Citi: Stablecoins, ETFs to Drive Crypto Performance in 2025

The continued rise in the adoption of stablecoins and cryptocurrency exchange-traded funds (ETFs) is projected to significantly drive the performance of digital assets throughout 2025, according to a recent research report released by Citi on December 26th. The report indicates a sustained and elevated level of activity across multiple key indicators within the cryptocurrency market. Specifically, data reveals substantial increases in crypto ETF inflows, heightened on-chain activity, and expanding stablecoin usage, all of which gained momentum following the United States presidential election victory of Donald Trump in November. Citi’s analysis underscores that ‘adoption’ represents the most crucial factor to monitor for the long-term performance of cryptocurrencies.

Crypto ETF Activity and Market Dynamics

The report highlights the critical role of crypto ETF inflows in shaping the market’s trajectory. A significant portion of the variance in Bitcoin’s price action is directly attributed to these inflows, with approximately $1 billion in inflows consistently resulting in returns of around 4.7%. As of November 21st, US Bitcoin ETFs surpassed $100 billion in net assets for the first time, a milestone achieved through growing institutional investment. This surge in institutional interest is anticipated to generate “demand shocks” for Bitcoin, potentially triggering a substantial increase in its price during 2025, as suggested by asset manager Sygnum Bank. The report emphasizes that these ETF inflows serve as a reliable indicator of new funds and market participants entering the cryptocurrency space, further solidifying their importance as a market barometer. The increased trading activity translates to an enhanced liquidity and stability within the broader crypto market.

On-Chain Activity and Stablecoin Growth

Beyond ETF activity, the report emphasizes accelerating on-chain activity, particularly concerning stablecoins. This trend represents a key performance driver for the coming year. Following the election of Donald Trump, stablecoin market capitalizations experienced a dramatic increase, with the combined market capitalization of the top three stablecoins – Tether’s USDt, USD Coin, and Dai – growing by over $25 billion. Citi views these stablecoins as vital “on-ramps” to decentralized finance (DeFi), facilitating increased participation in this rapidly evolving sector. The robust growth in stablecoin market capitalization mirrors an overall increase in on-chain activity, indicating a broadening base of users engaging with the cryptocurrency ecosystem. The increasing number of significant and minor crypto wallets observed since the November election further supports this assessment.

Ethereum Network Activity and Wallet Expansion

The report also notes substantial growth within the Ethereum network, including activity on layer-2 scaling chains, which has risen by 210% compared to 2023 averages. This expansion highlights Ethereum’s continued relevance as a leading platform for decentralized applications and smart contracts. Furthermore, the number of crypto wallets has increased slightly since the November US election, demonstrating a broader engagement with the digital asset space. These developments collectively paint a picture of an expanding and maturing cryptocurrency market.

Implications and Future Outlook

The convergence of these factors – heightened ETF inflows, accelerating on-chain activity, substantial stablecoin growth, and increasing Ethereum network usage – strongly suggests a positive outlook for digital assets in 2025. While predictions are inherently subject to market volatility, the sustained momentum across these key indicators lends considerable weight to the expectation of continued digital asset performance. The shift towards increased institutional involvement and broader market adoption, driven by stablecoins and ETFs, appears to be a foundational trend that is likely to persist in the years to come. The report’s emphasis on ‘adoption’ as a key performance driver underscores the importance of continued market interest and acceptance within the cryptocurrency space.