Why 2025 is set to be the year of the altcoin

• The crypto industry could be primed for "alt-season" in 2025, Citi said this week.
• Sources point to altcoins' relative outperformance as bitcoin's rally has slowed.
• Altcoins will likely get an outsize boost from policy support under Trump.

Last year saw a breakout surge in bitcoin, but 2025 is set for outperformance in other segments of the crypto market, industry experts say.

With bitcoin trading in a sideways range in recent weeks and traders looking for fresh catalysts to push the token higher, analysts and commentators say altcoins—any cryptos that aren't bitcoin, essentially—are poised to rally this year on the promise of less regulation of digital assets under Donald Trump.

Bitcoin soared 116% in 2024, riding a wave of enthusiasm for developments such as the approval of bitcoin ETFs, the halving event in April, and Trump's election win in November.

Bitcoin crossed the $100,000 threshold for the first time and gained 51% in just a month. Altcoins similarly surged, with ethereum up 59%, and other tokens like XRP, solana, and tron also seeing strong gains.

But bitcoin's rally has slowed following hawkish commentary from the Federal Reserve, and other crypto coins are showing signs of continued momentum.

The hawkish tilt from the central bank triggered a broad market selloff in US stocks after their November rally, and bitcoin wasn't spared, losing around 15% in the last two weeks of the year from its peak. The currency's spot ETFs similarly saw huge outflows, losing a record $680 million in the day after Fed officials released their new rates guidance, according to data compiled by Bloomberg.

"Given that Ethereum is the only other major cryptocurrency to have been approved as the basis for spot ETFs, it was a likely rotation target," the Citi analysts said in a Monday note.

Other cryptos have seen even greater outperformance, growing their shares of crypto's overall market cap. The bank added that respondents to a recent survey see 2025 as a year of outperformance for altcoins in particular.

"Other cryptocurrencies and altcoins have outperformed even more meaningfully, suggesting that some market participants are counting on an 'alt-season' coming to fruition in 2025 following a strong year for Bitcoin," the analysts said.

Experts say the diverging moves in bitcoin and other cryptos are the result of a fundamental difference in what moves the two segments of the market.

Bitcoin has fairly robust regulatory support, with futures contracts, ETFs, options, and more. As a result, CoinDesk Indices' Andrew Baehr says any upward price moves are a result of greater enthusiasm for more bitcoin adoption in general.

But altcoins have occupied a relatively gray area and have been targeted over the years by the Securities and Exchange Commission, which has deemed many cryptos to be unregistered securities.

Therefore, the prospect of favorable crypto regulation will be the main driver of price moves for altcoins in 2025. This was on display when the token XRP, which has been in the crosshairs of a lawsuit from the SEC in recent years, rallied sharply following Trump's win and jumped again after SEC chief Gary Gensler announced he would resign when Trump takes office.

With the market widely expecting the SEC to back off in 2025, more crypto projects will come online, Baehr says. Decentralized projects powered by stablecoins will need a blockchain to run on, and ethereum has emerged as a likely candidate.

"More decentralized projects are going to launch in the United States, and those projects are going to need a blockchain," Baehr told Business Insider, adding, "Ethereum started to move partly in concert with all of crypto moving up after the election, but really for a more specific reason, that the outlook for more crypto projects under the new administration became much brighter, much more optimistic."

Fresh policy support would help cement altcoins' legitimacy in the market, likely boosting prices, the Citi analysts said.

"Bitcoin is classified as a commodity and already has spot ETFs and futures as 'trad-fi' trading vehicles. In contrast, the definition of other crypto assets is more uncertain," the Citi analysts said, adding, "The range of investing options is also more limited."

The analysts added that further policy support will provide an outsized boost to altcoins compared to bitcoin going forward.