On Christmas Day 2024, Business Insider said 6 factors could make or break crypto in 2025. After the crypto industry’s “blockbuster year” in 2024, is it set to get even better? With the bitcoin price soaring to a record high of over $109,000 in time for Donald Trump’s inauguration, how might the Solana price, the dogecoin price, and other currencies be affected? And what were the 6 factors?
Number 1: “A supportive macro backdrop”
The first of the 6 factors, based on a note by Citi analysts, is the current macro backdrop supporting risky trades in the first quarter. The analysts wrote, “Macro may turn less favorable over the rest of the year given heightened US policy uncertainty and forecasted equity volatility”.
Number 2: Inflows to spot ETFs
After ETFs were approved by the SEC in early 2024, there were over $36 billion of inflows into Bitcoin spot ETFs from January to December last year. There were $2.4 billion of Ethereum spot ETFs inflows.
Spot ETFs are exchange-traded funds tracking the current, or “spot” price, of a cryptocurrency. These allow investors to track price movements without directly owning the currency.
The Citi analysts expected the strong inflows to continue, supporting more crypto growth.
Number 3: Crypto in multi-asset portfolios
The analysts predicted bitcoin would have added value in portfolios. They did consider bitcoin to still be a risky asset, so said “crypto returns need to be priced a few percentage points above equities' expected returns to justify a 1% allocation of portfolios, and far higher for a bigger share”, as per Business Insider.
Some investors manage risk by spreading their investments across various blockchain networks and currencies.
Number 4: Stablecoin market diversification
The analysts wrote that they view stablecoin market diversification “as a positive as it will lessen the potential for systemic risks from a specific user”.
Stablecoins are pegged to the value of a fiat currency (such as the US dollar) or a commodity (e.g. gold). They’re designed to reduce the volatility of cryptocurrencies, providing a more consistent store of value.
More stablecoins are entering the space, potentially threatening Tether’s leadership.
Number 5: widespread adoption
Citi analysts said that adoption was the most important factor to track. More mainstream adoption is needed for the crypto boost to continue post-election.
The analysts are monitoring “bitcoin volumes, stablecoin market values, and rising adoption in countries with currency problems, such as Turkey, Argentina, and Venezuela.”
Number 6: less regulation
As Trump takes office, there may be less regulation. The analysts wrote that there’s likely to be a shift away from regulation to a “more legislative-based approach”.
How has the election impacted crypto so far?
Trump returning to office has coincided with bitcoin’s record high, and it’s not alone: Solana reached a record high of $275 in mid-January.
Monero, which some supporters view as an answer to bitcoin’s goal of a decentralized currency, has been less affected by Trump’s presidency so far. It is at a healthy price, though, having reached $230.69 on January 17. Its all-time high was over $421 in April 2021.
What about Dogecoin?
Dogecoin (DOGE) is the biggest meme coin. Its market cap is about $56 billion.
A meme coin is a cryptocurrency inspired by an internet meme or trend. Dogecoin was originally made as a joke, with its creators Billy Markus and Jackson Palmer poking fun at the wild speculation in the crypto space.
Like other currencies, DOGE benefited from Trump being elected. It closed at $0.415 on 17 January.
How could you make money with Dogecoin?
Alex Carchidi, writing for The Motley Fool, says it’s possible to make money with DOGE, but there are 3 mistakes to avoid. They are:
● Copying what a celebrity does (buying/selling): “It doesn't matter whether Elon Musk is talking up his position in the coin again”, says Carchidi. Nor does it matter if an investment influencer is saying to buy DOGE. A serious investor has their own investment thesis, says Carchidi. What other people do shouldn’t dictate an investor’s actions. It can be one part of the research process, but not the whole process.
● Getting carried away by short-term price movements: Dogecoin is volatile, and so “focusing on the price on any given day is a mistake”. Carchidi says you shouldn’t let fear of missing out, or fear of any kind, dictate selling/buying decisions.
● Overcommitting: When the price of Dogecoin surges, Carchidi says, it can be tempting to make poor decisions and buy more when the price is high. However, “you still need to maintain your portfolio’s diversification even if one of your investments is exciting.”
Takeaways:
After a remarkable last year, the six factors highlighted by Citi analysts will help shape the market’s direction in 2025. Bitcoin’s record highs and the rising popularity of other currencies like Solana and Dogecoin indicate that crypto is becoming more mainstream. As Carchidi suggests, a disciplined approach to investing – avoiding impulsive decisions, staying diversified, and not blindly following influencers – may be key to successful investment.
Analysts will be watching Trump’s next moves closely. While regulatory uncertainty and market volatility continue to be concerns, the overall momentum is positive.
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