2024 was a breakthrough year for crypto, with new record-breaking highs and a flood of institutional participation fueled by ongoing regulatory progress. What does Luno, South Africa’s leading cryptocurrency app, expect for 2025?
Christo de Wit, Luno’s country manager for South Africa, explains what the business forecasts.
Digital assets in investment portfolios
Due to heightened institutional investment in crypto and the launch of Bitcoin spot ETFs in 2024, there was an uptick in Ethereum ETFs. Eight were approved during the year, albeit with less activity than Bitcoin spot ETFs. Crypto enthusiasts predict that the SEC’s approval of Bitcoin and Ethereum could unlock approvals for these traditional investment products for other smaller-cap crypto assets in 2025.
Legislation
Solid regulatory foundations give institutions greater confidence in integrating crypto into their operations. This year, the crypto industry anticipates additional vital legislation, such as the upcoming exchange control regulation, that promises to further integrate digital assets into the broader South African financial system.
If 2024 was the year institutions entering the crypto space took the time to understand new regulations, how to integrate crypto, assess the risks, and set up their operations properly, 2025 will be the year we see much of this work come to fruition.
AI and crypto convergence
AI’s strengths in automation and data analysis align perfectly with the foundations of cryptocurrency: programmable money or data itself. AI adoption by users and its spread across industries will likely continue in 2025, including the crypto industry.
AI is also transforming decentralised systems. Machine learning algorithms are optimising smart contracts, enhancing network security, and even contributing to consensus mechanisms. Additionally, decentralised data marketplaces are emerging, allowing individuals to securely sell their data to train AI systems while maintaining control over how their information is used. This evolution marks a significant shift, where AI and decentralisation converge to build more efficient, transparent, and decentralised systems.
The continued tokenisation of assets and everyday things
Tokenisation converts real-world assets like real estate, stocks, or commodities into digital tokens on a blockchain. This makes traditionally hard-to-sell assets easier to trade and opens up investment opportunities for a wider range of investors. Big players like BlackRock are leading the charge, launching tokenised funds such as BUIDL, which raised $240 million in its first week. BUIDL operates on the Ethereum blockchain and allows investors to earn interest by investing in assets like cash and US Treasury bills.
Experts say the market could be worth trillions by 2030, creating new opportunities for investors and platforms.
Inflation and interest rates in the US
Interest rate reductions in the US at the end of 2024 marked a new approach. According to the CME FedWatch Tool, most investors expect a sustained softer approach to monetary policy and continued low interest rates into 2025.
The full impact of the 2024 policy shift and lower interest rates remains to be seen. Its true effects could unfold well into 2025, potentially creating a supportive backdrop for riskier assets. Or it could not, especially if inflation keeps ticking upward. The one certainty is that investors will watch the Fed very closely to see how their decisions impact risk-on markets like crypto. Historically, monetary easing has buoyed assets considered higher risk but with more attractive returns, such as stocks and crypto.
Ethereum continues to adapt for Web3 and DeFi
The first smart-contract cryptocurrency network has seen a huge increase in competition since it launched in 2015, with many of its rivals claiming to be faster and cheaper. Developers have been coming up with ideas about how to make the network more efficient as decentralised finance (DeFi) continues to evolve and gain adoption. Ethereum’s development trajectory in 2024 centred on the Pectra upgrade, is expected to roll out sometime in 2025. This update improves scalability, security, and usability, addressing long-standing challenges for developers and users.
These advancements are expected to support DeFi and NFT ecosystems by reducing transaction costs and improving efficiency. Enhanced cryptographic protocols will also provide stronger safeguards for smart contract execution.
As Ethereum continues to evolve, these updates will likely solidify its position as a foundational layer for Web3 development, fostering growth in DeFi and other emerging use cases in 2025.
“We continue to see signs that digital assets are maturing and expect additional use cases to emerge. No doubt crypto will continue to shake up the traditional financial system in innovative ways in 2025,” concludes de Wit.
Christo de Wit, Luno’s country manager for South Africa
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