2024 was a record-breaking year for the crypto market. Bitcoin rallied to reach $100,000 for the first time in history, more than doubling in value this year and rising more than 45% since Donald Trump's victory in the U.S. presidential election this past November.
At the same time, artificial intelligence (AI) has taken the world by storm since the launch of Chat GPT in late 2022. Today, it remains on course to cause continued disruption in nearly every sector in 2025.
Against this backdrop, the question for 2025 is how quickly Trump and his pro-crypto allies in Congress will take action to further accelerate adoption and fuel innovation.
The Biggest Winner of the Trump Trade: Crypto
The biggest winners of the Trump trade have been crypto and Web3, the blockchain-enabled internet, with leading assets like Bitcoin, Ethereum, and Solana performing very well.
Why is the industry so hopeful?
First, they argue that anything is better than the Biden administration, which was openly hostile to the Web3 industry. Second, a Trump presidency is viewed as more business-friendly, leaving the market to innovate undisturbed. Third, there is much the government can do to actively encourage innovation and investment by setting clear rules of the road; there's hope now that the crypto industry will finally achieve regulatory clarity under a Trump presidency.
A Whole-of-Government Approach to Crypto
Bitcoin soared past $100,000 after President-elect Donald Trump announced Paul Atkins as his pick for SEC chair. Atkins is a former SEC commissioner and an advisor to the Digital Chamber, the world's largest crypto trade association.
His selection sends a strong signal Trump will make good on his promise to support the growth of this industry and overhaul agencies like the SEC. As of writing, Trump has also announced the creation of a new position in the federal government to oversee all crypto and A strategy — the Crypto and AI Czar — and appointed Silicon Valley venture capitalist David Sacks to the top job.
This decision feels sensible as there is much the government can do, beyond setting clear rules and regulations, to support the crypto industry. Ultimately, a whole-of-government approach may be needed.
Trump-Led SEC May Attract New Retail & Institutional Investors to Crypto
The appointment of pro-crypto officials in positions of power at the SEC, CFTC, and other federal agencies may bring much-needed regulatory clarity to an industry that has operated in somewhat of a grey area. This would bring additional retail and institutional investors into the crypto markets and provide access to growth capital for the industry's leading businesses.
Under the new administration, the SEC could very well drop its suits against Coinbase Global Inc. (COIN:NASDAQ), which alleged the company is operating a brokerage exchange without a license. This would then set a precedent for other similar companies who want to enter the U.S. market.
Regulatory Clarity Poised to Draw Banks to Crypto Arena
With clear rules of the road, banks and other traditional players may finally enter the crypto arena, accelerating the growth of stablecoins (cryptocurrencies pegged to other, more traditional assets) and other financial applications.
Some in the industry even hope that Trump may establish a strategic Bitcoin reserve and abolish taxes on many small-dollar crypto asset transactions, making it easier to use these assets for everyday transactions.
The Revenge of Ethereum
Bitcoin may be hitting new highs, but for the broader cryptoasset ecosystem and for many investors in the space, performance beyond Bitcoin has been quite uneven. However, there's one notable outlier from the recent rally: Ethereum (ETH), the second largest cryptoasset by market capitalization and the foundational platform of Web3.
ETH may still be trapped in a bear market, but ETH sentiment is in borderline depression territory. However, a careful analysis of the facts shows that the bear case is not just massively overstated; it is borderline delusional.
The fact is that today, Ethereum still dominates all other networks in essentially every metric, accounting for about 55% of the total $110B TVL across the crypto ecosystem, and 52% of the $185 billion stablecoin supply is on Ethereum.
Enterprise Onchain Adoption is Surging, Driven by Ethereum, Solana, and New High-Performance Blockchains
Enterprise on-chain adoption is surging, and there's been one major commonality in most initiatives: Ethereum.
BlackRock's tokenized BUIDL fund, Visa's Tokenized Asset Platform, PayPal Holdings Inc.'s (PYPL:NASDAQ) PYUSD stablecoin, UBS's inaugural on-chain fund, and several others all chose Ethereum to originally launch these projects on.
When Coinbase launched Base, it did so as an Ethereum Layer 2 network. According to a Coinbase report, Web3, "projects announced by Fortune 100 companies have increased 39% year-over-year and hit a record high in Q1 2024." These metrics are likely to only accelerate in a regulatory and political environment where Web3 development is encouraged.
Nvidia Paves the Way for AI Chipmaker Boom
Nvidia Corp. (NVDA:NASDAQ), which manufactures the leading computer chips powering the AI revolution, has become the poster child for how a company can unlock billions, or even trillions, in value in this new age.
Today, GPUs are the dominant chip in AI — and Nvidia is the dominant player. While Nvidia is the clear leader, it's not alone: more than a dozen other companies crowd the market with their own offerings, including legacy chipmakers like AMD, Intel, and IBM and lesser-known upstarts such as Graphcore and Groq.
However, often in technology, the market leader dominates. Google captured most of search revenue. Apple captured most of mobile revenue. Nvidia is poised to capture most of the revenue from the AI chip bonanza.
AI Disruptions Are Coming to Business, Culture & Our Everyday Way of Life
AI is on course to create five very significant disruptions to business, culture, and our way of life. In health sciences, AI is helping to identify diseases and discover new drugs, leading to breakthroughs that will impact medicine and longevity.
Virtual AI companions are augmenting and improving human capability. AI is accelerating the development of autonomous vehicles and robotic humanoid companions — in fact, a robot may soon be the household appliance of the 21st century. One day, AI could disrupt creative industries, paving the way for an AI written award-winning screenplay or song. Finally, machine-human brain interfaces like Neuralink will quite literally meld organic and synthetic brains, a moment that prominent futurist and AI expert Ray Kurzweil calls "the singularity."
"Like the Internet of the 1990s, the AI age of the 2020s is very new, and its use cases are not well developed or well understood. The winners of the Internet era were not infrastructure firms like Cisco but companies like Amazon, Google, and Facebook that used the web to upend legacy industries. With that in mind, the next wave of growth in AI will likely come from the application layer, like software for fully autonomous cars or humanoid robot companions."
Alex Tapscott is the managing director of the Digital Asset Group, a division of Ninepoint Partners LP. He is also the author of "Web3: Charting the Internet's Next Economic and Cultural Frontier." Sign up for his newsletter, Digital Asset Digest.
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