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Crypto’s new regime in the US: What investors should know

Dramane Meite, CFA
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On Monday, Donald Trump will be sworn in as the 47th president of the United States. November’s election results have been particularly significant for the emerging digital assets industry, with a new Congress overwhelmingly comprised of pro-crypto policymakers.

Regulatory clarity has long been an important enabler of the crypto industry's growth and for fostering investor confidence. We believe 2025 will likely be a year of significant leaps forward in this regard. In the US specifically, digital asset market structure legislation, stablecoin legislation, and the repeal of the onerous SAB 121 regulation—which has prevented large US banks from holding crypto assets in custody—are some of the major policy initiatives that many investors are anticipating from the new administration and Congress. 

While many of these developments are being priced into bitcoin and other crypto assets post-election, we believe there is more positive price movement to come as key regulators and other administration officials are confirmed, set their agendas, and new policies advance. 

Going forward, there certainly is downside risk if anticipated policy outcomes differ from what the market expects, so we are anticipating continued price volatility in the coming months. But this volatility doesn’t change our view that 2025 will be a very strong year for the asset class. As we’ve seen in the past, large drawdowns are part of the bull market phase of crypto’s cycles, and this year will likely not be any different.

 

 

Source: Hashdex Research with data from Messari (from July 21, 2010 to December 31, 2024).
Past performance is not a guarantee of future results.
Chart data was calculated using daily close prices (not considering intraday movements). 

 

It’s not, of course, just regulatory clarity that is driving crypto prices. We think it is only one of three pillars that will help establish crypto assets and blockchain technology as a cornerstone of the global economy over time. Crypto innovation and adoption are the two other pillars investors should be thinking about as this bull market takes shape.

 

Innovation will push boundaries of technology and utility

Scalability improvements in smart contract platforms enhance network throughput, reduce transaction costs, and improve user experience. These advancements allow these platforms to support applications in decentralized finance (DeFi), artificial intelligence (AI), and blockchain-enhanced social experiences, unlocking new use cases beyond value transfer.

Tokenization is transforming traditional finance by bringing real-world assets like digital dollars, equities, and private credit onto the blockchain. As regulatory clarity improves, smart contract platforms and payment networks beyond Bitcoin will play pivotal roles in enabling this transition.

Enhanced programmability is also driving growth, with foundational networks like Bitcoin and Litecoin serving as a base for layered, fully programmable solutions. This fosters greater demand for base-layer tokens and expands the ecosystem's utility. Meanwhile, the emergence of regulated exchange-traded products (ETPs) is broadening investor access to digital assets, with diversified crypto baskets providing new avenues for market participation.

 

Adoption will continue to accelerate

Crypto ETFs went mainstream this year, and this will continue. The adoption of blockchain technology is accelerating across sectors, laying the groundwork for the modern digital economy. Smart contract platforms and Bitcoin stand to benefit significantly as blockchain becomes the infrastructure for payments, financial markets, and social applications. And the regulatory environment over the next four years should help facilitate these developments. 

Retail adoption is surging, driven by billions of smartphone users who now have seamless access to blockchain applications. Corporations are integrating digital assets into their balance sheets, leveraging Bitcoin and Ethereum as uncorrelated, asymmetric assets. Institutional investors, including pension funds and endowments, are exploring digital assets as strategic allocations to preserve purchasing power and achieve diversification.

Even sovereign states are recognizing the potential of crypto. Bitcoin, as a digital store of value, is becoming a tool for reducing reliance on traditional reserve currencies and enabling international trade. Smart contract tokens with growing utility are also gaining traction.

As innovation drives technological advancements, adoption expands blockchain’s reach, and the new regulatory environment in the US provides a stable framework for growth, the crypto industry is poised for a very strong 2025. These factors collectively are transforming blockchain into an increasing presence within the global financial system, unlocking its potential to reshape economies and create new opportunities for investors, businesses, and governments alike. We are, however, still early with these developments and believe that investors currently have an attractive entry point for capitalizing on the growth of this market. 

 

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This material expresses Hashdex Asset Management Ltd. and its subsidiaries and affiliates (“Hashdex”)'s opinion for informational purposes only and does not consider the investment objectives, financial situation or individual needs of one or a particular group of investors. We recommend consulting specialized professionals for investment decisions. Investors are advised to carefully read the prospectus or regulations before investing their funds.
 
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