Continued adoption of stablecoins and cryptocurrency exchange-traded funds (ETFs) will drive digital asset performance in 2025, according to a December 26 Citi research report.
Crypto ETF inflows, on-chain activity and stablecoin usage have all surged since President-elect Donald Trump won the U.S. presidential election last November, and these metrics continue to rise in the new year, Citi said.
“In our view, adoption is the most important concept to track the long-term” performance of cryptocurrencies, according to the report.
“ETF activity and broader trading volume are improving, and stablecoin market caps, considered a measure of flows into the cryptocurrency ecosystem, are rising rapidly (particularly since the election).”
Source: Citi
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ETF inflows
Crypto ETF inflows are one of the most important indicators to watch as they are “more likely to be new funds/market participants entering the cryptocurrency space than any other trading activity,” the report said.
In particular, in the case of Bitcoin (BTC), it also has a significant impact on price performance.
In 2024, BTC ETF inflows “accounted for ~46% of BTC price movements, with beta showing that $1 billion of inflows led to returns of ~4.7%,” the asset manager said.
On November 21, the net assets of U.S. Bitcoin ETFs surpassed $100 billion for the first time, according to data from Bloomberg Intelligence.
A surge in institutional inflows could create a positive “demand shock” for Bitcoin, potentially sending BTC prices skyrocketing in 2025, asset manager Sygnum Bank said in December.
Source: Citi
On-chain activity
On-chain activity has also accelerated, especially for stablecoins. This could be a key performance driver for next year.
Stablecoin market capitalization has increased rapidly since Trump was elected. Citi said the combined market capitalization of the top three stablecoins – Tether’s USDt (USDT), USD Coin (USDC) and Dai (DAI) – has increased by more than $25 billion.
According to the report, this is particularly bullish on decentralized finance (DeFi) because “stablecoins are the on-ramp to decentralized finance.”
Other measures of on-chain growth are also performing well. Activity on the Ethereum network, including layer 2 extension chains, increased 210% compared to the 2023 average, Citi said.
Citi said that the number of large and small cryptocurrency wallets increased slightly even after the US presidential election in November.
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