Lack of Bitcoin allocation could be risky for nations in 2025: Fidelity

• Fidelity Digital Assets report suggests that several nations could adopt Bitcoin in 2025.
• The analysts predict that increased adoption could lead to an evolution in the stablecoin sector.
• They also foresee mature digital assets launching their native blockchains in 2025.

Fidelity Digital Assets' Look Ahead report for the crypto market in 2025 highlights key trends expected for the year, including increased Bitcoin adoption by governments worldwide, broader use cases for stablecoins and more app blockchain launches.

Fidelity analysts release 2025 forecast for the crypto market

In its 2025 outlook report, Fidelity Digital Asset analysts stated that it anticipates 2025 to be Bitcoin's year of acceptance and adoption among federal governments of the world.

"We anticipate more nation-states, central banks, sovereign wealth funds, and government treasuries will look to establish strategic positions in Bitcoin," wrote Fidelity's Matt Hogan.

It also shared the risks of choosing not to adopt Bitcoin, considering factors such as rising inflation and monetary devaluation. 

"Facing challenges such as debilitating inflation, currency debasement, and increasingly crushing fiscal deficits, not making any bitcoin allocation could become more of a risk to nations than making one," Hogan added.

Fidelity analysts also discussed the potential impact of stagflation on Bitcoin's price following the recent changes in the US economy. The effect of such would be dependent on fiscal and monetary responses from the government.

"If fiscal and monetary institutions chose to fight the "stag" part of the problem through increased spending or monetary tools, bitcoin could potentially perform well, albeit likely with another lag," wrote Fidelity's Chris Kuiper. "However, if controlling the "flation" part becomes the higher priority and is addressed with significant reductions in the money supply, liquidity, and fiscal spending, then bitcoin could potentially face headwinds on a relative basis."

Stablecoins continue to show strong potential

Fidelity believes that stablecoins have the potential to evolve further as a significant use case, judging from their impressive performance in 2024. However, the analysts emphasized that stablecoins are not yet fully mature products.

To reach its full potential, Fidelity analysts highlighted the need for additional measures to address counterparty and compliance risks.

They also stressed the importance of enhancing integration with traditional payment and lending systems, improving cross-chain interoperability and meeting the increasing demand for yield-bearing assets. 

They argued that these developments will be essential for refining the utility and adoption of stablecoins within the broader financial ecosystem.

Mature digital assets could begin building native blockchains

Fidelity analysts anticipate significant innovation and growth in the DeFi sector throughout 2025, driven by maturing market conditions and increased interest from traditional finance (TradFi). 

A prominent trend expected to take place is the rise of mature digital asset projects launching their native blockchains. Fidelity predicts that projects that have already achieved success and adoption in their niches will increasingly turn to blockchains to drive scalability and optimum performance. 

They stated that such a move could help projects gain greater control over their ecosystems and capture more value through transaction fees, governance participation, and tokenomics design.

A notable example is dYdX, a decentralized exchange specializing in perpetual derivative contracts, which successfully launched its own dYdX chain using Cosmos' software development kit (SDK).

Uniswap is also planning to launch Unichain as an Ethereum Layer-2 in the coming months.