Predicting the trajectories of various cryptocurrencies is about as easy as picking stock market winners—probably harder, because cryptocurrency markets can be volatile and it’s often difficult for casual investors to understand the mechanisms and features built into those products. But one thing appears certain: in 2025, cryptocurrencies are likely to gain greater acceptance and earn some long-hoped-for support from U.S. government regulators.
According to a 2024 report by Triple-A, global cryptocurrency ownership has already penetrated to 6.8 per cent, with more than 560 million people owning crypto worldwide. Wealthy investors have already staked a claim in cryptocurrencies, albeit a small one. The North America Family Office Report 2024 by Campden Wealth and RBC indicates that 16 per cent of North American family offices are invested in cryptocurrency, although merely seven per cent intend to increase their exposure. Canadian Family Offices’ 2024 survey of Canadian multi-family offices found similarly minimal exposure to crypto: 85 per cent of MFO respondents said they do not recommend cryptocurrencies in client portfolios, and nearly three-quarters had no crypto holdings at all.
Could that reluctance to embrace crypto change in 2025?
“Major financial institutions have launched cryptocurrency investment products, which will assist in achieving mainstream acceptance,” says Paul de Sousa, head of wealth management, sales and development at Sightline Wealth Management, an independent wealth management firm specializing in alternative investment strategies. “While some nations, like El Salvador, have adopted Bitcoin as legal tender, others like China have banned it, showing the polarizing global view. Companies like Tesla, Microsoft and Shopify accept crypto for payments, further integrating it into the global economy.”
The sentiment is optimistic that Trump will assemble a crypto-friendly cabinet.
Paul de Sousa
While the U.S. is often seen as a financial products innovator, cryptocurrencies have seen an uncertain regulatory environment in recent years. Outgoing Securities and Exchange Commission (SEC) chair Gary Gensler had a contentious relationship with the crypto sector, and was widely seen as an antagonist, cracking down on industry players and suing companies for fraud and money laundering. That includes high profile enforcement cases against Binance and Coinbase.
At the same time, the Commodity Futures Trading Commission (CFTC) continued to vie for the right to become the regulator of choice for cryptocurrencies. During the high-profile case against officers of cryptocurrency exchange FTX, both agencies laid dueling charges against its officers.
The re-election of Donald Trump as president may go a long way towards settling those issues. Trump has vowed to make the U.S. the world’s crypto capital. Gensler is resigning as the new president takes office, and his replacement is Paul Atkins, an outspoken supporter of digital assets. Prominent pro-crypto hedge fund manager Scott Bessent has been tagged as Trump’s secretary of the Treasury, while Trump is expected to choose a crypto-friendly chair to head the CFTC, a move widely seen by the industry as a herald of unified federal policy.
“The sentiment is optimistic that Trump will assemble a crypto-friendly cabinet and that there will be a more laissez-faire approach to economic policy,” de Sousa says. “Trump wants to restore U.S. dollar reserve currency status and may even create a bitcoin reserve. If the SEC under new leadership clarifies the status of cryptocurrency coin XRP, or adopts a more crypto-friendly approach, it could set a precedent, positively affecting other cryptocurrencies.”
There is currently no shortage of cryptocurrencies for investors to choose from, with Bitcoin dominating the field with a market capitalization of US$1.9 trillion (as of Dec. 20, 2024), followed by Ethereum (US$407 billion) and Tether (US$141 billion) to round out the top 3.
de Sousa notes, however, that all cryptocurrencies are not alike and that investors and their advisors need to have a firm understanding of their characteristics, use cases and utility before committing to an investment decision.
Ethereum, for example, supports a wide range of applications through its smart contract functionality, while Dogecoin was initially created as a meme but now sees limited transactional use. Projects with active developer communities, regular updates and strong roadmaps—such as Ethereum’s transition to Ethereum 2.0—indicate greater reliability. de Sousa also suggests potential investors look at coins with higher market caps and liquidity, as they tend to have lower volatility and are easier to buy and sell.
“Lastly, assess technological advantages, such as speed, scalability and security,” he says. “For instance, Solana is known for high transaction speeds, whereas Bitcoin prioritizes security and decentralization. Ethereum is highly regarded for its robust ecosystem and smart contract capabilities, and it powers much of the DeFi [decentralized finance] and NFT [non-fungible token] space. Cardano, on the other hand, is marketed as a scalable and sustainable blockchain, with a focus on academic research and peer-reviewed development.”
While the biggest cryptocurrencies may be familiar, there are literally hundreds of additional meme coins and aptly dubbed “shitcoins” that offer little to no value and no discernible purpose. While the Hawk Tuah coin declined precipitously in value following its recent launch, even Fartcoin briefly crested US$1 billion in valuation.
Ultimately, the value of any currency, including cryptocurrencies, will be based on continued acceptance by those who invest in and use them. Currencies such as the Canadian and U.S. dollar are also backed by a promise of the governments of both nations to back them, something cryptocurrencies obviously can’t offer.
Crypto doesn’t do anything, earns nothing, does not pay a dividend or interest, and you can’t even eat it.
Mark Yamada
Supporters say that this doesn’t mean cryptocurrencies lack underlying value, while detractors see these products as pure speculation plays.
Some investment professionals, including Mark Yamada, president and CEO of PUR Investing Inc., remain skeptical. He asserts that while blockchain technologies hold promise, cryptocurrencies have no economic value.
“Cryptocurrency is the millennial version of the tulip bulb mania of the 17th century with tulips at least offering an annual display of beautiful flowers,” he says. “Crypto doesn’t do anything, earns nothing, does not pay a dividend or interest, and you can’t even eat it. It’s speculation like baseball cards and Beanie Babies. It has been equated to gold as an inflation hedge, but that has been disproven—and at least one can fashion gold into jewelry.”
de Sousa disagrees, noting that while the value of cryptocurrencies can fluctuate according to market sentiment, scarcity and level of adoption, their unique characteristics represent underlying value.
“Look at their utility in transactions, stability and acceptance,” he says.
Michael Zagari, investment advisor and associate portfolio manager at Wellington-Altus, says one underlying value of Bitcoin is its role as a trusted alternate payment rail to transfer wealth across the globe.
“In Canada, we’re privileged to be able to send money back and forth in e-mail transfers that cost almost nothing,” he says. “For many countries, those transfers are very costly. Bitcoin is also a store of value. In countries such as Argentina, with out-of-control inflation, people are more encouraged to spend their money than to save it because there’s no valid storage of value in their currency. Why not provide an alternative that’s accessible through a mobile device or Internet connection?”
The best proof that Bitcoin represents a store of value and a hedge against inflation? Zagari explains that Canadians will require more Canadian dollars to buy a house today than they did a decade ago—but less Bitcoin.
Arthur Salzer, chief executive officer and chief investment officer of Northland Wealth Management, says his was among the first Canadian investment firms to steer family clientele to Bitcoin in 2019, following two years of research.
“When we looked at the risk and return profile of Bitcoin, we thought the best place for it was a tax-free savings account,” he says. “We thought the probability of Bitcoin going to zero was low and the probability of Bitcoin going to hundreds of thousands of dollars was quite high, so many of our families now have very valuable TFSAs.”
A 2023 Crypto Asset Survey by the Ontario Securities Commission notes that 65 per cent of those who owned crypto assets or funds in 2023 were recommended to buy them by their financial advisor—up from 53 per cent in 2022.
Zagari says he first incorporated Bitcoin into his investment models in 2021 when Canada became the first country to offer Bitcoin ETFs, following approval by the Ontario Securities Commission.
He notes, however, that seven to 10 per cent of his clients admitted they were already investing in crypto outside their managed portfolio.
“What surprised me most was that the more conservative investors had researched Coinbase, understood how to use it and then started buying tokens on the platform,” he says. “I couldn’t give them advice on an investment I wasn’t managing, but I asked them to tell me a bit more about why they bought it. About 50 per cent of it was speculation and 50 per cent believed that cryptocurrency could change the world. I had one client that had no appetite for risk and she bought crypto assets on her own. It convinced me that if you don’t have this conversation about cryptocurrency with clients, they might go out and buy it on their own.”
Educating the client is paramount before committing to a crypto investment, he says.
“Advisors need to understand what the investor is buying and what the pros and cons are,” he says. “I encourage advisors to broaden their education above and beyond KYC [know your client] and KYP [know your product] requirements. I think advisors should dig deep and understand the underlying technologies of the companies that they’re representing.”
Zagari notes that specific use cases have the potential to drive significant value for the cryptocurrencies on which they’re based. Solana, for example, is focusing on micropayments and the ability of its blockchain to process transactions faster than Ethereum and more cheaply than credit cards. If successful, Solana will compete with major credit cards that will have to lower their prices, improve their technology or partner with them.
“Usually, smart money gets involved in something that’s exciting and big ahead of the trade, and that could be a family office or an institution,” Zagari says. “Bitcoin was the first time that the retail investor got it right and the institutions got it wrong. The way family offices have managed their money for the last 20 years has gotten them so far, but technology is changing so quickly that the framework of how they assess the risk and opportunities involved with intangible assets and network effects needs to be re-evaluated.”
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