Will 2025 Be the Year of Bitcoin?

At the Bitcoin conference in Nashville, Tennessee, on July 27, 2024, then-Presidential Candidate Donald Trump pledged to make the United States the “‘crypto capital of the planet’” and laid out his vision for a crypto-friendly administration. (MacKenzie Sigalos, CNBC). At first glance, this statement may seem like just another campaign promise; however, on January 23, 2025, President Trump signed the “Strengthening American Leadership In Digital Financial Technology” Executive Order. (The White House). The Executive Order outlines the Trump Administration’s plans to follow through on its promise to encourage digital asset growth in the United States and revokes both President Biden's “Ensuring Responsible Development of Digital Assets” Executive Order and the Department of the Treasury's "Framework for International Engagement on Digital Assets." Id. With news of a crypto-friendly presidential administration and Bitcoin prices soaring, 2025 could prove to be a prosperous year for Bitcoin and decentralized finance. This paper argues that while some may still be skeptical about cryptocurrencies, Bitcoin's recent success will preview digital assets becoming more common and popular throughout the United States and the rest of the world.

To fully grasp Bitcoin's recent success, it is crucial to examine the broader regulatory narrative surrounding cryptocurrencies. Since 2013, the Securities and Exchange Commission ("SEC") has developed a narrative of "regulation by enforcement" towards digital assets. (Commissioner Hester Pierce, SEC). The SEC's strategy is evident in numerous cases against crypto developers, such as SEC v. Telegram Group Inc., 448 F. Supp. 3d 352 (S.D.N.Y. 2020), where the SEC used the Howey test to deem cryptocurrencies as unregistered securities. Sec. & Exch. Comm'n v. Telegram Grp. Inc., 448 F. Supp. 3d 352, 358 (S.D.N.Y. 2020). The Howey test is a four-part test to determine if something is a security and includes (1) an investment of money (2) into a common enterprise (3) with an expectation of profits (4) derived from the efforts of others. Id. However, the SEC did not provide guidelines for crypto developers on how to register, leaving them without a clear path forward. (Cooley). 

Another notable case is SEC v. Coinbase, Inc., where the SEC alleged that Coinbase, a cryptocurrency exchange platform, was selling unregistered securities. Sec. Exch. Comm'n v. Coinbase, Inc., 726 F. Supp. 3d 260, 268 (S.D.N.Y. 2024). This case is significant in the broader narrative of the SEC's crypto enforcement because, rather than assessing each individual token separately, the SEC applied a broad classification, asserting that the cryptocurrencies offered on Coinbase were collectively unregistered securities. (Robert Schwinger, Norton Rose Fulbright). That was the narrative until January 21, 2025, when the SEC announced that the agency will establish a regulatory framework for cryptocurrencies. (SEC). The exact framework has not been revealed yet, but it will be a step in the right direction in regulatory posture towards cryptocurrencies in now allowing crypto developers to legally register the tokens. Id.

The face of the SEC’s prior war on crypto is the former SEC Chairman Gary Gensler. (Michelle Chapman & Stan Choe, AP News). Gensler viewed crypto as an unsafe asset "‘rife with fraud, scams, and abuse in certain applications.’" Id. Gensler rose as the mastermind behind the “regulation by enforcement” strategy and led the SEC to strike down digital assets as unregistered securities. Id. However, not every SEC director is anti-crypto. In a speech now treated as gospel within the crypto community, former SEC Director William Hinman outlined a pro-crypto legal analysis. (William Hinman, SEC). He suggested that if a digital asset becomes decentralized later down the road, it would no longer be able to pass the Howey test. Id. Therefore, such decentralized digital asset would not qualify as an unregistered security under the SEC's definition. Id. The tides of war between the SEC and digital assets have recently changed with Gensler stepping down as SEC chair, which, alongside a crypto-friendly presidential administration, may foster a pro-crypto SEC. (SEC).

Now, with a new pro-crypto regime, Bitcoin has regained growth in popularity, especially within the investment community. (Lydia Kibet, NASDAQ). In the wake of Bitcoin’s popularity, institutional investment leaders, such as BlackRock, Goldman Sachs, and J.P. Morgan, are starting to adopt Bitcoin and other tokens within their investment strategies, especially within the vehicles of Bitcoin ETFs. Id. One example is BlackRock's Bitcoin ETF, which not only fuels the price of Bitcoin but also increases public perception and confidence in cryptocurrencies. Id. BlackRock's Bitcoin ETF has skyrocketed, surpassing over $58 billion in assets since its inception in January 2024, which reflects growth in public demand and exposure to cryptocurrencies. (Ishares).

Besides public confidence, another important factor shaping cryptocurrency's future success is the governmental posture towards digital assets. (Lydia Kibet, NASDAQ). As previously mentioned, the new presidential administration has been vocal in its strong support of crypto. Id. Cryptocurrencies are expected to thrive under President Trump as he has promised to establish a national Bitcoin reserve and promote a more crypto-friendly SEC. Id.

One factor that could impact the success of cryptocurrency is its staggering price. Id. Johnny Gabriel, the head of blockchain economics at The Lifted Initiative, has suggested that a market correction could occur this year, potentially driving Bitcoin’s price down to $70,000-$80,000. Id. Cryptocurrencies are already known to fluctuate drastically, and such a drop in Bitcoin prices could shake investor confidence, pushing them back towards traditional investments.

A more unpredictable threat to the growth and popularity of Bitcoin and other cryptocurrencies is fraud. Public and federal confidence significantly dropped in November 2022 after the publicity of the mass crypto fraud orchestrated by Sam Bankman-Fried ("SBF"), in which SBF was revealed to have missappropriated customer funds, commited wire and securities fraud, made false and misleading statements, committed conspiracy to commit wire fraud, and had campaign finance violations. (Luc Cohen, Reuters). There is a real fear that crypto investments are insecure and susceptible to theft. (David Gura, NPR). Governmental enforcement agencies, including the SEC, used the SBF incident as a rallying cry to crack down even harder on crypto enforcement. Id. Additionally, hacker groups, including North Korea’s Lazarus Group, have stolen over $1.9 billion from 2021 to 2023 through crypto-focused attacks. (Hacken). With hacker groups and illicit actors like the Lazarus Group still operating, there is a chance of another crypto-fraud or crypto-related cyberattack. Such an event could derail any momentum that Bitcoin and other cryptocurrencies have and reignite public skepticism toward digital assets.

Bitcoin, however, is not the only prominent cryptocurrency worth watching. Another major cryptocurrency to keep eye on is Solana. (John Divine, U.S. News). Solana is a cryptocurrency made to be faster and more scalable than other forms of crypto. (Solana). In the summer of 2024, Solana reached a regulatory hurdle when the SEC charged Coinbase with selling unregistered securities, listing Solana as one of them. Coinbase, 726 F. Supp. 3d at 276. However, with new leadership at the SEC, it is expected that the agency will not be enforcing its action against Coinbase and Solana, potentially allowing Solana to grow quickly into one of the most prominent cryptocurrencies. (SEC). Yet another cryptocurrency to watch is Ethereum ("ETH"). ETH is already one of the most popular tokens and operates akin to Bitcoin, while also providing access to decentralized applications, causing the token to provide functionality. (Coinbase). This functionality aspect of ETH can lead to a high demand for the token and incentivizes token holders to retain ownership, which could contribute to price increases. Id.   

In conclusion, Bitcoin is poised to continue its growth during 2025, fueled by momentum and support from the Trump Administration and institutional investors like BlackRock creating crypto ETFs. Through the Trump Administration's establishment of crypto-friendly laws and a crypto-friendly SEC, more companies are likely to adopt blockchain technologies. With cryptocurrencies becoming more abundant throughout the United States, the public will grow more confident in digital assets and be more compelled to invest in them. However, only time will tell as another massive crypto scam or a succeeding anti-crypto presidential administration could bring Bitcoin and other digital assets back into the shadows.