Can cryptocurrencies continue to shine in 2025? Citigroup points out six key elements.

The Citibank analyst led by Alex Sanders stated in a report last Friday: "This has been a strong year for cryptocurrencies, with a total market value increase of over 90%." Will the bull market for cryptocurrencies continue in 2025? The Citibank analysts' report points out that six key factors will help determine the price of cryptocurrencies in the future year, including ETF activity, regulation, and the future market for stablecoins, a type of cryptocurrency. Cryptocurrencies have just experienced a remarkable year. In January of this year, over a dozen Bitcoin spot ETFs kicked off the rise in the Bitcoin industry, making it more convenient for investors to trade Bitcoin. In September, the series of interest rate cuts and other policies by the Federal Reserve paved the way for economic growth, further boosting the cryptocurrency market. But for digital assets, nothing is as important as Donald Trump's victory on election day for the future. Trump advocated for cryptocurrencies during his campaign, and since taking office, he has appointed several cryptocurrency supporters to lead the government, including Paul Atkins as the chairman of the Securities and Exchange Commission. These actions helped Bitcoin break through the key $100,000 mark for the first time in history, and the prices of all tokens are rising. This optimism has led to a total market value of cryptocurrencies reaching $3.4 trillion, almost double that of last year, despite some selling triggered by hawkish remarks at last week's Federal Reserve meeting. Will cryptocurrencies continue to shine in 2025? According to a report from Citibank analysts, six key factors will help determine the price of cryptocurrencies next year, including macroeconomics, ETF activity, asset allocation, widespread adoption, regulation, and the future market for stablecoins. Favorable macroeconomic background Analysts expect the current macroeconomic backdrop to continue supporting high-risk trading in the first quarter, but warn that the outlook may become less favorable thereafter. The outlook may change depending on Trump's economic policies and stock market volatility. They said: "Given the increasing uncertainty of US policy and expectations for stock market volatility, the macroeconomy may become less favorable for the rest of this year." Funds continue to flow into spot ETFs Analysts expect strong fund inflows into spot ETFs in the first year of listing to continue into 2025, providing further momentum for the growth of cryptocurrencies. Since trading began in January, Bitcoin spot ETFs have attracted $36.4 billion, while Ethereum spot ETFs have received $2.4 billion since their listing in July. After years of approval processes, ETFs received approval from the US Securities and Exchange Commission (SEC) this year, making cryptocurrency trading even easier. By purchasing these funds, investors can track the prices of Bitcoin and Ethereum without actually buying the assets. Analysts said: "These fund flows have always been the most important driver of cryptocurrency returns, and we expect this to continue in 2025." A place in multi-asset portfolios Portfolio allocation will also be key to future returns. Analysts say that during this year's rise, Bitcoin added value to multi-asset portfolios. However, it remains a highly volatile high-risk asset, with a weighting of over 3% and comprising 10% or more of the total portfolio risk. Therefore, Citibank analysts say that cryptocurrency returns need to be several percentage points higher than expected stock returns to justify a 1% portfolio allocation, and much higher if the allocation is larger. Analysts wrote: "For a 5% allocation, performance needs to be higher, by Standard & Poor's long-term risk-return balance standard, performance needs to reach double digits, or calculated by recent performance, performance needs to reach 21%, as high returns/risk mean investors need good compensation for taking additional risks." Stablecoin issuance Analysts say that the continued issuance of stablecoins has received a boost after Trump's election, which will help create a healthier cryptocurrency market. The purpose of stablecoins is to maintain a stable price for a period of time, and they are usually pegged to fiat currencies such as the US dollar, meaning that as long as stablecoin issuers have enough collateral to actually support it, stablecoin volatility is lower than that of cryptocurrencies like Bitcoin. Analysts say that the entry of more stablecoins into this space may threaten Tether, a long-standing leader in stablecoins, especially with the new collaboration between Circle and centralized exchange Binance. They said: "Innovations, partnerships, and newcomers in the stablecoin space pose a threat to Tether's dominance." However, they added that these developments may help stablecoins continue to lead decentralized finance. Analysts said, "We largely consider the diversification of the stablecoin market to be positive as it may reduce systemic risks from specific issuers," and "the widespread adoption of stablecoins in use cases beyond cryptocurrency trading may be a driving factor for broader DeFi participation." Widespread adoption The most important theme the analysts are tracking is the adoption rate. They stated that despite improvements in ETF activity and broader trading volumes, as well as the rise in the market value of stablecoins, more widespread adoption is required to generate returns beyond the excitement after the election. Analysts say they are monitoring the number of Bitcoins, the market value of stablecoins, and the increasing adoption of Bitcoin in countries with currency issues such as Turkey, Argentina, and Venezuela. Less regulation Finally, analysts say that with Trump's upcoming inauguration next year, regulation will be a major theme. The incoming US president has appointed several candidates who support cryptocurrencies to his cabinet. While this portion of the policy remains uncertain, the industry generally expects regulation to be more relaxed, which could drive wider adoption. Analysts say: "The result may be a shift from enforcement-based regulation to more legislation-based regulation." They add that this "is not a relaxation".The story of supervision; more importantly, the removal of unfavorable factors."Bonjour, comment a va ?" "Hello, how are you?"