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The article discusses the anticipated developments in the decentralized finance (DeFi) sector by 2025, highlighting three major trends: Bitcoin staking, tokenized real-world assets (RWAs), and the integration of agentic artificial intelligence (AI). Bitcoin's price surpassing $100,000 in 2024 has sparked renewed interest from institutions and regulators, setting the stage for further growth in the crypto sector. The total value locked (TVL) in DeFi protocols has already shown significant growth, nearing its all-time high, with expectations of continued expansion. Bitcoin staking, facilitated by layer-2 networks, offers investors new yield opportunities, with liquid staking tokens (LSTs) gaining traction. Tokenized RWAs, representing claims on various assets, are seen as a massive market opportunity, potentially improving liquidity and reducing operational frictions. Lastly, agentic AIs, which autonomously pursue complex goals, are expected to become central to the future of the industry, enhancing decentralized applications and user interactions. These trends suggest a transformative year for DeFi, with significant implications for both the crypto and broader financial markets.
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The bitcoin mining ecosystem has hit a new peak with the mining difficulty adjustment soaring to 110.45 trillion, marking it as the eighth consecutive positive adjustment. This escalation in difficulty intensifies the competition among miners, making it increasingly challenging to mine new blocks and earn bitcoin rewards. As a result, some publicly traded mining companies have begun to explore alternative revenue streams in high-performance computing and artificial intelligence, unable to sustain operations solely through bitcoin mining. Notably, MARA Holdings has also ventured into issuing convertible bonds to acquire more bitcoin and optimize revenue through lending. Historical data shows mixed outcomes following such difficulty adjustments; for instance, after the China mining ban in 2021, bitcoin experienced a bull run followed by a bear market, while in 2018, similar adjustments preceded both market highs and lows. Despite these fluctuations, the network's hashrate remains robust, currently at 775 EH/s, with projections suggesting it could reach 1 zettahash per second before the next halving.
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Bitcoin's reserves on exchanges have dwindled to levels not seen since June 2018, with only 2.35 million BTC available as of January 13, according to CryptoQuant data. This decline is largely attributed to institutional investors, including hedge funds, who are capitalizing on the current dip in Bitcoin's price. André Dragosch from Bitwise highlighted that hedge funds are increasing their exposure to Bitcoin, suggesting a potential supply shock if demand continues to outstrip the available supply. Despite this, Bitcoin's recovery to surpass the $100,000 mark is hindered by low trading volumes, as noted by Ryan Lee from Bitget Research. The broader cryptocurrency market also reflects this trend, with trading volumes at their lowest since before the U.S. elections, indicating a lack of market excitement. However, analysts remain optimistic, predicting Bitcoin could reach a cycle top above $150,000 by late 2025, driven by an expected increase in global money supply.
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Laser Digital, the digital asset subsidiary of Nomura, predicts that 2025 could be a significant year for cryptocurrency exchange-traded funds (ETFs) in the U.S. The report highlights that over twelve crypto ETFs might be launched if approved by the SEC, with asset managers having already submitted twelve filings. These potential ETFs include innovative products like a ProShares ETF that tracks the S&P 500's return in bitcoin, a combined bitcoin/ether ETF, and ETFs based on litecoin, XRP, and Solana. The report suggests that a bitcoin/ether ETF is most likely to receive approval first. The success of spot bitcoin ETFs in the previous year, exemplified by Blackrock's iShares Bitcoin Trust, which amassed $53 billion in assets, underscores the potential for these new ETFs. The regulatory environment is also expected to become more favorable with the appointment of Paul Atkins as SEC chairman and the anticipated support from a crypto-friendly administration under President-elect Donald Trump.
