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Crypto winter is potentially looming, but provides opportunities for investors
2025 has continued to be a volatile year for the cryptoasset sector, with positive and negative headlines driving investment trends, market sentiment, and asset allocation. During the first 100 days of the Trump administration there has been a flurry of actions that have been received positively by the crypto market, but that has not mitigated other headlines working against price appreciation. Notably, trade policies, specifically the inconsistent tariff implementation that has roiled TradFi markets have also pressured crypto prices across the board. In a move that was viewed as both a pivot and reallocation of resources by a long-time crypto investor, Galaxy Digital recently signed a multi-year agreement with CoreWeave to repurpose facilities used for bitcoin mining to support AI initiatives.
While periods of market uncertainty have occurred previously, there are several factors that can make this potential crypto fall/winter more anxiety inducing for investors. Beginning with the spot ETF approval in January 2024 the price of bitcoin and other cryptoassets – as well as sentiment – has been on an almost uninterrupted upswing. This has included the embracing of crypto by TradFi institutions, an uptick of stablecoin development and issuance by TradFi players (and even states), a pivot at the SEC to a pro-crypto position, and multiple federal level actions creating a more hospitable environment for crypto investment. These events have led to an uptick of investment into crypto by both retail and institutional investors who might not have experienced previous crypto downturns.
As 2025 looks set to continue being a volatile (good and bad) year for crypto assets, let’s take a look at a few items investors should keep in mind as prices continue to fluctuate.
Focus On Fundamentals And Adoption
As tempting as it has been to focus on the price of bitcoin and other cryptoassets during this most recent bull market and uptick in prices, the reality is that price appreciation should viewed as a result of improvements, versus the goal of policy actions itself. Supported by institutional buyers such as asset managers, companies such as Strategy, and even nation-states the price action of bitcoin – setting it aside from other cryptoassets – may not drop as low as it had during previous crypto falls or winters.
That said investors and policy advocates would be well advised to continue to focus on improving the fundamentals of crypto applications, as well as enabling broader adoption of these instruments at both the institutional and retail levels. For example, NFTs experienced what might be on the most rapid rises in value followed by a devastating cycle of value destruction, complete with instances of fraud, illogical business models, and speculation. Following this boom and bust price cycle however, the true value of NFTs – connecting physical assets to a digital identity or connecting digital-to-digital identifies, is becoming more widely understood.
In short, prices will fluctuate as with any other financial asset, but investors need to remain focused on building better business use cases.
Double Down On Policy Improvements
Some of the most significant of price appreciation and improved investor sentiment related to cryptoassets is directly connected to the pivot at a policy level to an environment that is increasingly pro-crypto versus the antagonistic positions taking during previous administrations. The bringing to light, and ending, of Operation Chokepoint 2.0, implementation of a pro-crypto leadership team at the SEC, and the appointment of multiple pro-crypto members to Cabinet level roles have all contributed to these improvements. These actions are indeed worthy of celebration, but still leave much room for improvement.
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