Coinbase’s 5 Predictions for the Crypto Market in 2025

Coinbase recently released a report outlining its predictions for the cryptocurrency market in 2025. The report focuses on key areas such as stablecoins, tokenization, ETFs, DeFi, and regulatory developments.

Reports from other industry players also suggest a positive outlook for the crypto market in 2025.

A Favorable Regulatory Environment Will Drive Market Growth

The first major prediction highlights that regulatory changes will benefit the overall crypto market. Coinbase refers to the incoming US Congress as “The Most Pro-Crypto US Congress … Ever.” Among potential developments, the establishment of a Strategic Bitcoin Reserve could become a reality.

Notably, pro-crypto movements are not limited to the US; regions such as Europe, the G20, the UK, the UAE, Hong Kong, and Singapore are actively developing regulations to support digital assets.

Binance CEO Richard Teng also predicts that regulatory changes in the US will act as a growth catalyst in 2025, with other countries likely to follow suit.

Positive Developments for Crypto ETFs

Coinbase highlights the significance of Bitcoin and Ethereum ETFs in attracting new capital. Data reveals that net inflows have reached $30.7 billion since their introduction.

The report also suggests that ETFs linked to assets like XRP, SOL, LTC, and HBAR might gain approval, although their benefits could be short-term.

Crucially, Coinbase speculates that the SEC may approve staking in ETFs or eliminate the requirement for creating and redeeming ETF shares in cash, potentially broadening the ETF market. SEC Commissioner Hester Peirce has hinted that these developments could occur “early on.”

Global Adoption of Stablecoins

Coinbase projects a highly optimistic scenario for the adoption of stablecoins. With a market capitalization exceeding $190 billion, stablecoins currently account for 0.9% of the US M2 money supply.

The report anticipates stablecoins could grow to comprise 14% of the $21 trillion US M2 supply, driven by their speed and cost efficiency compared to traditional methods.

“Indeed, we may very well be getting closer to the day when the first and primary use cases for stablecoins won’t just be trading but rather global capital flows and commerce.” Coinbase predicted.

Tokenization to Thrive Amid Regulatory Challenges

Coinbase expects tokenized assets to experience continued growth in 2025. The capitalization of tokenized real-world assets (RWA) has grown over 60% in the past year, reaching nearly $14 billion.

Estimates suggest that RWA capitalization could increase by at least $2 trillion over the next five years, bolstered by traditional financial giants like BlackRock and Franklin Templeton.

The tokenization trend extends beyond traditional assets such as US Treasury bonds and money market funds to areas like private credit, commodities, corporate bonds, real estate, and insurance.

“Eventually, we think tokenization can streamline the entire portfolio construction and investing process by bringing it onchain, although this may yet be a few years away. Of course, these efforts face their own set of unique challenges, including liquidity fragmentation across multiple chains and persistent regulatory hurdles.” Coinbase predicted.

A Messari report echoes these sentiments, forecasting that Bitcoin and tokenized RWAs will dominate 2025 discussions.

DeFi to Rebound in 2025

Despite the market’s peak capitalization exceeding $3.7 trillion, DeFi’s total value locked (TVL) has yet to reclaim its previous high of $200 billion; it currently stands at $120 billion.

Coinbase argues that DeFi faced significant challenges in the last cycle, as many protocols offered unsustainable yields. However, regulatory changes in the US could allow DeFi protocols to share revenue with token holders, fostering a revival.

The report also references comments by Federal Reserve Governor Christopher Waller, who stated that DeFi could complement centralized finance (CeFi) with distributed ledger technology (DLT), enhancing data storage efficiency.