypto-Assets (MiCA) regulation will take effect in December, establishing a unified legal framework for crypto assets throughout the EU.
Eyes should remain on the 2024 presidential election, as its outcome could significantly influence the crypto market for years ahead. A post-election rally could signal substantial changes for crypto in 2025.
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Dominic Basulto holds positions in Bitcoin, Ethereum, and Solana. The Motley Fool also holds positions in and recommends Bitcoin, Coinbase Global, Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.
