Invesco analyst: Bitcoin bull market is not over, the crypto industry will reach new highs in 2025
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Invesco analyst: Bitcoin bull market is not over, the crypto industry will reach new highs in 2025
2025 Crypto Bullish Factors Overview
Navigating Web3 tides with focused insightsAuthor: Ashley Oerth, Invesco
Translation: Baicai Blockchain
Invesco is a leading global independent investment management company founded in 1935 and headquartered in the United States. With over $1.8 trillion in assets under management as of 2024, Invesco operates in more than 20 countries worldwide and has actively expanded into blockchain and digital asset investments in recent years, focusing on opportunities in Bitcoin and other cryptocurrencies.
This article was written by Ashley Oerth, Assistant Global Market Strategist at Invesco. In it, Oerth discusses the strong performance of digital assets in 2024 and believes that improved regulatory environments and more crypto-friendly policymakers will drive the crypto industry to new highs in 2025.
Below is the full text:
We believe the crypto industry will continue setting new highs in 2025, primarily due to clearer regulatory policies and more supportive policymakers.
Positive developments following the U.S. presidential election, shifting investor sentiment toward the crypto sector, and a supportive market backdrop could boost digital asset performance. President Trump has expressed interest in establishing a strategic Bitcoin reserve and appointed crypto-supportive officials to key positions.
Digital assets performed strongly in 2024. Following Republican victories in the House, Senate, and presidential election, Bitcoin surpassed the $100,000 mark. As of January 31, 2025, the total market capitalization of all crypto assets reached $3.5 trillion. U.S. large-cap equities rose 4.8% since the election, Bitcoin surged 47.6%, and Ethereum gained 37.4%. We expect this momentum to continue into 2025, supported by potential positive news and legislative progress.
In our view, digital assets are largely influenced by macroeconomic conditions and market sentiment, which can lead to significant price volatility. Currently, the market environment and sentiment are shifting in favor of digital assets, including positive post-election developments, more favorable investor attitudes toward the crypto industry, and a broadly supportive backdrop driven by central bank rate cuts and a return to normal economic growth.
We outline the following five key factors indicating why digital assets may continue to perform well in 2025.
Crypto-Friendly U.S. Policymakers Taking Office
President Trump has signaled his intention to implement a series of crypto-friendly policies, including plans to establish a strategic Bitcoin reserve and appoint pro-crypto officials to key regulatory bodies such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). However, support for digital assets extends beyond the president. According to data from a pro-crypto advocacy group, a total of 294 pro-crypto candidates from both parties were elected to the U.S. House and Senate in the 2024 elections.
This suggests a stark contrast with the Biden administration, which maintained a consistently hostile stance toward digital assets. For example, the SEC under Chairman Gary Gensler frequently brought enforcement actions against crypto firms without clearly defining compliant frameworks, drawing criticism for its "enforcement over policy" approach. President Biden himself opposed the crypto industry, even vetoing the FIT21 Act (Financial Innovation and Technology for the 21st Century Act), despite its bipartisan support.
One major point of contention was SAB 121—an SEC staff announcement issued in 2022 requiring publicly traded institutions to record custodied crypto assets on their balance sheets. This triggered capital adequacy requirements and prevented most banks from participating in the digital asset ecosystem, as they lacked sufficient capital or risk management infrastructure to absorb the additional liability.
Due to the lack of effective custody solutions from traditional banks, many crypto investors had to rely on costly and often unreliable alternatives. Now that SAB 121 has been repealed, the path is open for more large institutions to offer crypto custody services.
With these policy shifts in the U.S. digital asset landscape, we expect broader investor adoption, potentially fueling a bull market. Since the November election, investor interest in U.S. Bitcoin exchange-traded products (ETPs) has continued to rise.
Growth in total assets and fund flows of U.S. Bitcoin ETPs since their launch on January 11, 2024
Investing in Crypto Has Become Simpler
In 2024, spot Bitcoin products (ETFs) launched in the U.S. and Hong Kong. According to Bloomberg data, they attracted $34.6 billion in net inflows by the end of 2024. We expect more countries to allow broader investor access to spot ETFs in 2025, and additional crypto assets may become accessible through ETF structures. Based on the latest SEC regulatory filings as of the end of January, multiple ETFs are planning to invest in other digital assets. As more investment vehicles emerge, attracting a wider range of investors, we anticipate upward pressure on crypto asset prices.
Perceptions of Bitcoin Are Shifting
As Bitcoin’s market capitalization grows, investor attitudes toward the leading cryptocurrency are evolving. The January 2024 launch of widely accessible spot Bitcoin ETFs in the U.S. marked a significant milestone, offering investors in the world’s largest capital market an easy way to gain exposure to Bitcoin (and potentially Ethereum in the future). For instance, by January 11, 2024, U.S. investors had allocated $40.6 billion to spot Bitcoin ETFs, growing to $101.8 billion in total assets by year-end. In comparison, gold ETFs managed $124.2 billion in assets.
One year after launch, Bitcoin ETFs have nearly reached the asset levels of U.S. gold ETFs.
The Market Environment Appears More Favorable
Hints of interest rate cuts from major economies like the U.S., Eurozone, and the UK suggest 2025 could become a "risk-on" year for global markets. Indeed, our outlook for 2025 favors cyclical market segments such as equities and credit. As investors become more willing to take on risk, digital assets may benefit significantly, given their sensitivity to macroeconomic trends.
Tokenization Is Progressing
Tokenization involves recording assets or information as tokens on a blockchain, offering numerous benefits for asset management and exchange. We believe the current financial system can achieve several potential advantages through tokenization, including reduced counterparty risk, faster payment and settlement speeds, and enhanced personalization of investor experiences.
Over the past five years, pilot programs for central bank digital currencies (CBDCs) and asset tokenization have steadily advanced, including tokenized money market funds, tokenized bonds, and tokenized private market products. The UK government plans to issue tokenized government bonds for the first time within the next two years. Meanwhile, the European Central Bank is preparing to launch a digital euro, which is expected to further accelerate the adoption of tokenized applications. As this technology becomes more widespread, we expect digital assets to benefit as well.
Summary: 2025 Is a Year to Watch
Digital assets are highly volatile investments that can swing dramatically based on news events. Overall, we believe the crypto market will continue reaching new highs in 2025, driven primarily by greater regulatory clarity and more supportive policies—positive catalysts for digital assets (such as market reactions following Trump’s election, his nomination of an SEC chair, and the U.S. approval of spot Bitcoin and Ethereum ETFs). We also anticipate that interest rate cuts across major economies may stimulate demand for risk assets.
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