Citi Predicts Crypto Surge in 2025, Driven by Trump Policies and ETF Inflows
Citi analysts forecast strong crypto growth in 2025, driven by Trump’s policies, rising ETF inflows, and stablecoin innovation, signaling a bullish outlook for bitcoin and defi.
Citi’s 2025 Crypto Forecast: Factors Driving Crypto Growth
Citi analysts have identified several pivotal factors that could influence the cryptocurrency market in 2025, following a record-breaking year spurred by Donald Trump’s election win.
Trump’s crypto-friendly stance and his appointment of figures like Paul Atkins as chair of the U.S. Securities and Exchange Commission (SEC) contributed to bitcoin surpassing $100,000 for the first time. Citi analysts, led by Alex Saunders, described 2024 as a year of strong growth, stating: “This year was a strong one for crypto, registering a 90%+ increase in total market cap.” A primary factor cited by Citi is the influx into spot bitcoin and ethereum exchange-traded funds (ETFs), which began trading in 2024. These ETFs, approved by the SEC after years of debate, have simplified access to crypto for traditional investors. The analysts noted:
These flows have been the most significant driver of crypto returns, and we expect this to continue in 2025.
They emphasized the role of portfolio allocation, acknowledging that while bitcoin could add value, its volatility presents risks. “For a 5% allocation, performance needs to be higher – double-digits using the S&P’s longer-term risk-reward trade-off, or 21% using recent returns where the high reward/risk implies investors need to be compensated well for taking additional risks,” they detailed.
The analysts also predict continued growth and competition in the stablecoin market, driven by innovations, partnerships, and new entrants that could challenge Tether’s dominance. They view market diversification as positive, reducing systemic risks from reliance on a single issuer. They suggest stablecoin adoption beyond crypto trading could enhance decentralized finance (defi) and drive broader engagement in the sector.
As President-elect Trump prepares to take office in January 2025, his administration is expected to implement policies that could significantly impact the cryptocurrency market. Trump has expressed intentions to establish a strategic bitcoin reserve and create a more crypto-friendly regulatory environment. He has also nominated venture capitalist David Sacks as the White House AI and crypto czar, tasked with developing a legal framework for the cryptocurrency industry. These appointments suggest a shift towards more supportive policies for digital assets, potentially fostering innovation and growth in the crypto sector.
The Citi analysts anticipate a regulatory shift, explaining:
The result is likely to be a shift from regulation by enforcement to a more legislative-based approach.
They clarified that this is “less a de-regulation story; more so a removal of headwinds,” implying that rather than loosening oversight, policies may reduce barriers that previously hindered growth. Widespread adoption remains critical for crypto’s long-term success. Citi analysts concluded that while ETFs and stablecoins boost market activity, the broader adoption of cryptocurrencies, particularly in countries with economic challenges like Turkey, Argentina, and Venezuela, will be essential for sustained growth.
