A recent research report from Citi highlights the potential for continued growth in digital assets in 2025, driven by the adoption of stablecoins and cryptocurrency exchange-traded funds (ETFs). According to the report, which was published on December 26, key metrics such as crypto ETF inflows, onchain activity, and stablecoin usage have all seen a significant spike following President-elect Donald Trump’s election victory in November.
Adoption: The Key to Long-Term Performance
Citi’s report emphasizes the importance of adoption as a long-term driver for digital asset performance. As stated in the report, "adoption is, in our view, the most important concept to track for the long-term performance" of crypto assets.
This focus on adoption is supported by various indicators that suggest increasing participation and engagement with the digital asset ecosystem. For instance, the report notes that ETF activity and broader volumes are improving, while stablecoin market caps – which serve as a measure of flows into the crypto ecosystem – are rising swiftly (especially post-election).
Crypto ETF Inflows: A Key Metric to Watch
The report highlights crypto ETF inflows as one of the most important metrics to track for digital asset performance. According to Citi, this metric is more likely than other trading activity to represent new funds or market participants entering the crypto space.
Moreover, the report suggests that crypto ETF inflows have a significant 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 showing that $1 billion of inflows has led to around 4.7% returns.
The surge in crypto ETF inflows is evident from the fact that US Bitcoin ETFs broke $100 billion in net assets for the first time on November 21, according to data from Bloomberg Intelligence. This trend could continue in 2025, potentially driving positive "demand shocks" for Bitcoin and sending its price soaring.
Onchain Activity: A Key Performance Driver
In addition to crypto ETF inflows, onchain activity has also accelerated, particularly for stablecoins. The report notes that the combined market capitalizations of the top three stablecoins – Tether’s USDt (USDT), USD Coin (USDC), and Dai (DAI) – collectively grew by more than $25 billion following Trump’s election victory.
This growth is particularly bullish for decentralized finance (DeFi), as "stablecoins are the on-ramp to decentralized finance," according to Citi. Other measures of onchain growth, such as activity on the Ethereum network (including layer-2 scaling chains), have also outperformed 2023 averages.
Growing Adoption: A Key Driver for Digital Asset Performance
The report highlights that the number of large and small crypto wallets has increased slightly since the November US election. This increase in adoption is a positive sign for the digital asset ecosystem, suggesting growing interest and participation from investors and users alike.
In conclusion, Citi’s report suggests that continued adoption of stablecoins and cryptocurrency ETFs will propel digital asset performance in 2025. As key metrics such as crypto ETF inflows, onchain activity, and stablecoin usage continue to grow, the potential for positive "demand shocks" for Bitcoin and other digital assets becomes increasingly likely.
Key Takeaways:
- Adoption is a critical driver of long-term digital asset performance
- Crypto ETF inflows have seen a significant spike in recent months, potentially driving positive "demand shocks" for Bitcoin
- Onchain activity has accelerated, particularly for stablecoins, which are a key on-ramp to decentralized finance (DeFi)
- Growing adoption and participation in the digital asset ecosystem suggest increasing interest and engagement from investors and users alike
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