Digital assets: Is the bitcoin bull run just getting started?

Digital assets enjoyed strong performance in 2024. Following Republican victories in the US House, Senate, and presidency, bitcoin broke above the $100,000 mark, and the market capitalization of all cryptocurrencies now sits at $3.5 trillion as of Jan. 31, 2025.¹ While US large-cap equities have risen 4.8% since the election, bitcoin has risen 47.6%, and ether has risen 37.4%.² In 2025, we expect this momentum to continue as a series of positive headlines and legislative progress look likely.

Cryptocurrencies are disproportionately influenced by broader macro conditions and sentiment, in our view — and that can result in significant moves higher or lower. Today, we believe conditions and sentiment are shifting to be more supportive for digital assets, including positive post-US election developments, friendlier investor attitudes towards cryptos, and a market backdrop that looks likely to be positive given central bank rate cuts and a more normal global growth environment.

We highlight five stand-out factors below that suggest cryptocurrencies may continue to see positive performance in 2025:

1. Crypto-friendly US policymakers enter office

President Donald Trump has signalled a slew of crypto-friendly policies, including his desire for a strategic bitcoin reserve and the installation of crypto-friendly policymakers at the Securities Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), the two key US regulators for the crypto space. However, the surge in digital assets support is broader-based than just the president: According to a pro-crypto industry group, 294 pro-crypto candidates from both parties were elected to the House and Senate in the 2024 election.³

This will most likely mark a significant departure from the Biden administration’s approach, which had generally been hostile towards digital assets. For example, the SEC under Chair Gary Gensler pursued a number of cases against crypto enterprises without specifying the framework they were following, earning the unpopular description of a “regulation by enforcement” approach to policy. Biden himself has generally pushed back on crypto, opposing the Financial Innovation and Technology for the 21st Century Act (FIT21) bill despite bipartisan support.

A key flashpoint has been SAB 121, an SEC bulletin published in 2022 that imposed strict requirements for publicly traded institutions that hold custody of digital assets on behalf of clients. SAB 121 forced such institutions to record these assets on their balance sheets, triggering regulatory capital requirements and effectively shutting out most banks from participating in the digital assets ecosystem.

In the absence of bank custody solutions, many crypto investors have instead turned to a myriad of costly (and at times unreliable) solutions. SAB 121 has now been revoked, opening the door for more large institutions to provide custody solutions in the digital assets space.

As the US posture towards digital assets evolves, we anticipate that a larger cohort of investors will embrace digital assets and may help propel a bull market in cryptocurrencies. 

2. Investing in cryptocurrencies is getting easier

2024 brought the launch of spot bitcoin ETPs in the US and Hong Kong, helping to propel $34.6 billion in net flows as of year-end 2024, according to Bloomberg. 2025 may see additional countries permit spot ETPs to a broader set of investors, and additional cryptocurrencies may become more easily accessed through ETPs. Recent regulatory filings indicate a slew of ETPs investing in additional cryptocurrencies, based on the US SEC as of the end of January. As more products become available to a wider set of investors, we anticipate cryptocurrency prices may benefit.

3. Perceptions of bitcoin are changing

As bitcoin market cap grows, investor attitudes towards the largest cryptocurrency continue to evolve. The launch of widely accessible spot bitcoin ETPs in the US in January 2024 marked a key milestone as the world’s largest capital market provided an easy on-ramp for investors to gain exposure to bitcoin (and later, ether). In the US, for example, investors have already allocated $40.6 billion to spot bitcoin ETPs since Jan. 11, 2024, making up $101.8 billion in assets as of the end of 2024. Compare this to gold ETFs, which have $124.2 billion in AUM.⁴

4. The market backdrop looks favorable

Lower rates in the US, eurozone, UK, and other major economies suggest that 2025 may be a risk-on year in global markets. Indeed, our outlook for 2025 favors more cyclically-oriented parts of the market, including stocks and credit. An environment in which investors take on more risk is likely to be supportive of cryptocurrencies, which tend to be influenced substantially by macro conditions.

5. Tokenization is building momentum.

Tokenization involves representing something on a blockchain in the form of a token, which enables a variety of benefits for information and asset custody management and exchange. We believe today’s financial system can realize a number of potential benefits through tokenization such as reduced counterparty risk, faster payment and settlement, and improved customizability in client investing experiences.

Already, central bank digital currencies and asset tokenization pilot projects have been building momentum over the past five years, including tokenized money market funds, tokenized bonds, and tokenized private markets offerings. The UK government is planning to issue tokenized gilts for the first time within the next two years. In the eurozone, the European Central Bank is preparing to launch its digital euro, which is expected to facilitate tokenized use cases. As the adoption of this technology increases, we anticipate cryptocurrencies may also benefit.

2025: A year to watch

Cryptocurrencies are volatile investments that can rise or fall substantially on news flow. Overall, we suspect that cryptocurrencies will continue to notch new highs in 2025, driven by improving regulatory clarity and friendlier policymakers who have been generating headlines favorable to digital assets. (See, for example, crypto price behavior around Trump’s election win, the announcement of Trump’s SEC chair pick, and the authorization of spot bitcoin and ether ETPs in the US.) We also anticipate that lower rates in many major economies could help increase demand for riskier assets.