This article was compiled and organized by BlockWeeks
2024 was a pivotal year for Bitcoin and digital assets: new products launched, record capital inflows, dramatic policy shifts, increased adoption, and Bitcoin's status as an institutional-grade asset was further solidified. The Galaxy Research team compiled this 2025 crypto market forecast between mid-December 2024 and December 27. The team believes that 2024 was driven by two major events—the launch of US spot Bitcoin ETPs, and Trump winning a second non-consecutive presidential term; between these two events, the market experienced a 237-day period of choppy sideways trading. In 2025, market breadth and the range of narratives will both expand.
Bitcoin: Breaking $150K in H1, Testing $185K in Q4
Galaxy Research expects Bitcoin to break $150,000 in the first half of 2025 and to test or reach $185,000 in the fourth quarter. Adoption by institutions, corporations, and sovereign nations will jointly drive prices to new highs. Since its inception, Bitcoin has appreciated faster than all other asset classes, especially the S&P 500 and gold, and this trend will continue in 2025. Bitcoin's market cap will then reach 20% of gold's market cap.
US Spot Bitcoin ETPs Surpass $250 Billion in AUM
In 2024, US spot Bitcoin ETPs collectively saw net inflows exceeding $36 billion, making it the most successful collective ETP launch in history. Major global hedge funds such as Millennium, Tudor, and D.E. Shaw all bought Bitcoin ETPs, and the State of Wisconsin Investment Board (SWIB) also disclosed holdings through 13F filings. In just one year, Bitcoin ETPs' assets under management are only 19% (about $24 billion) away from surpassing all US physical gold ETPs. Galaxy Research expects that in 2025, US spot Bitcoin ETPs' combined AUM will exceed $250 billion.
Meanwhile, on a risk-adjusted return basis, Bitcoin will once again rank among the top global asset performers in 2025. Among a basket of equities, fixed-income securities, indices, and commodities, Bitcoin's risk-adjusted performance ranks third; the highest Sharpe ratio, however, belongs to MicroStrategy, which calls itself a "Bitcoin reserve company."
Accelerated Entry of Institutional and Sovereign Capital
The forecast suggests that in 2025, at least one top wealth management platform will publicly recommend allocating 2% or more of model portfolios to Bitcoin. Previously constrained by observation periods, internal training, compliance requirements, and other factors, no large wealth management institution had formally included Bitcoin allocation in investment advisory portfolios; this situation will be broken in 2025, further driving up capital inflows and AUM for US spot Bitcoin ETPs.
Additionally, it is expected that 5 Nasdaq-100 constituent companies and 5 sovereign nations will announce that they have added Bitcoin to their balance sheets or sovereign wealth funds. Whether for strategic reserves, portfolio diversification, or trade settlement considerations, Bitcoin will begin to enter the balance sheets of large corporations and sovereign allocators. Competition among sovereign nations—especially non-aligned countries, countries with large sovereign wealth funds, and even countries with adversarial stances toward the US—will drive mining or other strategies to acquire Bitcoin.
Bitcoin Network: Protocol Upgrade Consensus and Hashrate Landscape
Galaxy Research expects Bitcoin developers to reach consensus on the next protocol upgrade in 2025. Since 2020, Bitcoin Core developers have been discussing which opcodes can safely enhance transaction programmability. As of December 2024, the most supported pending opcodes include OP_CTV (BIP 119) and OP_CAT (BIP 347). Although reaching consensus on soft forks in Bitcoin's history has been time-consuming and rare, in 2025 a consensus will form to include OP_CTV, OP_CSFS, and/or OP_CAT in the next soft fork upgrade—though the upgrade will not activate within 2025.
On the mining side, more than half of the top 20 listed Bitcoin mining companies by market cap will announce a transition or partnerships with hyperscalers, AI, or high-performance computing (HPC) companies. The growing computing demand brought by AI will prompt mining companies to retrofit, build new, or co-locate HPC infrastructure alongside Bitcoin mining farms, thereby suppressing hashrate growth throughout the year; total network hashrate is expected to reach 1.1 zetahash by the end of 2025.
Bitcoin DeFi Nearly Doubles in Size
Measured by the total amount of BTC locked in DeFi smart contracts and staking protocols, Bitcoin DeFi will nearly double in 2025. As of December 2024, over $11 billion worth of wrapped BTC was locked in DeFi smart contracts, with more than 70% used as collateral for lending protocols. In addition, approximately $4.2 billion in additional deposits are held through Babylon, Bitcoin's largest staking protocol. The current Bitcoin DeFi market, at about $15.4 billion, is expected to expand significantly in 2025 along multiple paths, including existing DeFi protocols on Ethereum L1/L2, new protocols on Bitcoin L2s, and staking layers such as Babylon. Key drivers for doubling include a 150% year-over-year increase in cbBTC supply.
Custody Banks Enter: Four Major Banks to Offer Digital Asset Services
As regulation opens pathways for national banks to custody digital assets, the world's four largest custody banks—BNY, State Street, JPMorgan Chase, and Citi—will all launch digital asset services.
Stablecoins: Surge in TradFi-Partnered Issuance, Supply Doubles Past $400 Billion
From 2021 to 2024, stablecoins experienced rapid growth, with the number of projects reaching 202, many of which are closely tied to traditional finance (TradFi). Beyond issuance numbers, stablecoin transaction volume growth has also surpassed major payment networks such as ACH (about 1%) and Visa (about 7%). In 2024, stablecoins became increasingly embedded in the global financial system: US-licensed institution FV Bank already supports direct stablecoin deposits; Japan's three major banks, through Project Pax and SWIFT, are collaborating to enable faster, lower-cost cross-border fund transfers. Payment platforms are also building their own stablecoin infrastructure—PayPal launched its own stablecoin PYUSD on the Solana blockchain, Stripe acquired Bridge to natively support stablecoins; asset management institutions such as VanEck and BlackRock are also partnering with stablecoin projects. As regulation becomes clearer, TradFi participants will incorporate stablecoins into their businesses to seize the initiative, and early movers are expected to gain advantages by building infrastructure.
Galaxy Research expects at least 10 TradFi-partnered stablecoin issuances in 2025. Meanwhile, total stablecoin supply will double, surpassing $400 billion. Stablecoins have already found product-market fit in payments, remittances, and settlement scenarios, and increasingly clear regulatory frameworks for existing issuers as well as traditional banks, trusts, and depository institutions will drive explosive growth in stablecoin supply in 2025.
Another notable change: Tether's long-standing market dominance will fall below 50%, challenged by yield-bearing alternatives such as BlackRock.
