This is a follow-up guest post by Keegan Selby, a Founding Partner at the investment firm 4RC. A month ago on October 21, before the U.S. elections, he published a piece titled The Return of the Bull Market, where he accurately predicted much of the current market rally. This serves as an excellent foundation for discussing what might happen next.

The US Election has opened the floodgates for the digital asset class, and the market’s response has been electric. 2025 could be the year our industry declares checkmate in a decade long war for institutional adoption and reasonable regulation, embedding itself as a cornerstone of the new financial world order. Here’s a look at the latest developments and flows driving crypto’s total market capitalization to all-time highs.

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1. US Regime Change

U.S. Strategic Bitcoin Reserve: Senator Cynthia Lummis has officially introduced the Bitcoin Act of 2024, aiming to create a Strategic Bitcoin Reserve for the U.S., and the bill has gained meaningful momentum after Trump’s election and Bitcoin’s subsequent price surge. The Act proposes acquiring 1 million Bitcoins (approx. 5% of the total supply) over five years, with funds offset by Federal Reserve remittances or gold sales. Analysts expect this move to catalyze global superpowers including China, Russia, and the EU to advance their own agendas amidst the digital gold rush.

Gary Gensler’s Departure from SEC: The resignation of SEC Chairman Gary Gensler is expected to usher in a friendly and collaborative regulatory environment for cryptocurrencies, leading to an influx of onshore innovation and fewer legal hurdles for US crypto companies. The shift is also expected to result in long-awaited clarity around the classification of digital assets, specifically defining securities vs commodities and their respective regulators in the SEC and CFTC.

President Trump meeting with Coinbase CEO, Brian Armstrong: Trump’s meeting arrangement with Armstrong signals further political endorsement of the digital asset class, and reports from Investors.com suggest a focus on the future regulatory landscape and Trump’s cabinet / administration selection including:

• J.D. Vance — As Vice President-elect, Vance holds approx. $500K in Bitcoin. He actively campaigned on a pro-crypto platform supporting friendly legislation in the Senate and has fought for protections against traditional banking cutoffs.

• Howard Lutnick — Expected to be nominated as Secretary of Commerce, Lutnick’s firm, Cantor Fitzgerald, manages the U.S. Treasury reserves for Tether, confirmation of his deep ties to the industry.

• Robert F. Kennedy Jr. — Although nominated for Health and Human Services, RFK Jr. has publicly expressed support for Bitcoin, describing it as a currency of freedom and a hedge against inflation.

• Scott Bessent — Trump’s leading pick for U.S. Treasury Secretary is on record as pro-crypto, particularly pro-Bitcoin.

• Teresa Goody Guillén, Daniel Gallagher, Hester Peirce, Mark Uyeda, Paul Atkins, and Chris Giancarlo — These individuals are being considered for leading roles in key financial oversight bodies like the SEC and CFTC due to their pro-crypto stances or past involvement with regulatory frameworks favorable to digital assets.

• Elon Musk & Vivek Ramaswamy— While not a cabinet pick, Musk’s influence on Trump’s administration and his public support for cryptocurrencies, especially Dogecoin as a branding inspiration for the Department of Government Efficiency, aka “DOGE”, which he’ll lead alongside Vivek Ramaswamy, are pervasive in the broader crypto conversation.

Elimination of Capital Gains on US Crypto Companies: To top it all off, whispers of a potential policy change being considered by the Trump administration to eliminate capital gains tax on crypto for U.S.-based companies could heavily incentivize domestic innovation and investment.

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2. ETF Dominance

Net Flows: The Bitcoin ETF has achieved record-breaking inflows, as BlackRock’s iShares Bitcoin Trust (IBIT) recorded over $1.1B in a single day on November 7th following Trump’s election victory. Overall, BTC ETFs are on track to $30B in first year net inflows, highlighting intense investor interest exceeding most best case expectations.

BTC Options: Options started trading on Nov 19th for the iShares Bitcoin Trust (IBIT) on Nasdaq, introducing calls and puts for Bitcoin exposure. With an “unheard of $1.9B in first day volume”, investors are now able to hedge their positions and speculate on Bitcoin’s price without owning the spot cryptocurrency directly. The launch is expected to dramatically increase market liquidity, attract additional institutional investment via sophisticated trading strategies, and indicate higher highs for BTC given 82% of the volume went to calls.

ETH Staking: The reconsideration of staking in Ethereum ETFs would allow funds to lock up their ETH to earn rewards, enabling ETFs to offer yield in addition to spot exposure. While there are valid concerns around centralization, governance, and slashing risks, the industry remains optimistic that staking is on the ETF roadmap, strengthening both demand and supply sinks for ETH itself.

3. The M&A Space Race

Stripe Pays $1B for Bridge: Stripe’s acquisition of Bridge broke the M&A price tag record in the crypto industry to date, and could double Stripe’s transaction volume as it integrates blockchain-based payments across its vast network.

DJT Buying Bakkt: Donald J. Trump’s DJT has sent waves across the crypto ecosystem with its rumored acquisition of Bakkt, a regulated crypto trading and custody platform known for its institutional grade infrastructure. A recent Financial Times report suggests that this acquisition could provide direct and trusted crypto access for Trump’s large traditional base.

Robinhood Acquires BitStamp: Robinhood Markets, Inc. has agreed to acquire Bitstamp, a well-established global cryptocurrency exchange, for approximately $200 million in cash. The acquisition, set to close in the first half of 2025, aims to significantly enhance Robinhood’s international presence in the crypto market. Bitstamp’s established infrastructure, with over 50 active licenses worldwide, will bolster Robinhood’s capabilities in serving both retail and institutional clients across the EU, UK, US, and Asia.

4. Product-Market Fit

Stablecoins: Stablecoins have found their stride as a bridge between traditional finance and the volatile crypto market, evidenced by their 3,800% growth from $4 billion to over $156 billion between 2020 and 2024. Their use in facilitating fast, affordable, and borderless financial transactions has been a key driver, with over 80% of trading volume on most centralized exchanges facilitated through stablecoins. The EU’s MiCA (Markets in Crypto-Assets) will be fully implemented on December 30th 2024, further driving regulated adoption.

Real-World Assets: Tokenizing RWAs enables instant settlement, allows for fractional ownership, and permits 24/7 trading, thus making investment in traditionally illiquid assets more accessible globally. BlackRock has ventured into this space with their Ethereum-based BUIDL fund, currently holding over $500M in AUM, as well as Fidelity, through its digital assets division, and Goldman Sachs, via their tokenization platform GS DAP™.

AI Agents: As blockchains provide a digitally native and programmable payment platform for AI agents to autonomously transact services, resources, or data, free from traditional KYC reliant financial systems, it is estimated that by 2025, AI-driven trading could account for up to 40% of all crypto volume. In other words, AI agents could soon become crypto’s largest demographic.

Conclusion

2025 will not only continue crypto’s cyclical rise to prominence, but usher in a true renaissance for digital asset adoption. This new era will see our industry transcend its speculative origins to become essential infrastructure for the next global economic epoch.

• Follow Keegan on Twitter/X here and follow the team at 4RC here!

• For qualified investors, learn more about 4RC Fund II here.

Disclaimer: The information provided in this article is for informational purposes only and should not be considered financial advice. Always conduct your own research or consult a financial professional before making any investment decisions.