After struggling to finish 2024, cryptocurrencies were green at the start of 2025, as exuberance around the sector returned from several sources. Treasury yields also fell this morning, which is generally a good sign for crypto.
The price of the second largest cryptocurrency in the world, Ethereum (ETH 2.49%)was up 4% from late yesterday afternoon at 10:58 a.m. ET. The price of XRP (XRP 2.46%) And Shiba Inu (SHIB 4.80%) were trading up 4.3% and 5.4%, respectively.
Enthusiasm to launch 2025
Since President-elect Donald Trump won the election in early November, cryptocurrency prices have skyrocketed. The market calmed down in the last few weeks of the year, but enthusiasm appears to be rising again.
The price of the largest cryptocurrency in the world, Bitcoin (CRYPTO:BTC), an industry indicator, has surged over $96,400, and many experts and analysts predict much more in 2025. Investment bank HC Wainwright recently released a report saying that Bitcoin may even more than double this year to $225,000, an increase from its previous price target of $145,000.
Wainwright’s optimism is largely due to a more favorable regulatory landscape under the Trump administration, which includes the passage of several key bills by Congress that will lead to more institutional adoption. One bill Wainwright is optimistic about is the Financial Innovation and Technology for the 21st Century Act. This bill, which the US House of Representatives passed in mid-2024, would provide a set of standards for determining whether a cryptocurrency is a security or a commodity, one of the big debates in crypto today.
The SEC has asserted that many cryptocurrencies traded as speculative assets should be treated as securities and therefore subject to securities laws. Crypto proponents would prefer that cryptocurrencies be considered a commodity and overseen by the Commodity Futures Trading Commission (CFTC). At the very least, this law would set parameters that would help many financial institutions and brokerages better determine which cryptocurrencies are and are not securities.
Additionally, the BlackRock Bitcoin ETF (IBIT 4.37%) has secured over $37 billion in assets in its first year of trading, making it one of the top three ETFs in 2024. More spot cryptocurrency ETFs are expected to be adopted in 2025. Ethereum already has one, and many suspect XRP could also get one if the SEC’s lawsuit against the token ends, which could happen this year.
Can crypto ride another big wave this year?
After such a big run until the end of 2024, the downside risk for cryptocurrencies is even greater. However, it is very possible that the crypto bull market still has some traction. Passage of key crypto legislation will create more clarity around the sector, while a greater number of spot crypto ETFs will increase adoption among institutions and investors.
Additionally, Treasury yields and inflation could play a role. Recently, investors have become increasingly concerned about inflation and Treasury yields have remained high. Easing inflation expectations and falling yields would likely push the crypto market higher, while the opposite could hurt crypto.
I’m long-term bullish on Bitcoin and Ethereum, and I think Ethereum could catch up to Bitcoin a bit this year. I hold a smaller, more speculative position in XRP, but I’m not interested in Shiba Inu at the moment.
Bram Berkowitz has positions in Bitcoin, Ethereum and XRP. The Motley Fool holds positions and recommends Bitcoin, Ethereum and XRP. The Motley Fool has a disclosure policy.