Market Q4 Review: Commentary on the 2024 U.S. Election and the Outlook for 2025

14.01.2025

Market Q4 Review: Commentary on the 2024 U.S. Election and the Outlook for 2025

As we step into 2025, the implications of the U.S. election outcome and other key developments are starting to take shape, influencing expectations for the year ahead. Thankfully, our accomplished portfolio manager, Štefan Duliak, has stepped up to provide some much-needed insights to help you start the year on the right foot.

The outcome of the 2024 U.S. election—with Donald Trump securing the presidency—represents a pivotal turning point for markets. We anticipate heightened volatility as the new administration’s economic policies, including broad-based import tariffs, corporate and individual tax reforms, and significant regulatory rollbacks, may simultaneously stimulate domestic production and risk fueling inflationary pressures.
While these measures could potentially boost U.S. growth, they also introduce a complex environment in which asset prices may rise in tandem with inflation—leading investors to navigate a far more uncertain macroeconomic landscape.

Meanwhile, China continues to grapple with decelerating growth, subdued inflation, and ongoing stimulus measures aimed at reigniting economic activity.
Taken together, these global crosscurrents increase the potential for volatility. The bond market has already reflected shifting sentiment, with the 10-year yield rallying over 100 bps since the Federal Reserve’s “pivot” in September 2024.
What began as expectations for immediate rate cuts has morphed into a consensus that the Fed may remain more hawkish than originally forecast, a disconnect that highlights the market’s anxiety over a potential inflation spiral.

Implications for Crypto Adoption

On the upside, President Trump’s public statements around establishing a U.S. Bitcoin strategic reserve and appointing crypto-friendly regulators could catalyze significant tailwinds for digital assets.
His personal interest in cryptocurrency further underscores the administration’s potential to foster a more favorable regulatory framework. In response, crypto markets have seen robust momentum, with Bitcoin and a broad range of altcoins surging, and total value locked (TVL) in DeFi nearing its previous bull-market peak at around USD 300 billion.
Nation-states increasingly appear to be competing to secure a larger share of Bitcoin and top crypto talent, adding another layer of acceleration to the sector’s adoption narrative.

However, investors must remain vigilant. U.S. policy decisions during the pivotal first 100 days of the new administration will be closely scrutinized and could either amplify or dampen the crypto rally.
Monetary policy has transitioned from a tightening phase to a more stable or even easing bias, while fiscal measures are simultaneously becoming more expansionary.
Although this environment is generally supportive for risk assets, the potential for resurgent inflation poses a notable risk for said assets.

Expectations for H1 2025 and Beyond

Our base-case view is that early 2025 could usher in an “alt season,” particularly for projects in the AI, DeSci, and DeFi sectors.
By late 2025, we foresee a narrower rally centered on select, high-conviction narratives. Key trends and themes we anticipate for the coming year include:

Solana’s Continued Growth

Solana’s intuitive user experience positions it favorably to capture mainstream crypto adoption.

AI Mania

The ongoing “AI mania” in traditional finance is spilling over into crypto, inflating valuations of AI-focused crypto projects.

DeSci on the Rise

Decentralized science (DeSci) is still at an early stage, but with low penetration and strong potential, the sector is poised for outsized growth.

Persistent Memecoin Popularity

Although often speculative, memecoins are expected to retain investor attention throughout the bull cycle, further driving market participation.

Real-World Assets (RWA)

Growth Continued innovation will enable on-chain access to “traditional” yields (e.g., U.S. Treasuries), expanding DeFi’s current size.

Adoption of DeFi

DeFi protocols have matured to become stable businesses and will soon also include meaningful economic mechanisms, offering profit distributions—akin to dividends—to token holders.

Accumulation of Bitcoin 

As most, we expect high-profile disclosures from major corporations or even nation-states announcing new Bitcoin allocations.

Conclusion and Market Outlook

Overall, 2025 may well be defined by significant volatility, driven by shifting global monetary and fiscal policies, as well as evolving crypto market dynamics.
While this environment could create opportunities for savvy investors, it also increases the likelihood of cyclical downturns, followed by potential final rallies for the most resilient crypto assets.
We maintain a generally optimistic stance for 2025, underscored by the belief that as challenges emerge, they may ultimately pave the way for long-term, fundamental growth in digital assets.
As always, we will monitor macro developments and policy actions closely, adjusting our portfolio strategy to navigate and capitalize on this evolving landscape.