A recent report from Citi highlights the continued adoption of stablecoins and cryptocurrency exchange-traded funds (ETFs) as key drivers for digital asset performance in 2025. According to the research, which was published on December 26, crypto ETF inflows, onchain activity, and stablecoin usage have all spiked since President-elect Donald Trump’s election win in November.
Adoption: The Key to Long-Term Performance
Citi’s report emphasizes that adoption is a crucial factor for the long-term performance of digital assets. The research highlights that "adoption is, in our view, the most important concept to track for the long-term" performance of crypto. This focus on adoption underscores the significance of user acquisition and growth within the cryptocurrency ecosystem.
ETF Activity and Stablecoin Market Caps
The report notes that ETF activity and broader volumes are improving, with stablecoin market caps witnessing a significant surge since Trump’s election win. According to Citi, "stablecoin market caps — which we view as a measure of flows into the crypto ecosystem — are swiftly rising (especially post-election)." This uptick in adoption is particularly evident for decentralized finance (DeFi), where stablecoins serve as an on-ramp for users.
Crypto ETF Inflows: A Key Metric to Watch
Citi’s research highlights that crypto ETF inflows are among the most important metrics to track, as they are more likely than other trading activity to be new funds or market participants entering the crypto space. The report also notes that these 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’s price action.
The Impact of Institutional Inflows
The increasing institutional investment in cryptocurrency exchange-traded funds (ETFs) could lead to positive "demand shocks" for Bitcoin. This phenomenon, where a surge in demand drives up prices, may cause Bitcoin’s price to soar in 2025. Asset manager Sygnum Bank highlighted this potential outcome in December.
Onchain Activity and Stablecoin Growth
Onchain activity has also accelerated, particularly for stablecoins. Citi notes that the combined market capitalizations of the top three stablecoins (Tether’s USDt, USDC, and Dai) have collectively grown by more than $25 billion since Trump’s election win.
- Stablecoin Market Capitalization Growth:
- Tether’s USDt: +$15.3 billion
- USDC: +$6.7 billion
- Dai: +$3.5 billion
These stablecoins are a critical component of the decentralized finance (DeFi) ecosystem, serving as an on-ramp for users and facilitating lending, borrowing, and trading activities.
Decentralized Finance (DeFi) Growth
Citi’s report also highlights that other measures of onchain growth are outperforming. Activity on the Ethereum network, including layer-2 scaling chains, is up 210% versus 2023 averages. This uptick in activity underscores the growing adoption and usage of decentralized applications (dApps) within the DeFi ecosystem.
Growing Crypto Wallets
The number of large and small crypto wallets has increased slightly since the November US election. This growth in wallet adoption could be a key driver for digital asset performance in 2025, as it suggests an increase in user engagement and activity within the cryptocurrency space.
Conclusion
Citi’s report highlights that the continued adoption of stablecoins and cryptocurrency exchange-traded funds (ETFs) will propel digital asset performance in 2025. The research emphasizes that adoption is a crucial factor for long-term performance, and key metrics to track include crypto ETF inflows, onchain activity, and stablecoin usage.
By maintaining focus on these areas and capitalizing on the growing demand for decentralized finance (DeFi), users and investors can make informed decisions about their participation in the cryptocurrency market.
Sources:
- Citi Research Report
- Bloomberg Intelligence
- Sygnum Bank
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