What’s In Store For Traders In 2025?
2024 was an eventful year across the board. The London Stock Exchange saw nearly 90 firms depart. Gold outperformed the S&P 500 rising nearly 30%, and silver wasn’t too far behind. Bitcoin had a relatively modest year, by its standards, posting 150% gains, but 2024 also saw the introduction of spot ETFs for Bitcoin and Ether. Prices were driven by geopolitical factors like the US presidential race as well as Labour’s first budget in the UK, while the ongoing wars in Ukraine and Israel had significant influences.
2025 doesn’t look likely to be any quieter, either, with Trump set to take office in January and his de facto right-hand man, Elon Musk, already getting involved in global politics. All of these factors, and more, will impact traders over the next 12 months.
Cryptocurrency
Cryptocurrency had a relatively subdued 2024 by its standards. It continued to gain prominence, with more businesses now readily accepting digital currency than ever before. It is not only popular with eCommerce stores, where payment gateways can be used to simplify its acceptance, but it is becoming more commonly accepted by physical businesses.
It, along with the blockchain technology that underpins it, is also leading to innovations across the board. This has included the tokenization of physical assets and its implementation in mainstream gaming and the introduction of cashback casino websites that offer players regular money back on their deposits while providing instant withdrawals and a wide range of casino games.
Bitcoin posted 150% gains – significant movement in any other sector, but only middling by digital gold’s records. This year sees the “crypto President” taking office in the US, and he has promised sweeping changes to the cryptocurrency industry. His impending arrival has already led to the current SEC chair and crypto-sceptic, Gary Gensler, announcing that he will leave his post in January. A more sympathetic replacement is expected, with Trump’s nomination being that of Paul Atkins, who is considered a crypto-friendly option.
Most commentators expect 2025 to see further expansion of the crypto market. More ETFs may be accepted and launched, following on from Bitcoin’s new financial products. The likes of Ripple, Monero, Solana, Litecoin, and Hedera have been touted by various sources as the next single-crypto ETFs. Although there have been some calls for Dogecoin, due to Musk’s connections to the meme coin, this seems less likely.
Musk will continue to have a significant impact on crypto market prices. His intervention is at least partially responsible for DOGE’s rise to become the 7th largest cryptocurrency by market capitalization. A week ago, Trump changed his X handle to Kekius Maximum causing its price to rise from $0.012 per KEKIUS to momentarily nearly reach $0.40. He has since changed his name back and he has not indicated the reason for the name change.
Trump’s Tariffs
Trump’s return to the White House will have a major impact on investment markets. His first reign was shrouded in unpredictability and there’s little reason to expect things to be different this time around.
He hasn’t taken control yet but has already threatened to impose tariffs against various countries. In particular, he has threatened to tariff Canada and Mexico and, more recently, has threatened similar charges against Denmark and the rest of Europe as well as China.
Tariffs are also in keeping with Trump’s America First policy, which will see US companies that manufacture and trade primarily in the US likely see increased revenue, while overseas companies that are heavily reliant on the US market may experience losses.
Trump imposed tariffs during his first term. In particular, he added a 25% levy on certain Scotch whiskeys. The EU retaliated by imposing levies against US goods like Harley-Davidsons. Similar retaliatory tariffs are likely this time around, too.
It is worth noting that tariffs only apply to products, and not to services. As such, companies that expert services to the US will be less affected by these measures. The UK, for example, exports to the US, but the majority of those exports are service-based.
UK Struggle
Outside the US, the UK also had a politically turbulent 2024. Labour was voted into power on July 4 and the party has since gone on to bemoan a £22 billion black hole left by the previous government. Labour’s first budget has not been received very well, with spending decreasing and the country likely heading into recession in the coming months.
At the same time, the London Stock Exchange saw a mass exodus with 88 companies departing: the most since the global economic crisis of 2008. It’s unlikely that departures will continue at the same rate, but it has already left fairly slim pickings in the UK market.
A Continued Rise In AI
2024 was a big year for artificial intelligence. Generative AI has found use in creative industries, data analysis, and in a host of other settings. There’s no doubt it has the potential to change our lives, in many different ways, but modern AI is still in its infancy. There are various ways to invest in AI, including through the purchase of stock in companies that are directly part of the industry.
Semiconductor companies like Nvidia and AMD may, as a result, continue to see growth. Nvidia saw its revenue increase 126% year-on-year, while its stock value rose 140%. In the last 10 years, its stock has risen nearly 30,000% making it the best-performing stock over the period.
AMD’s rise of nearly 5,000% is also significant. While some cooldown is expected, if AI continues to develop at pace, and Nvidia and AMD chips are prominent in the development, investors can expect to see continued growth.
AI ETFs represent another good opportunity for potential investors, with shares in various companies affected by the AI industry. The likes of Nvidia and AMD are prominent in these ETFs, but they also offer inroads into companies that specialize in this emerging technology.
Cryptocurrency also offers another inroad into AI. AI cryptocurrencies have a market cap of nearly $40bn. NEAR, ICP and RENDER are the three biggest crypto coins currently. NEAR, in particular, enjoyed a significant price boost immediately following the US election and similar price increases could be seen in 2025.
Other companies are making massive investments in generative AI. Amazon, Microsoft, and Meta are known to have vested interests. And, while Apple has seen some teething problems with its AI implementation, it is a sign they, too, are investing in the technology. However, as AI progresses, we are likely to see new companies emerging so investors should be on the look out for new opportunities, as they present themselves.
Stock Rebounds
Stock markets are expected to rebound in 2025, starting with the S&P 500. The S&P is expected to reach 6,500 points by the end of the year, according to some analysts, which would represent a 9% increase. Others have an even more optimistic target of 7,000 points. The FTSE, which endured a torrid year of companies leaving the market, is expected to reach 8,500 points, an increase of around 5%.
Markets in the rest of Europe are expected to show positive returns, but these will likely fall some way behind the UK and especially the US. Although the Fed has predicted they will make just two cuts of a quarter point, Goldman Sachs has said it still expects three drops over the year.
In foreign exchange, the dollar is expected to rally due to loose fiscal policies and strict US immigration under Trump. The Euro is likely to weaken, and the Pound has already dropped to its lowest rate in a year at the start of January.
Crypto Regulations
Cryptocurrency does hold a lot of potential for investors, but it is highly volatile. This volatility can give light to substantial price increases, making it popular with day traders as well as long-term investors. One of the reasons for cryptocurrency’s volatility is the lack of regulatory measures. However, that is changing. The FCA, in the UK, has released its crypto roadmap, highlighting its plans to move forward with cryptocurrency regulations.
These regulations are likely to start with stablecoins. Stablecoins are different to other cryptocurrencies because they are pegged to the value of physical assets: most commonly, currencies like the US Dollar. This means they do not face the volatility of the rest of the market. They can offer a means of investing in foreign currencies and even traditional commodities, without having to dip into the forex or commodities markets.
CBDCs
Another area that is gaining a lot of attention is that of Central Bank Digital Currencies or CBDCs. These digital versions of fiat currencies are not true cryptocurrencies, because they are established and managed by central banks. They are not decentralized. However, they could act as a bridge between traditional currencies and cryptocurrencies and will bring greater acceptance of the idea of digital coins.
CBDCs could also mitigate some of the credit and settlement risks associated with foreign exchange trading.
A Return To Traditional Energy
Trump is a climate change sceptic. He doesn’t believe that the use of fossil fuels and traditional energy sources is a problem. As such, the US will likely take a step back from its move towards renewable energy sources and, instead, return to burning fossil fuels.
He recently urged the UK government to get rid of its wind farms and open up North Sea oil licensing once again. It is unlikely the UK government will acquiesce, but it shows what we can expect from a Trump administration.
Companies in the traditional energy sector, including major drilling companies, may see increased revenue as a result. Trump has been especially vocal in his condemnation of wind turbines. He criticized how the turbines overlooking his golf course in Scotland looked and has also claimed they kill whales and cause damage to people’s health.
Renewable Energy Will Continue To Grow
Despite Trump’s protestations, however, a lot of countries are concentrating on renewable energy sources. The war in the Ukraine highlighted global dependence on Russian oil and gas, and this forced European countries to look for new ways to generate power. One source that many countries turned to was that of renewable energy.
A lot of countries have pledged to become carbon neutral by 2050, although China, the world’s largest emitter, has only pledged to achieve this status by 2060. While that deadline is still two and a half decades away, governments are looking for ways to help them achieve the goal.
For the most part, this means using renewable energy sources like solar and wind power, but it may also see more nuclear power stations brought online. Companies in these sectors could see substantial growth in the coming years, even if the US turns its back on renewables.
The International Energy Agency predicts that in 2025 a third of electricity generated will come from renewable sources. As well as investing in the renewable energy companies themselves, individuals and businesses can also invest in companies surrounding the industry.
Vestas, for example, is the world’s largest wind turbine manufacturer, while Tongwei Solar is the world’s largest manufacturer of solar panels. The trick to investing in renewable energy is likely to be avoiding those companies that concentrate on the US and opting, instead, for global organizations while identifying the countries that are taking their environmental pledges more seriously than others.
One area of particular interest to spectators will be that of Electric Vehicles. Trump has criticized tax credits and other moves to help bolster the EV market. But Musk, who has the future President’s ear, is the owner of Tesla, the world’s second-largest EV maker.
Could their close relationship lead to Trump’s stance on electric vehicles softening? Or, could it lead to a public falling between the pair? Many political analysts believe it is only a matter of time before the pair come to blows, and EV production could be the spark that causes that falling out.
Blockchain Growth
Digital services continue to expand, and blockchain continues to expand the horizons of what is possible. Blockchain is a digital ledger that can be used to store any records or transactions. As well as being the technology behind Bitcoin and cryptocurrencies, it is used in many industries.
It is used in finance and to create smart contracts, but it is also being used in healthcare for the storage and transfer of patient records. It has even been used in real estate to tokenize properties, and this trend of tokenizing physical assets will become increasingly prominent.
Chivas Brothers started using blockchain in 2018 to track its casks of Scotch whiskey, and fine art can also be tracked in the same way. For investors in these assets, blockchain can be used to show provenance and for the digital transfer of goods. It can help reduce fraud, which is fairly common in these and many other physical investment types.
Tokenization is likely to continue to spread, especially in physical investments, and it is likely that we will see more blockchain companies floating in the future. Currently, only a handful offer public shares, leaving potential investors having to deal with the volatile cryptocurrency market.
A Busy January
January is going to see a lot of changes in the US which will, in turn, have a knock-on effect on the rest of the world. Trump is a divisive figure, even in the country where he was resoundingly voted in as the next President. He has claimed he can end the war in Ukraine in one day and, if he did, this would likely lead to the US minimizing the sanctions they have levelled against Putin’s Russia. This, in itself, could have a significant impact on global markets.
His introduction of tariffs, which seems highly likely given his recent statements, could also cause seismic shifts in certain industries, especially as a result of the retaliatory tariffs that would be imposed on the US. Trump is officially sworn in on January 20, which is the same day Gensler has said he will step down from his position at the head of the SEC.
The new chairperson won’t take over immediately, however, and even when they do, it will take time for changes to happen. As yet, it is unclear exactly what shape those changes will take. January is going to be a busy month and one that could set the tone for the next few years: not just in the US, but globally.
