US-based crypto exchange Coinbase says there will be five main trends to watch in digital asset markets next year.
In a new “Crypto Market Outlook” report, Coinbase begins its list with stablecoins, saying they are “just getting started” following the sector’s explosive growth in 2024.
Coinbase claims that stablecoins are the “flagship application” of crypto and that their use case will soon expand beyond just trading.
“As stablecoins continue their rise, we are quickly approaching the day when their first and primary use case will be global capital flows and commerce, rather than commerce.”
Next on the list is real-world asset (RWA) tokenization, which Coinbase predicts will become the cornerstone of the current crypto market cycle in 2025.
“Companies are experimenting with using tokenized assets as collateral for other financial transactions, such as those involving derivatives, which could streamline operations and mitigate risks. Additionally, the RWA trend extends beyond assets such as U.S. Treasuries and money market funds – also finding traction in private credit, commodities, corporate bonds, real estate and insurance.
The third area to watch, according to Coinbase, is the exchange-traded fund (ETF) space.
Coinbase says it expects institutional interest to remain focused on a few select crypto ETFs. The crypto exchange is also interested in potential rule changes that regulators could make, such as allowing ETF products to incorporate staking or in-kind redemptions.
The next step is decentralized finance (DeFi). Coinbase claims that DeFi will experience a “resurgence” that will propel it into a new era and expand its reach.
“Decentralized finance (DeFi) took a few hits during the previous cycle, but a more sustainable and resilient ecosystem has emerged. Lending protocols are reaching all-time highs in total value locked (TVL), while decentralized exchanges (DEX) are pushing their share of trading volumes – relative to centralized exchanges (CEX) – to unprecedented levels.
The fifth area of the crypto markets that Coinbase says it is monitoring is the regulatory climate, which the exchange believes is due to a major change boosting the industry. Coinbase says a pro-crypto majority in both the House and Senate will be a tailwind for crypto in 2025.
“Specifically, we expect to see the establishment of a comprehensive regulatory framework in the United States, the introduction of robust stablecoin legislation, and an end to the era of regulation by enforcement.
And the United States isn’t the only jurisdiction poised to make regulatory progress. Many G20 countries and major financial centers are developing rules to accommodate digital assets, which should help create environments more conducive to innovation and growth. Together, these measures can open the door for more people and institutions to confidently participate in the crypto economy.
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