The U.S. Bitcoin ETF surpasses gold, signaling the entry of cryptocurrency into a long-term stable period. With government-friendly policies and market trends, the future of cryptocurrency will further flourish.
Cryptocurrency winter? It's over. The decline of the crypto empire and courtroom dramas? They are all in the past. Survivors? Battle-tested, with eyes on the prize, as if this is a new gold rush.
After years of conflict with the U.S. Securities and Exchange Commission (SEC), Bitcoin and Ethereum exchange-traded funds (ETFs) have finally arrived. According to cryptocurrency research firm K33 Research, as of December 16, U.S. Bitcoin ETFs hold assets totaling $129 billion, surpassing the $125 billion held by gold ETFs.
The market excitement after the U.S. elections, combined with Trump's promise to make the U.S. the 'crypto capital of the world' and establish strategic Bitcoin reserves, caused Bitcoin prices to briefly exceed $100,000.
Solana is experiencing development opportunities due to the hype around meme coins and the rise of new narratives like DePIN. DePIN is a network that uses blockchain technology to decentralize control and ownership of physical infrastructure. Platforms like Polymarket (where users can bet on the outcomes of U.S. presidential elections) and the battle royale game Off The Grid have achieved success in the mainstream market. A new wave of 'degens' is betting on tokens like fartcoin and dogwifhat, both of which currently have market capitalizations exceeding $1 billion.
Rob Hadick, a general partner at San Francisco-based cryptocurrency venture capital firm Dragonfly, said, "This year, cryptocurrency has entered mainstream consciousness in a way not seen since 2021. Now it is a sustainable long-term asset class that will have a voice and play a significant role." "If you only look at cryptocurrency's influence on elections, whether through political donations or promoting it among legislators and presidential candidates, it is unprecedented, marking a significant step towards the legalization of cryptocurrency," he added.
With Trump and a batch of cryptocurrency-friendly officials preparing to take office, the so-called 'golden age of cryptocurrency' has arrived. Here are the trends that are brewing:
Historical highs and Bitcoin reserves in the U.S.
The art of bold price predictions is trending again. Cryptocurrency asset management firm Bitwise predicts that if the U.S. establishes a strategic reserve similar to oil or gold, Bitcoin's price could reach $200,000 or even $500,000. The logic is that official U.S. Bitcoin reserves would trigger global FOMO.
Trump proposed using 200,000 Bitcoins (worth $21 billion) seized from criminals to kickstart the reserves at the July Bitcoin conference in Nashville. But the legal path is unclear, whether Congressional approval is needed or if the executive branch can act unilaterally? Pro-crypto Senator Cynthia Lummis proposed a treasury-operated reserve scheme in July. Skeptics argue that Bitcoin's volatility could threaten financial stability. Trump's silence on whether the U.S. will purchase more Bitcoin through open markets adds another layer of uncertainty.
Cryptocurrency regulatory reset: A friendly Washington.
The new administration is expected to be the most crypto-friendly government to date. Some important government official appointments related to cryptocurrency include:
U.S. Securities and Exchange Commission (SEC): Former SEC commissioner and cryptocurrency supporter Paul Atkins is set to replace cryptocurrency adversary Gary Gensler, who is known for his lawsuits and enforcement actions against crypto companies during his tenure.
Commodity Futures Trading Commission (CFTC): Brian Quintenz, policy chief of Andreessen Horowitz and former CFTC commissioner, is a popular candidate to lead the agency.
Treasury Department: Hedge fund billionaire and Bitcoin advocate Scott Bessent is Trump's pick for Treasury Secretary.
Department of Commerce: Howard Lutnik, CEO of Cantor Fitzgerald (the main custodian of Tether's USDT reserves), will lead the department.
Artificial Intelligence and Cryptocurrency Czar: David Sacks, a long-time venture capitalist who previously worked with Musk at PayPal, will oversee the policies of two key industries in Trump's strategy to enhance national competitiveness.
House Financial Services Committee: Arkansas Republican Congressman French Hill is advocating for crypto-friendly legislation alongside outgoing committee chair Patrick McHenry. He plans to prioritize a crypto market structure bill in the first 100 days and investigate the so-called 'Choke Point 2.0', which many believe unfairly targets the crypto industry through de-banking practices.
"This is a real opportunity to create good policy for the industry," said Kristin Smith, CEO of the Blockchain Association based in Washington, D.C., which represents over 100 cryptocurrency companies. "The White House has indicated this is a priority. I think we will see a collaborative effort across government agencies, push for legislation on market structure and stablecoins, and a significant shift in innovation returning to the U.S.," she added.
New crypto IPOs and venture capital are entering.
The process for cryptocurrency IPOs is heating up. Bitwise has listed five companies that may go public next year:
Circle: The issuer of the second-largest stablecoin USDC secretly applied for an IPO in January this year.
Figure: The company is known for blockchain-based financial services (such as mortgages, personal loans, and asset tokenization) and has been exploring an IPO since last year.
Kraken: The IPO plans of this U.S.-based cryptocurrency exchange date back to 2021.
Anchorage Digital: Its status as a federally chartered bank may pave the way for its IPO.
Chainalysis: A leader in blockchain compliance and intelligence services, is expected to go public.
Additionally, Dragonfly's Hadick said: "I expect the LP (limited partners of cryptocurrency venture capital firms) market to improve, and they will want to invest more in cryptocurrency. Many traditional Web2 crossover funds will return to the Web3 industry. We are already seeing such trends in certain industries, such as stablecoins and payments." He added that venture capital deals often lag behind public market price increases by a quarter or two.
Crypto-related companies being included in major stock indices
MicroStrategy's stock price has risen over 400% this year. New accounting rules allow companies to reflect their Bitcoin investments at market value in their financial statements, making the company a component of the Nasdaq 100 index. Analysts predict that the company will be included in the S&P 500 index next. This change could allow MicroStrategy to enter index-tracking funds, thus joining the portfolios of countless American investors. MicroStrategy co-founder and executive chairman Michael Saylor's 'Bitcoin treasury' strategy (selling bonds and stocks to accumulate Bitcoin) has pushed its $86 billion company into the top 100 of the S&P 500 index. Analysts also believe that Coinbase, which has risen 70% this year, may join this coveted index.
Surge in stablecoins
With the U.S. set to unveil highly anticipated stablecoin legislation, the stablecoin industry is poised for explosive growth, with its market cap expected to double to $400 billion. According to Bitwise data, stablecoin transaction volume is expected to reach $8.3 trillion in 2024, nearly matching Visa's $9.9 trillion transaction volume.
Tether and Circle still dominate. However, Hadick warns that if they continue to operate as asset management firms rather than payment companies, their growth may soon stagnate.
Stripe spent $1.1 billion in October to acquire the stablecoin platform Bridge, signaling that stablecoins may become a cornerstone of fintech. Stripe refers to it as the "superconductor of financial services," boasting its unparalleled speed, low cost, and global reach. Robinhood is also exploring the creation of a global stablecoin network.
Meanwhile, the next generation of 'stablecoin 2.0' models is quietly emerging. Ceteris, research director at New York cryptocurrency analytics firm Delphi Digital, explains: "Many new stablecoin models are returning revenue to token holders or actual user-attracting applications. I believe these models are disruptive."
Acceleration of traditional asset tokenization
BlackRock CEO Larry Fink has been promoting tokenization for years. Everything from real estate to artwork could soon be tokenized. The biggest benefits of tokenization are: instant settlement, lower costs than traditional securitization, 24/7 liquidity, and transparency.
Three years ago, the cryptocurrency industry had only tokenized $2 billion of real-world assets (RWA), including private credit, U.S. debt, commodities, and stocks. Today, that figure is approaching $14 billion. Venture capital firm ParaFi predicts that by 2030, the market size of tokenized RWA could soar to $2 trillion, indicating significant changes in asset ownership and trading.
New applications, better infrastructure
The buzzword by the end of 2024 is AI agents. Get ready to witness the fusion of artificial intelligence with cryptocurrency, a combination closer to science fiction.
This trend has begun to emerge. Take TruthTerminal as an example; this AI agent not only secured $50,000 from Marc Andreessen but also became a millionaire by leveraging X social media. Its success stems from promoting a token based on an absurd meme from the early 2000s (the token's anonymous creator transferred a large sum into TruthTerminal's wallet, managed by Andy Ayrey).
But analysts are cautious. Practical AI agents (such as those attempting to execute complex transactions across blockchains on behalf of users) are few and still in early stages. "The excitement about agents is because they are very novel," said Ceteris from Delphi, "but whether good or bad, it could be the biggest bubble of this cycle."
Despite the blockchain industry still being fragmented, with most decentralized applications not yet mainstream, work continues on building robust infrastructure. Ceteris explains: "Solana has established trends for the high-throughput blockchain era, and almost every new chain is launched under this trend, thus creating a massive amount of inexpensive blockchain space."
Thus, the narrative theme of cryptocurrency has shifted from survival to prosperity. This is just part of what may bring surprises next year. You can choose to prepare popcorn for the show or pull out your wallet for this opportunity. Caution is essential, as the market will experience highs and lows. This time, the stakes seem higher than ever.