5 Cryptocurrency Predictions for 2025

When the curtain closes on 2024, investors will be singing Wall Street's praises. The rise of artificial intelligence (AI) and stock-split euphoria helped

As the curtain closes on 2024, investors have been singing Wall Street's praises. The rise of artificial intelligence (AI) and stock-split euphoria helped lift the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite to multiple record-closing highs. However, Wall Street's gains pale in comparison to the phenomenal year delivered by the cryptocurrencies.

As of this writing in the late evening on Dec. 28, the aggregate value of the entire crypto market has surged from $1.71 trillion to $3.32 trillion on a year-to-date basis. This 94% gain triples the return of the growth-centric Nasdaq Composite in 2024.

Bitcoin (CRYPTO:BTC) led the charge, with the world's largest digital currency by market cap adding north of $1 trillion in value, which is good for a 125% year-to-date climb. The launch of spot Bitcoin exchange-traded funds (ETFs) played a key role in facilitating mainstream investment in the leading cryptocurrency in 2024.

Additionally, Donald Trump's November victory helped lift Bitcoin above $100,000 per token. Trump and soon-to-be Vice President J.D. Vance have a favorable view toward Bitcoin.

But the investment landscape is all about looking forward. Following another banner year, here are five cryptocurrency predictions for 2025.

1. The crypto bear market will return

The first prediction promises to be an unpopular one: the bear market will return.

The stars aligned perfectly for Bitcoin in 2024. The debut of spot Bitcoin ETFs spurred required buying, and the halving event in April 2024 reduced the pace at which new Bitcoin are being mined. However, the biggest catalyst of all for the world's largest digital currency might just be MicroStrategy's (NASDAQ:MSTR) ascension as the world's first "Bitcoin Treasury Company."

MicroStrategy CEO Michael Saylor has been a longtime supporter of the world's top digital currency and has overseen the purchase of 442,262 Bitcoin at an average cost of $62,257, as of Dec. 23. Saylor has financed MicroStrategy's big bet on Bitcoin by selling convertible debt and issuing shares of his company's stock. He's currently seeking approval to increase his company's outstanding share count by up to 10 billion to 10.33 billion shares.

While this leveraged bet on Bitcoin has some investors believing in the fabled "infinite money glitch," we've witnessed leveraged investment scenarios fail time and again on Wall Street. To make matters worse, MicroStrategy potentially lacks the operating cash flow from its AI-enterprise analytics software segment to even cover the servicing costs on its debt.

Without sustained purchases from MicroStrategy, which seem likely to fade at some point in the new year, Bitcoin's upward momentum will taper. With key catalysts now in the rearview mirror and Bitcoin's history filled with jaw-dropping corrections, a bear market decline of 20% or greater is expected.

2. Ethereum will handily outperform Bitcoin

Secondly, don't be surprised to see the second-largest cryptocurrency by market value, Ethereum (CRYPTO:ETH), notably outperform Bitcoin in the new year. For some context, Ethereum's 48% year-to-date gain significantly lags the 125% increase registered by Bitcoin.

One of the tangible catalysts for Ethereum is the approval of more than a half-dozen spot Ethereum ETFs in May 2024 by the Securities and Exchange Commission (SEC). Creating a path for everyday investors to buy Ethereum without having to purchase it on an obscure crypto exchange can provide the same lift for crypto's No. 2 coin that we saw from Bitcoin in 2024.

Furthermore, history is on Ethereum's side. The last time we witnessed a gap this wide in overall cryptocurrency market cap dominance between Bitcoin and Ethereum was in early 2021. Between June 2020 and June 2021, Ethereum more than tripled the return of Bitcoin. Historically speaking, when Ethereum's dominance dips, relative to Bitcoin, investors flock to crypto's No. 2 coin.

3. The ultra-popular dog-themed meme coins will lose half of their value

While altcoins are expected to be a hot commodity in 2025 following the huge rally in Bitcoin, ultra-popular meme tokens Dogecoin (CRYPTO:DOGE) and Shiba Inu (CRYPTO:SHIB) are likely to lose 50% of their value.

Dogecoin rocketed higher following Trump's November victory. This rally has to do with Trump appointing Tesla CEO Elon Musk to head the Department of Government Efficiency (DOGE) with Vivek Ramaswamy.