The trajectory of cryptocurrency in 2025 can be summarized in a single dramatic arc: triumph followed by humiliation. The year began with euphoria as Bitcoin surged over $109,350 on Trump’s inauguration day, driven by political tailwinds and promises of regulatory clarity. By October, however, the market had discovered a sobering truth – crypto had finally integrated into the broader financial system, but not in the way evangelists had envisioned. Then came October 10, when a 14% single-day drop from about $112,000 to $104,782, along with $19.13 billion in liquidations across 1.6 million traders, punctured the myth of crypto as a hedge.
The October shock exposed crypto’s vulnerability to macro shocks while regulators moved toward legitimacy. In July 2025, the GENIUS Act established a framework for payment stablecoins with 1:1 reserves, asset segregation, and custody requirements, exempting compliant issuers from SEC/CFTC oversight. The act did not create a permissionless environment; it created a permissioned one with clear roles for banks and regulated issuers. Meanwhile, the SEC introduced an express-lane ETF process reducing reviews to 75 days, enabling rapid expansion beyond Bitcoin and Ethereum and giving rise to the “Mullet Architecture.”
The regulatory pivot, however, was a victory for legitimacy over decentralization, benefiting established financial institutions and stablecoin issuers. By year-end, U.S. spot Bitcoin ETFs held over 1.36 million BTC (about 7% of circulating supply) and the stablecoin market cap surpassed $300 billion, led by USDT and USDC. In 2025, stablecoins processed $46 trillion in total transaction volume (or $9 trillion adjusted for bot activity) over a 12-month period, with September alone reaching $1.25 trillion per month approaching the scale of the U.S. ACH network. These figures dwarf PayPal’s volumes and approach Visa’s scale.
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