The continued adoption of stablecoins and cryptocurrency exchange-traded funds (ETFs) is expected to drive digital asset performance in 2025, according to a research report from Citi dated December 26.
Crypto ETF inflows, on-chain activity, and stablecoin usage all surged following President-elect Donald Trump’s victory in the United States presidential election in November, and these metrics remain elevated as the new year approaches, Citi noted. “Adoption is, in our view, the most important concept to track for the long-term performance of crypto,” the report stated. “ETF activity and broader volumes are improving, and stablecoin market caps — which we view as a measure of flows into the crypto ecosystem — are swiftly rising (especially post-election).”
ETF inflows
Crypto ETF inflows are among the most significant metrics to monitor because they are “more likely than other trading activity to be new funds/market participants entering the crypto space,” the report explained. They also have a substantial impact on price performance, particularly for Bitcoin (BTC). In 2024, BTC ETF inflows accounted for approximately 46% of the variance in BTC price action, with the beta indicating that $1 billion of inflows has resulted in about 4.7% returns, the asset manager stated. On November 21, US Bitcoin ETFs surpassed $100 billion in net assets for the first time, according to data from Bloomberg Intelligence. Rising institutional inflows could create positive “demand shocks” for Bitcoin, potentially driving BTC’s price upward in 2025, asset manager Sygnum Bank mentioned in December.
On-chain activity
On-chain activity has also accelerated, particularly for stablecoins, which could be a key performance driver next year. Stablecoin market capitalizations increased sharply after Trump’s election win. The combined market caps of the top three stablecoins — Tether (USDT), USD Coin (USDC), and Dai — collectively grew by more than $25 billion, Citi reported. This is particularly bullish for decentralized finance (DeFi), as “stablecoins are the on-ramp to decentralized finance,” according to the report. Other measures of on-chain growth are also outperforming. Activity on the Ethereum network, including layer-2 scaling chains, has increased by 210% compared to 2023 averages, Citi indicated. Furthermore, the number of large and small crypto wallets has seen a slight increase since the November US election, according to Citi.