Crypto got everything it wanted in 2024
12/26/2024 16:16
Crypto was once a fringe sideshow for the investing public, a concern for DC policymakers and a subject of ridicule for top Wall Street figures. That changed in 2024.
Crypto was once a fringe sideshow for the investing public, a concern for D.C. policymakers and a subject of ridicule for top Wall Street figures.
That changed in 2024.
Digital assets such as bitcoin (BTC-USD) can now be owned and traded by regular Americans like a stock. Some of the biggest players on Wall Street are hailing it as a wise investment. And an incoming administration in Washington, D.C., is promising major legislative changes to support the industry.
Crypto's widespread acceptance translated into major gains for investors who were along for the ride.
Those holding bitcoin are up 126% since the beginning of the year as the price of the world’s largest cryptocurrency set new records and surged past $100,000 following the election of Donald Trump. The market value of all crypto swelled by nearly $1.7 trillion, according to Coinmarketcap.
"It's all lining up for the crypto industry right now," Ian Katz, a managing partner with Capital Alpha, told Yahoo Finance.
Enthusiasts don’t see the rally ending anytime soon.
This time next year, "we're going to have the same conversation, that bitcoin has had an incredible run," Bitwise chief investment officer Matt Hougan told Yahoo Finance. Bitwise expects bitcoin to cross $200,000 before the end of 2025.
One of the biggest Wall Street beneficiaries of this shift, BlackRock (BLK) CEO Larry Fink, was once a "proud skeptic" of bitcoin. The boss of the world’s largest money manager has evolved into one of its best-known advocates.
"I was a proud skeptic, and I studied it, learned about it, and I came away saying, 'OK, you know, my opinion [for] five years was wrong,'" Fink said earlier this year while discussing his previous views with CNBC.
His firm, BlackRock, now recommends intrigued investors put "as much as 2%" of their portfolio into bitcoin.
"We believe bitcoin is an asset class in itself; it is an alternative to other commodities like gold," Fink told analysts during an October earnings call.
BlackRock and 10 other money managers such as Fidelity Investments and Franklin Templeton got the green light in January to launch spot bitcoin exchange-traded funds, allowing everyday investors to get exposure to the world’s largest cryptocurrency without having to own it.
BlackRock's ETF, IBIT, then became the fastest-growing ETF in history. The 11 ETFs that launched amassed $100 billion in assets under management as of Dec. 18, according to JPMorgan Research.
"You had folks who would have been allocating to bitcoin, but because there was no traditionally trusted, easy, efficient way to do it for their circumstances, they weren't in it," Robbie Mitchnick, BlackRock's head of digital assets, told Yahoo Finance. "And then the ETFs changed that."
BlackRock’s embrace of crypto (it also launched a smaller spot ether ETF in late July) coincided with an election year where pro-crypto congressional candidates received lots of industry support. Some of crypto's biggest players — including Coinbase Global (COIN), Ripple, and venture firm Andreessen Horowitz — spent some $135 million via super PACs.
As a candidate, Trump also made a number of promises to the industry. He pledged to fire SEC Chair Gary Gensler, one of the industry’s greatest antagonists; appoint a crypto presidential advisory council; and establish a "strategic national bitcoin stockpile" with the help of Congress.
Whether the president-elect will make the US government a bitcoin holder or even buyer remains a hot debate.
But Gensler has already given his resignation notice and will be replaced by well-known crypto lawyer Paul Atkins if confirmed. For years, Atkins has made it clear he favors clearer regulations of cryptocurrencies that don’t stifle innovation or impose unnecessary oversight.
Trump has also appointed venture capitalist David Sacks to the role of AI and crypto czar. Through his venture firm, Sacks has already backed a number of crypto and AI firms.
Some other Trump Cabinet appointees have also in the past disclosed or discussed their exposure to crypto.
If those executive branch appointees weren't enough, the industry is also eagerly awaiting what will easily be the most pro-crypto Congress in history.
"People are shocked by it because we're a new industry, and we're newly influential in Washington," Nic Carter, a partner and co-founder of crypto venture firm Castle Island Ventures, told Yahoo Finance.
The GOP is expected to push forward pro-crypto legislation that would offer clear regulation of stablecoins and the broader crypto market and even give big banks a better route to interact with digital assets.
Carter has met with Republicans to discuss the crypto world's lack of US banking access.
"We were an industry that's been picked on relentlessly for the last four years, and it's only natural that we would try and protect our interests," he added.
But many regulated US banks still can’t touch crypto, Goldman Sachs CEO David Solomon noted at a recent Reuters conference.
"Everyone's speculating as to how that regulatory framework will evolve, but it's still unclear how the regulatory framework is going to evolve," Solomon added.
It’s still anyone's guess how long it could take for the first piece of crypto legislation to land before the House and Senate and then Trump.
"I would just caution people, if you think on Jan. 20 a switch is going to flip and everything's going to be better and roses for bitcoin and the digital asset community, it's just not how Washington works," Anthony Scaramucci, a crypto investor who worked in Trump’s first administration, told Yahoo Finance.
These unknowns aren't giving much pause to some crypto evangelists though.
"Every day for the past four years I've said, buy bitcoin, don't sell the bitcoin. I'm going to be buying more bitcoin,” MicroStrategy chairman and staunch bitcoin bull Michael Saylor told Yahoo Finance this month.
“I'm going to be buying bitcoin at the top, forever."
Even some remaining skeptics on Wall Street admit it would have been smart to get in earlier.
“Of course, I wish I bought something that trades at 100 times the price it traded at a few years ago, right?” Citadel CEO Ken Griffin said at the NYT DealBook Summit earlier this month.
“We all have FOMO.”
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance .
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