Three Reasons We’ll See a Crypto Rally This Year

Three Reasons We’ll See a Crypto Rally This Year

The key to knowing where bitcoin is headed is to understand where we are in the adoption story. And where bitcoin goes, the altcoins follow.

If adoption is increasing, so will the price.

Last year was massive for bitcoin and the wider crypto ecosystem. Looking back, it’ll be viewed as the year that Wall Street laid the groundwork for mass adoption.

Throughout 2024, we saw three major trends converge: Mass financialization of crypto assets by Wall Street… A “pro-crypto” regulatory environment… And national governments and central banks seriously considering adding BTC to their treasuries.

These trends are still intact. And once the market awakens to them, we’ll see the melt-up phase of the current bull cycle begin.

In today’s essay, I’ll dive into each of these three trends. After you read it, you’ll see why – despite the volatility we’re experiencing right now – we could see a rally for the ages in 2025.

Mass Financialization of Crypto Assets by Wall Street

All of last year, Daily editor Teeka Tiwari told you we’d see the mass financialization of crypto assets in 2025. And that financialization will come in the form of ETFs.

This is a huge innovation because it gives investors a simple way to gain exposure to bitcoin in their brokerage accounts. You no longer need to manage complicated crypto wallets or use crypto exchanges to profit from crypto assets.

The first spot bitcoin exchange-traded funds (ETFs) launched in January 2024. Since these funds came to market, we’ve seen more than $41 billion in assets flow into these bitcoin ETFs.

Let’s put that in context…

In just their first year of existence, these ETFs have attracted more capital than gold did over the past two decades. As we’ve predicted for years, spot bitcoin ETFs are acting as a gateway for institutional capital.

Currently, over 1,000 hedge funds, pensions, and other financial institutions have started allocating to bitcoin – including state pension funds in Wisconsin and Michigan.

According to the Federal Reserve, pension funds manage a combined $27.9 trillion in assets. So, there’s a massive pool of capital that can now start buying bitcoin. The successful launch of bitcoin ETFs prompted Wall Street to launch nine spot Ethereum ETFs in July 2024. Today, they hold a combined $12 billion in capital.

In total, Wall Street firms launched 20 bitcoin and Ethereum ETFs in 2024. Today, there’s over $133 billion in assets held in these funds, generating $700 million in annual fees.

And more altcoin ETFs are on the way.

On January 17, ProShares, CoinShares, and REX-Osprey filed a combined 16 applications for new crypto ETFs. In total, these firms manage $90 billion in assets. They include ETFs for Solana (SOL), Ripple (XRP), and Dogecoin (DOGE).

In the months ahead, we expect major asset managers like BlackRock, Fidelity, and Franklin Templeton to file more altcoin ETFs as well.

Clearly, there’s no shortage of demand for crypto financial products. Wall Street has had an early taste of the lucrative fees that can be had from this asset.

Think about it logically. They made $700 million in fees on a brand-new product…do you think they are incentivized to build more crypto products or less?

Of course they will launch more crypto products. That’s why I know the mass financialization story is not just intact, it’s getting stronger.

A “Pro-Crypto” Regulatory Environment

The previous administration was hostile to the crypto industry. And its antagonistic regulatory regime forced many crypto firms offshore.

We’ve seen a complete shift with the Trump administration. During his election campaign, President Trump vowed to make America the “crypto capital of the world.”

So far, he’s delivering on that promise.

White House “Crypto and AI Czar” David Sacks held his first press conference as President Trump’s point man on crypto policy earlier this month.

During the press conference, Sacks said the Trump administration would usher in a “golden age” for crypto.

Sacks pledged to provide long-awaited regulatory clarity to the industry. This move aims to keep innovation thriving within U.S. borders.

One immediate example of the new pro-crypto regulatory environment was the Trump administration’s repeal of Special Accounting Bulletin (SAB) 121. The Securities and Exchange Commission (SEC) introduced SAB 121 back in March 2022. The notice requires banks that wish to be digital asset custodians to hold their clients’ assets on their own corporate balance sheets as a liability.

That means if a bank holds $1 billion worth of bitcoin on behalf of a customer, it will need to hold $1 billion worth of its own assets as security against that bitcoin.

Moving forward, we expect every major U.S. bank that wants to stay relevant and highly profitable to charge into crypto. Its only options will be to establish a beachhead among its client base or run the risk of those clients looking elsewhere.

Bitcoin as a Government Strategic Reserve Asset

Not only is the Trump administration creating a friendlier regulatory environment for crypto… It’s also considering adding bitcoin to the national treasury.

During his press conference on crypto regulation, Sacks said, “We’re evaluating the idea of [a] bitcoin reserve — this is one of the first things we're going to look at in the admin.”

If the U.S. government establishes a bitcoin reserve, it doesn’t mean it will be an active buyer of BTC immediately. Instead, it would initially hold the bitcoin it has seized from criminal activity or acquired from forfeitures over the years… Much like it holds gold on its balance sheets.

But there’s another way the government can purchase bitcoin. And this bullish news is flying completely under the radar.

Earlier this month, President Trump signed an executive order directing the creation of a sovereign wealth fund.

“We’re going to create a lot of wealth for the fund, and I think it’s about time this country had a sovereign wealth fund,” he said in a White House press conference.

Now, imagine if President Trump does create a sovereign wealth fund that actually starts buying bitcoin. Under a plan like that, the United States would acquire 1 million bitcoin over five years.

There’s already precedent for nation states adding bitcoin to their sovereign wealth funds…

Last week, the Abu Dhabi Wealth Fund (called Mubadala) disclosed it had a $437 million stake in BlackRock’s iShares Bitcoin Trust ETF (IBIT) during the last quarter of 2024.

Mubadala was the top investor among sovereign wealth funds globally in 2024, investing $29.2 billion to expand its portfolio. In October 2024, Abu Dhabi was dubbed the “capital of capital” after it overtook Oslo to become the richest city globally – thanks to its $1.7 trillion in assets managed by sovereign wealth funds.

Now Is the Time to Get Positioned

Based on these three trends, we believe bitcoin will eventually overtake gold as the primary store of value in the world. That’s because the supply is fixed, and it’s easier to store and transact with.

Today, the total value of gold is $20 trillion. That’s 10x greater than the $2 trillion bitcoin is valued at.

If governments around the world follow the U.S.’s lead and start buying it, we could easily see bitcoin match the $20 trillion value of gold’s market cap.

If so, that would put each bitcoin at about $1 million. And where bitcoin goes, so do the altcoins.

I know the current volatility is creating a great deal of anxiety in crypto. It’s never fun going through these types of drawdowns.

But it’s something we’ve experienced multiple times before. And each time, bitcoin (and the overall crypt to market) rebounded to make all-time new highs.

That’s what makes this time a great buying opportunity.

If you’re not positioned, now’s the time. We’re at the doorstep of the single biggest migration of capital and adoption into the digital asset space anyone has ever seen. That first step through that doorway can only happen once. And it’s happening right now.

Regards,

Houston Molnar