Coinbase‘s (NASDAQ:COIN) 2025 Crypto Market Outlook provides key insights focused on the web3 and blockhain ecosystem.
The Outlook provides investors with deep dives that span the crypto space, from altcoins to ETFs, staking to gaming, and other important developments.
As noted by Coinbase, the following are some key trends to keep in mind as we enter 2025:
- Stablecoins are crypto’s killer app, and we are fast approaching the day when their primary use case will move beyond trading.
- While challenges remain, tokenization will emerge as a cornerstone of the current market cycle.
- Potential changes to crypto ETFs, such as allowing in-kind creations and redemptions or staking, could further increase demand.
- Despite facing setbacks in the last cycle, DeFi will be propelled into a new era of innovation.
- A new regulatory regime that appears poised to make clear, sensible rules will benefit both the crypto industry and consumers.
As mentioned in a blog post by Coinbase, stablecoins have emerged “as crypto’s killer app.”
In 2024, stablecoins’ market capitalization increased “48% to a new all-time high of $193B as of December 1, and some analysts project that this could grow to $3T over the next five years.”
YTD, they’ve reportedly processed over “$27T worth of transactions, about 3x more than over the same period in 2023.”
As explained in the report, stablecoins appear to have delivered proven utility by “facilitating faster and cheaper payments on a global scale for a broad range of users, from micro-entrepreneurs to the world’s biggest corporations.”
Coinbase further noted that as stablecoins continue their surge, they are rapidly “approaching the day when their first and primary use cases will be global capital flows and commerce, rather than trading.”
Coinbase also mentioned that tokenization continued to “make significant progress in 2024, as tokenized real world assets (RWA) grew over 60% to $13.5B (excluding stablecoins) as of December 1, according to rwa.xyz.”
Coinbase added in its outlook report that firms are experimenting with using tokenized assets as collateral “for other financial transactions, like those involving derivatives, which could streamline operations and mitigate risk.”
Moreover, the RWA trend is expanding “beyond assets like US Treasuries and money market funds – finding traction with private credit, commodities, corporate bonds, real estate, and insurance as well.”
Although these efforts face their own set of unique challenges, Coinbase said that they believe that the “cumulative effects of sustained investment and technological refinement in 2025 should set the stage for tokenization to emerge as a cornerstone of the current crypto market cycle.”
Eventually, Coinbase said that they think tokenization can “streamline the entire portfolio construction and investing process by bringing it onchain, although this may yet be a few years away.”
After the record-breaking success of US spot bitcoin ETFs, the entire crypto market “has been transformed.”
Coinbase pointed out that almost every type of institutional investor – including endowments, pension funds, hedge funds, investment advisors and family offices – “now owns crypto ETFs.”
As institutional adoption continues to increase, Coinbase thinks that these holders will provide “a long-term, stabilizing source of demand for the asset class.”
Looking ahead, the industry is focused “on the potential approval of spot ETFs for tokens like XRP, SOL, LTC, and HBAR in the US, but Coinbase thinks meaningful institutional demand may be limited to a small cohort of assets in the near term.”
Instead, Coinbase said that they are “more interested in what could happen if the SEC lifted its mandate on cash rather than in-kind creations and redemptions of ETF shares or allowed these products to incorporate staking.’
According to the update from Coinbase, these changes could “enhance the potential rewards for ETF holders, help narrow bid-ask spreads, and improve price alignment between share prices and NAV, making the ETFs even more attractive to investors.”
As noted in the update, decentralized finance (DeFi) took some hits in the previous cycle, but “a more sustainable and resilient ecosystem has emerged.”
Lending protocols are hitting all-time highs in “total value locked (TVL), while decentralized exchanges (DEXs) are pushing their share of trading volumes – relative to centralized exchanges (CEXs) – to unprecedented levels.”
Coinbase added in the update that innovative “user applications like decentralized physical infrastructure (DePIN) and prediction markets are leveraging DeFi primitives to enable novel experiences.”
Moreover, the shift in the US regulatory landscape and the adoption of onchain verification could help “provide a clear path for traditional institutional investors to participate in DeFi. All of this suggests that DeFi could extend its reach in the near future.”
Coinbase further noted that after years of struggling with unclear, inconsistent regulations, the “tides have turned and the US will soon usher in the most crypto-friendly Congress ever.”
A bipartisan, pro-crypto majority in both the House and Senate “means that US regulation will provide a tailwind for crypto performance in 2025.”
As noted by Coinbase, crypto’s emergence as “an electoral issue underscores the urgency for policymakers to align with the evolving demands of this influential voting bloc, and they think that the odds of achieving a new legislative milestone are strong.”
Specifically, Coinbase said that they “expect to see the establishment of a comprehensive regulatory framework in the US, the introduction of sound stablecoin legislation, and an end to the era of regulation by enforcement.”
And the US isn’t the “only jurisdiction poised to make regulatory progress.”
Coinbase’s report added:
“Many G20 countries and major financial hubs are writing rules to accommodate digital assets, which should help create more conducive environments for innovation and growth. Taken together, these moves can open the door for more people and institutions to confidently participate in the crypto economy.”
Coinbase concluded in its report:
“As the regulatory and technological landscapes evolve, we expect to see substantial growth in the crypto ecosystem as wider adoption drives the industry closer to achieving its full potential. The breakthroughs and advancements of 2025 could very well determine the long-term trajectory of the crypto industry for decades to come. This will be a pivotal year.”