Crypto Market Expected to Experience Significant Acceleration in 2025
On Nov. 6, a memo was sent to EY’s blockchain leadership team with the headline: “Every single private blockchain just died.” Since November 2022, the crypto and blockchain markets have been characterized by caution and gradual recovery, particularly in 2023.
Market Trends in 2024
2024 showed sustained acceleration in the crypto market, initiated by the introduction of Bitcoin exchange-traded funds (ETFs) and followed by an Ethereum ETF and the EU’s Markets in Crypto Assets (MiCA) legislation. Global regulatory convergence is evident, establishing frameworks for major crypto and digital asset types.
Future Predictions
Predictions for 2025 indicate significant changes in the U.S. regulatory environment, likely leading to global shifts, although at different paces. The U.S. remains the largest financial market, influencing worldwide trends.
Bitcoin and Ethereum's Growth
Bitcoin is solidifying its status as digital gold, potentially reaching a market cap equivalent to gold’s $14 trillion. Its supply does not increase with higher prices, enhancing its attractiveness as a scarcity-based asset.
Ethereum has successfully transitioned to proof-of-stake, reducing carbon output by over 99% and significantly increasing its network capacity. Low transaction fees combined with scalability and security make Ethereum a preferred choice for digital asset issuers.
Stablecoin Payments Expansion
The rise of stablecoin payments is anticipated in 2025, driven by demand for U.S. dollar access, especially for remittances. Partnerships, such as Circle with Nubank in Brazil and Celo with Opera, are expanding stablecoin accessibility, particularly in emerging markets. Enterprise sectors are also adopting stablecoin payments, with companies like EY, PayPal, and Coinbase facilitating automated transactions within ERP systems.
Decentralized Finance (DeFi) Outlook
2025 may mark a breakthrough year for DeFi, which replicates traditional financial services through on-chain applications. Regulatory clarity and potential decreases in interest rates could drive renewed interest in DeFi, making it attractive for asset lending and liquidity pooling.
Competitive Landscape in Blockchain
The blockchain ecosystem is expected to experience heightened competitive intensity, particularly among service providers and Layer 2 networks within Ethereum. With over 40 Layer 2 networks, competition on transaction fees is fierce. As public blockchain competition intensifies, private blockchains face bleak prospects due to diminishing regulatory support.
Fraud Risks in 2025
There is concern that 2025 could see a rise in fraud related to online trading amidst loosening regulations. While past methods of fraud may become harder to replicate due to improved security and audits, new forms of risk may emerge.
Disclaimer: These views are personal and do not represent EY’s views.