Tokenization, stablecoins, institutional adoption take stage

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The digital asset market doubled its market capitalization in 2024, peaking at $3.7 trillion as exchange-traded funds (ETFs) and the Trump victory in the U.S. elections sparked a bull rally. A new report by New York asset manager WisdomTree predicts another blockbuster year, with stablecoins, tokenization, and institutional adoption set to dominate the sector.

The United States Securities and Exchange Commission (SEC) approved BTC spot ETFs in January 2024, and by the end of the year, they had drawn over $120 billion from investors. WisdomTree expects this adoption to continue this year, with FOMO (fear of missing out) playing the biggest role.

“Institutional adoption is creating a ripple effect, forcing hesitant players to reconsider. Portfolios with BTC allocations are consistently outperforming those without, highlighting its growing importance,” the report stated.

WisdomTree is among the companies that launched a BTC ETF last year, although its BTCW ETF is the smallest in the U.S. market, with $422 million in assets under management. 

The company expects American regulators to approve spot ETFs for other digital assets under Trump. Ultimately, it will rub off on European regulators, who have been reluctant to approve the ETFs despite their success in the U.S., the report says.

“This next wave of altcoin ETPs will expand the diversity of crypto investment opportunities and further integrate cryptocurrencies into the global financial system.”

Stablecoins will also take a more prominent role in the blockchain sector this year, WisdomTree says. In 2024, the stablecoin market cap surged from $130 billion in January to $205 billion by the end of the year. Stablecoins have expanded beyond ‘crypto’ trading and are now being used by millions to make cross-border payments, especially in developing economies where conventional channels are expensive and difficult to access.

“With institutional adoption rising and DeFi applications booming, stablecoins will serve as the backbone of a seamless, interconnected financial ecosystem,” the report says.

Tokenization will also take center stage by “redefining how we think about ownership and value.” Tokenization remains one of a few blockchain applications with the backing of every other stakeholder, from institutions and retail to legislators and regulators.

“In 2025, tokenization will expand dramatically, empowering investors to own fractions of high-value assets. The integration of tokenized assets into DeFi will unlock new financial opportunities, such as using tokenized real estate as collateral for loans. As tokenization matures, it will transform industries ranging from private equity to venture capital, creating a more inclusive and efficient financial system,” the report noted.

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