2024 has already been a watershed year for the crypto industry, thanks to the launch of the new spot Bitcoin (CRYPTO: BTC) ETFs in January. For the first time ever, both individual and institutional investors have a quick, easy and regulator-approved way to gain direct exposure to Bitcoin without entering the cryptocurrency market through a crypto trading brokerage.
But even bigger changes could happen in 2025. Much of this will of course be the result of the 2024 presidential election, which introduced crypto as a political campaign issue for the first time ever. Here are three big changes on the horizon, ranked from most likely to least likely.
More crypto ETFs
The new Bitcoin ETFs have exceeded all expectations and generated more than $30 billion in investor capital. Yes, there was a brief rough patch in August when it looked like investor inflows were going to dry up. But inflows are now on the rise again, and these ETFs are being accepted by everyone from the smallest retail investor to the largest billionaire hedge fund manager.
So the introduction of more crypto ETFs in 2025 is almost a no-brainer. A new spot was launched in July Ethereum (CRYPTO:ETH) ETFs, and the current expectation is that a handful of other large-cap cryptocurrencies could be next. The most likely prospects include Solana And XRPboth of which are among the top 10 largest cryptocurrencies.
A change in the way crypto is regulated
Currently, the United States lacks a comprehensive regulatory framework for crypto, but that could change in 2025. Both Republicans and Democrats agree that such a framework is needed, and political momentum appears to be building for an overhaul next year.
Currently, the system for regulating crypto is unclear and sometimes unfair. This is a point where cryptocurrency is exchanged Coinbase worldwide (NASDAQ: MINT) has argued time and time again as it has become embroiled in regulatory battles with the SEC. Keep in mind: The current system for regulating crypto is based on a 1946 Supreme Court case that was originally intended to settle a dispute over Florida’s citrus groves. It’s becoming increasingly difficult to see how these age-old rules apply to modern business issues.
For example, new legislation could be introduced in 2025 that clearly describes how crypto should be regulated and who should regulate it. Right now, the SEC is the main regulator, but the current thinking among crypto advocates is that the Commodity Futures Trading Commission (CFTC) should be in charge. At the very least, look for SEC head Gary Gensler to be replaced in 2025 by someone with a more pro-crypto stance.
Bitcoin as a National Strategic Imperative
Bitcoin could become a new strategic imperative for the US government in 2025. There are already calls for more government support for the Bitcoin mining industry, as well as suggestions that the US could be drawn into a Bitcoin arms race with companies like Bitcoin. China and Russia.
Some politicians have even suggested that Bitcoin could become part of a solution to the $35 trillion national debt problem. The logic here is very simple: as long as Bitcoin can rise in price faster than the national debt can grow in size, there might be a chance to pay off all this debt one day. Admittedly, it will be a tough task, as the US debt grows by $1 trillion every 100 days. For comparison, that’s equal to Bitcoin’s total market capitalization right now.
As part of a possible solution, US Senator Cynthia Lummis (R-Wyoming) has already introduced legislation for a strategic Bitcoin reserve based on the idea of purchasing 1 million BTC over several years. In theory, some of that reserve could eventually be used to pay off debt.
Granted, the likelihood of this happening is directly related to the electoral success of Donald Trump, who claims to be the first pro-Bitcoin president in history. He has already said he wants to make America the “crypto capital of the planet.” To some people this may sound scary. But for crypto investors, it could be a dream come true.
How to benefit from changes in crypto
The big question facing investors in 2025 is how to position a portfolio to take advantage of these potential changes. The simplest solution, of course, is to load Bitcoin. Much of the political and regulatory focus appears to be on Bitcoin, which still accounts for more than half of the market capitalization of the entire crypto market. So any change in crypto will primarily have an effect on Bitcoin.
The real effect of any new crypto legislation is more difficult to predict. A clue here could come from other countries trying to introduce new crypto legislation. For example, the European Union’s Crypto Asset Markets Regulations (MiCA) will come into full effect in December. This will establish a comprehensive legal framework for the issuance, investment and trading of crypto assets across the EU.
For now, keep an eye on the 2024 presidential election. The outcome there could have a huge effect on the crypto market in the coming years. If there is a big rally after the election, you can rest assured that big changes will happen for crypto in 2025.
Should you invest $1,000 in Bitcoin now?
Consider the following before buying shares of Bitcoin:
The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Bitcoin wasn’t one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.
Think about when Nvidia created this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $845,679!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates, and two new stock picks per month. The Stock Advisor is on duty more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns October 14, 2024
Dominic Basulto has positions in Bitcoin, Ethereum and Solana. The Motley Fool has positions in and recommends Bitcoin, Coinbase Global, Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.
3 Big Changes That Could Come to Cryptocurrency in 2025 was originally published by The Motley Fool
