A recent research report by Citi highlights the potential for continued growth in digital assets, driven primarily by the adoption of stablecoins and cryptocurrency exchange-traded funds (ETFs). The report notes that metrics such as crypto ETF inflows, onchain activity, and stablecoin usage have increased significantly since President-elect Donald Trump’s election win in November.
Adoption: The Key to Long-Term Performance
According to the Citi report, adoption is a crucial concept to track for long-term digital asset performance. The report notes that ETF activity and broader volumes are improving, while stablecoin market caps are rising rapidly, especially after the US presidential election.
**Key Adoption Metrics:**
* Crypto ETF inflows: among the most important metrics to watch
* Onchain activity: particularly notable for stablecoins
* Stablecoin market capitalizations: grew by over $25 billion since Trump's election win
The Importance of ETF Inflows
Crypto ETF inflows are considered a significant indicator of new funds and market participants entering the crypto space. The report highlights that these inflows have a strong effect on price performance, especially for Bitcoin (BTC).
**ETF Inflows: A Key Driver of Price Performance**
* In 2024, BTC ETF inflows accounted for ~46% of the variance in BTC price action
* $1 billion of inflows led to ~4.7% returns
Breaking Records: US Bitcoin ETFs
The recent surge in institutional inflows has caused a significant increase in net assets for US Bitcoin ETFs. On November 21, these funds broke the $100 billion mark in net assets for the first time, according to data from Bloomberg Intelligence.
**Record-Breaking Net Assets:**
* US Bitcoin ETFs reached $100 billion in net assets on November 21
* Institutional inflows continue to drive growth
Demand Shocks and Positive Price Action
Asset manager Sygnum Bank notes that surging institutional inflows could cause positive "demand shocks" for Bitcoin, potentially sending the price soaring in 2025. This highlights the potential for continued growth in digital assets driven by adoption.
**Positive Demand Shocks:**
* Surging institutional inflows could drive price increases
* Adoption remains a key driver of long-term performance
Onchain Activity and Stablecoins
The report also notes that onchain activity has accelerated, particularly for stablecoins. The combined market capitalizations of the top three stablecoins – Tether’s USDt (USDT), USD Coin (USDC), and Dai (DAI) – grew by over $25 billion since Trump’s election win.
**Stablecoin Growth:**
* Combined market capitalizations of top three stablecoins grew by over $25 billion
* Stablecoins are a key driver of onchain activity
DeFi and the On-Ramp
The report highlights that stablecoins serve as an on-ramp to decentralized finance (DeFi). This growth is particularly bullish for DeFi, as it enables greater accessibility and participation in the ecosystem.
**Stablecoins: The On-Ramp to DeFi**
* Stablecoins enable greater access to DeFi
* Growth in stablecoin market capitalizations bodes well for DeFi
Onchain Growth Metrics
Other measures of onchain growth are also outperforming, including activity on the Ethereum network and layer-2 scaling chains. The report notes that these metrics are up 210% versus 2023 averages.
**Onchain Growth:**
* Activity on Ethereum network and layer-2 scaling chains up 210% vs 2023 averages
* Onchain growth remains a key driver of digital asset performance
Wallet Growth
The report also notes that the number of large and small crypto wallets has increased slightly since the November US election. This highlights continued adoption and growth in the ecosystem.
**Wallet Growth:**
* Number of large and small crypto wallets increased slightly since November US election
* Adoption remains a key driver of long-term performance
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