Virtual Asset Market Analysis and Outlook: April 13, 2025

Date: April 13, 2025

Author: Financial Technology Analyst

Executive Summary

As of April 13, 2025, the global virtual asset market is facing a complex phase characterized by high volatility driven by macroeconomic uncertainties and policy changes. Notably, shifts in U.S. trade policy have triggered sharp price fluctuations across the market, indicating that the virtual asset market remains highly sensitive to external shocks. Amidst this volatility, Bitcoin (BTC) and Ethereum (ETH) are exhibiting divergent fund flows and market expectations. Bitcoin is facing price correction pressure, accompanied by continued outflows from spot ETFs. Conversely, Ethereum is seeing inflows into its spot ETFs, driven by anticipation surrounding the upcoming 'Pectra' upgrade, showcasing a differentiated market dynamic.

The regulatory landscape is at a significant turning point. The U.S. is moving towards regulatory clarity, potentially fostering institutional participation, while the European Union (EU) is fully implementing its comprehensive MiCA regulatory framework. South Korea is also pursuing a phased regulatory approach, gradually allowing corporate participation in the market. These regulatory shifts, coupled with regional market characteristics, are expected to deepen the diversification of the global virtual asset market.

Technologically, the Ethereum Pectra upgrade is generating expectations for improved user experience (UX) and scalability. The decentralized finance (BTCFi) ecosystem on the Bitcoin network is experiencing rapid growth, fueled by the rise of Layer 2 solutions and native staking protocols. Real World Asset (RWA) tokenization is also emerging as a significant growth driver, bolstered by the increasing participation of major financial institutions.

Institutional investor interest persists, with strategies becoming more sophisticated, moving beyond simple investment to include DeFi participation and stablecoin utilization. However, despite these positive prospects, market volatility, regulatory uncertainty, and evolving security threats (hacking, money laundering, etc.) remain significant risk factors.

In conclusion, the 2025 virtual asset market is projected to unfold within a complex environment where opportunities from technological innovation and accelerated institutionalization coexist with risks related to macroeconomic factors and regulations. Market participants must consider these multifaceted factors comprehensively to formulate prudent approach strategies.

I. Global Virtual Asset Market Overview (April 2025)

A. Recent Market Trends and Sentiment

In early April 2025, the virtual asset market experienced extreme volatility. Some analysts suggested this period could be recorded as one of the most "violent" months in virtual asset history, reminiscent of the market shock during the early stages of the COVID-19 pandemic in 2020.[1] This market instability was primarily linked to macroeconomic pressures and policy changes related to trade tariffs by the U.S. administration.[1, 2, 3, 4, 5, 6, 7] Early in the month, major virtual assets like Bitcoin, Ethereum, Ripple (XRP), and Solana (SOL) suffered sharp price declines [1, 3, 5, 8], followed by short-term rebounds triggered by policy adjustments, such as President Trump's announcement of a tariff deferral.[1, 2, 7]

Observing the market situation from April 11th to the present (April 13th), despite the recent rebound, overall consolidation and potential bearish signals are detected. Bitcoin briefly recovered but retreated below key price levels (international price around $70,000, domestic price around ₩118 million), coinciding with persistent outflows from U.S. Bitcoin spot ETFs.[2] Ethereum also continues its unstable trend, fluctuating between $1,500 and $1,600.[9, 10, 11, 12, 13] The total virtual asset market capitalization has shown recovery since the lows of late 2022 but remains below the peak of 2021.[14] While long-term market size growth potential forecasts exist (e.g., Fortune Business Insights projecting $1.925 trillion by 2028 [15], Business Research Insights projecting $1.29 trillion by 2032 [16]), these projections predate the recent extreme volatility.

Market sentiment indicators show mixed signals or a prevalence of fear. According to Standard Chartered analysis, the Fear and Greed Index suggests a potential bullish reversal over the next three months [4], but in the short term, extreme anxiety was evident, with the Volatility Index (VIX) spiking.[5] Analysts mention "panic" [6], Ethereum's Net Unrealized Profit/Loss (NUPL) indicator entering the "capitulation" zone [17], and Ethereum investment sentiment shifting to "fear" [13], indicating that market participants are navigating significant uncertainty.[18, 19, 20] This market sensitivity clearly demonstrates that virtual assets still exhibit a high correlation with traditional risk assets and are heavily influenced by macroeconomic and geopolitical news headlines. This implies that internal technological and supply factors, such as the Pectra upgrade or halving events, can be easily overshadowed by external shocks in the short term. The direct temporal link between tariff-related news announcements and sharp market fluctuations is confirmed in multiple sources [1, 2, 7], and analysts also point to these macro/policy events as the primary cause of volatility.[1, 4, 5, 6, 17] This indicates that the virtual asset market has not yet fully decoupled and that its price discovery process is heavily influenced by the sentiment and risk appetite of traditional financial markets in response to global events.

B. Bitcoin (BTC) Market Analysis

Bitcoin experienced sharp price fluctuations in early April. It fell below $80,000 [5] dipped to the $76,000 level [2, 3], rebounded to around $83,000 following the tariff deferral news [2], but then retreated below $80,000 again [2], stabilizing around the $82,000 mark.[7, 12] In the domestic Won market, it fluctuated between ₩115 million and ₩122 million before adjusting to around ₩118 million.[2] Analysts are debating whether the current stability around $82,000 is a temporary technical rebound (dead cat bounce) or the beginning of a trend reversal.[7, 12] Some technical analysis suggests the possibility of further decline.[21]

Amidst this unstable price movement, Bitcoin's market dominance remained high, exceeding 63% at times [1] and maintaining a level of 58-59%.[22, 23] This reflects a tendency for investors to shift funds from altcoins to Bitcoin during periods of increased market uncertainty or correction phases, or it indicates that Bitcoin is leading the market recovery.[1]

U.S. Bitcoin spot ETFs, a major driver of the market rally in late 2023 and early 2024, recorded significant net outflows for several consecutive days in early April.[2] For instance, the cumulative outflow over four trading days exceeded $600 million.[2] These outflows acted as a primary factor contributing to Bitcoin's price weakness [2, 24], contrasting with the initial market expectations of continuous inflows.[14] Nevertheless, from a long-term perspective, fund inflows from institutional investors via ETFs remain a crucial bullish factor for Bitcoin.[25, 26, 27, 28]

The Bitcoin halving event in April 2024 was anticipated as a long-term price appreciation factor by reducing supply through decreased block mining rewards.[14] However, current price movements suggest that the short-term impact of the halving may have been overshadowed by macroeconomic factors or that the market had already priced it in. The long-term bullish case based on supply scarcity remains valid.[25, 27]

C. Ethereum (ETH) Market Analysis

Ethereum experienced a sharper decline than Bitcoin in early April. The price fell below $1,500 [5, 17], recording double-digit percentage drops at times.[3, 12] While showing some recovery [9, 11], it has struggled to regain previous highs, and some analyses suggest the possibility of further decline (to $1,300 [12] or even $990 [2, 10]). Notably, the relative value of Ethereum compared to Bitcoin (ETH/BTC ratio) dropped to its lowest level since 2020 [1], showing significantly weaker performance than Bitcoin even during the rebound phase.

Despite this bearish trend, the main focus in the Ethereum market is on the upcoming 'Pectra' upgrade. Pectra is a large-scale update simultaneously improving the execution layer (Prague) and the consensus layer (Electra), targeted for mainnet deployment on May 7, 2025, or in Q1 2025 (timing differs across sources [29, 30, 31, 32]). This upgrade includes numerous Ethereum Improvement Proposals (EIPs) aimed at enhancing user experience (UX), increasing network scalability, and improving validator operational efficiency (e.g., EIP-7702, EIP-7251, EIP-7742, etc.).[13, 24, 29, 30, 31, 32, 33, 34, 35, 36] Anticipation for the Pectra upgrade is seen as a factor improving Ethereum investment sentiment and driving inflows into spot ETFs.[13, 24, 27, 37, 33]

Indeed, in contrast to the outflows observed from Bitcoin spot ETFs, recent net inflows have been observed in Ethereum spot ETFs (presumably approved around February 2025 [24]), reportedly reaching approximately $393 million.[24] This difference in fund flows suggests investors might be shifting funds from Bitcoin to Ethereum, possibly driven by anticipation for the Pectra upgrade or strategic moves based on relative value assessment.[24] The potential approval of staked Ethereum-based ETFs also remains a potential catalyst.[28] This divergence in ETF flows and relative price performance between Bitcoin and Ethereum hints at a potential shift in short-term market narratives. Investors might be reallocating capital based on specific upcoming events like the Pectra upgrade, or they may perceive Bitcoin as having overextended in the short term. However, the fact that Bitcoin dominance remains high [1, 22] suggests this shift might be more of a tactical adjustment by some market participants rather than a full-blown trend reversal. Bitcoin still acts as the primary safe-haven asset within crypto or the key driver determining overall market direction.

Technical indicators show mixed signals. Some indicators suggest weakened bullish momentum or oversold conditions, hinting at a potential rebound (RSI below 50, NUPL entering capitulation zone) [17, 11, 12, 13, 38], while short-term moving averages indicate a bearish outlook.[11] Low implied volatility observed before the recent decline also foreshadowed the possibility of sharp future price movements.[38]

D. Altcoin Market Trends

The altcoin market experienced a sharp decline alongside Bitcoin and Ethereum in early April, with numerous altcoins recording double-digit percentage losses.[1, 3] Many altcoins failed to reach new all-time highs during the previous bull run and are struggling to recover recent losses.[1, 39]

Looking at sector performance, Meme coins, which previously garnered significant market attention, are showing considerable weakness with no signs of recovery. Dogecoin (DOGE), a representative meme coin, is trading approximately 70% below its peak.[1, 39] Conversely, Decentralized Finance (DeFi) assets and emerging sectors like Artificial Intelligence (AI) and Decentralized Physical Infrastructure Networks (DePIN) appear to be attracting selective investor interest.[40] Notably, Bitcoin-based DeFi (BTCFi) is showing remarkable growth.[22, 26, 41] The overall weakness in the altcoin market and the failure of many coins to surpass previous highs [39] might suggest the market is entering a maturation phase. Hype-driven rally cycles, like those seen with meme coins, may become less sustainable, with capital potentially shifting more selectively towards projects with clear utility, technological advancements (L2s, BTCFi, etc.), or institutional investment pathways (potential ETFs).

The Korean market exhibits unique altcoin preferences distinct from the global market. On Upbit, the largest domestic exchange, Ripple (XRP-KRW) often ranks first in trading volume, surpassing Bitcoin or Ethereum, and several altcoins with relatively small market caps record high trading volumes.[42] This contrasts sharply with Western markets where Bitcoin/Ethereum trading volume dominates. For example, even when Bitcoin prices were rising, Stratis (STRAX) ranked first in trading volume on Upbit [42], showing independent movements detached from global trends. This specificity of the Korean market can influence the prices of certain altcoins.

The potential launch of spot ETFs for Solana (SOL), Ripple (XRP), Litecoin (LTC), Hedera (HBAR), etc., awaiting regulatory approval, is also a potential variable for the altcoin market.[27, 43, 44] The launch of Solana futures contracts on the Chicago Mercantile Exchange (CME) is considered a significant step towards the institutionalization and adoption of that altcoin by institutional investors.[43]

Table 1: Summary of Key Virtual Asset Performance (as of April 13, 2025)

Note: The table above provides estimates based on the provided materials and may differ from real-time market data. Price ranges reflect volatility from early April to the present.

II. Key Market Drivers and Developments

A. Macroeconomic Impacts

The virtual asset market is highly sensitive to changes in the macroeconomic environment as of April 2025. Particularly, the unpredictable trade policies of the Donald Trump administration in the U.S. have been a key factor driving market instability.[1, 2, 4, 5, 6, 17, 7] Abrupt shifts in policy direction, such as tariff imposition announcements, deferrals, and negotiations with specific countries, have stimulated risk aversion among investors, causing sharp fluctuations in virtual asset prices. Standard Chartered referred to this phenomenon as the "Trump put," suggesting a market tendency to anticipate policy reversals when expecting extremely negative outcomes. While this might limit potential downside risks, it simultaneously acts as a factor amplifying market volatility.[4] Goldman Sachs also raised its probability of recession due to this policy uncertainty.[5] The outcomes of future negotiations with major trading partners and the trajectory of the trade conflict with China are expected to be major market variables.[4, 7]

Global economic growth forecasts are somewhat mixed but generally point towards a likely slowdown with prevailing downside risks.[4, 5, 18, 19, 47, 48, 49, 50] The International Monetary Fund (IMF) projected stable but below-expectation global economic growth rates of 3.3% for 2025 and 2026 [47], while the World Bank also noted that growth is stabilizing but insufficient to drive sustainable development, highlighting policy uncertainty and trade conflicts as major risk factors.[50] A World Economic Forum (WEF) report warned of potential losses due to increased instability, eroding trust, and economic fragmentation.[19, 49]

While the trend of slowing inflation continues, persistent price increases in the service sector [47] complicate the monetary policy normalization process for central banks. Major central banks, including the Federal Reserve (Fed), are considering interest rate cuts (expected 50-75bp cuts in H2 2025 [4, 5]), but there is a risk that rate cuts could be delayed or halted if new inflationary pressures arise, for instance, due to tariff impositions.[4, 47, 50] This "higher for longer" interest rate scenario could weigh on risk asset markets, including virtual assets. Meanwhile, concerns about macroeconomic uncertainty and U.S. policy changes have also stimulated safe-haven demand, contributing partly to the recent rise in gold prices.[51]

Short-term financial stability risks are currently assessed as contained [48, 52, 53], but analyses suggest that medium-term vulnerabilities are accumulating, such as the divergence between asset prices and the real economy and the potential for shock amplification.[48] Particularly, the fragmentation of the global financial system is a risk factor that could lead to reduced liquidity and increased asset value volatility.[49] The threat of cyberattacks is also reported to be increasing.[48] These macroeconomic and financial stability factors interact, exerting complex influences on the direction of the virtual asset market. Macroeconomic uncertainty could stimulate demand for assets perceived as stores of value, like Bitcoin or gold [25, 51], but simultaneously strengthen risk aversion, potentially hindering overall fund inflows.

B. Regulatory Environment Changes

As the institutionalization of the virtual asset market accelerates, the regulatory environments in major countries are also rapidly evolving.

United States: Since the inauguration of the Trump administration, there has been a clear shift away from the previous "regulation by enforcement" approach towards establishing a more defined regulatory framework.[28, 54, 55, 56] Through executive orders and the formation of virtual asset task forces, the administration is outlining policy directions for digital assets and financial innovation [28, 55, 57], emphasizing cooperation among relevant agencies like the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), Treasury Department, and Department of Justice.[55] Key legislative priorities include comprehensive regulation for stablecoins (requiring full reserves, regular audits, enhanced consumer protection, etc.) [28, 55], and discussions on market structure bills (like FIT21) to clarify jurisdiction between the SEC and CFTC are ongoing.[58] Under new SEC leadership (potential nomination of Paul Atkins [7, 27, 54], Acting Chair Mark Uyeda [59]), the focus might shift from asset classification debates to preventing fraudulent activities, and measures allowing temporary regulatory relief for compliant businesses to foster innovation could be considered.[55, 59] Furthermore, the potential repeal of SEC accounting guidance (SAB 121), which restricted traditional financial institutions like banks from custodying spot virtual assets, is being discussed [27], potentially accelerating integration with the institutional financial system. There's even talk of federal and state governments considering holding Bitcoin as a strategic reserve asset [25, 27, 28, 60], and potentially eliminating capital gains tax on profits from trading specific virtual assets (Bitcoin, US-made tokens).[60]

European Union (EU): The world's first comprehensive virtual asset regulatory framework, MiCA (Markets in Crypto-Assets), began full implementation from late 2024.[37, 28, 55, 61, 62] MiCA governs most virtual assets not classified as financial instruments (including stablecoins, utility tokens, etc.) and virtual asset service providers (CASPs) [28, 63] with the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) sequentially publishing detailed technical standards and guidelines to support implementation.[62, 64, 65, 66, 67] MiCA includes authorization requirements for CASPs, obligations for stablecoin issuers, market abuse prevention, and consumer protection rules.[33, 28, 63] However, a grace period allowing existing businesses to continue operating under national regulations until mid-2026 (varying by member state) [28], means full regulatory harmonization will take time, creating transitional uncertainty. Additionally, the Digital Operational Resilience Act (DORA) strengthens cybersecurity regulations.[55]

South Korea: South Korea is establishing its regulatory framework through phased legislation. The 'Virtual Asset User Protection Act' (Phase 1 Act), implemented in July 2024, mandates the segregation of user deposits and virtual assets, requires insurance coverage or reserve accumulation against hacking, prohibits unfair trading practices, and imposes monitoring duties on exchanges for abnormal transactions.[68] Currently, the Financial Services Commission (FSC) is operating a task force (T/F) with relevant agencies for Phase 2 legislation, discussing more comprehensive regulatory measures including entry and business conduct rules for Virtual Asset Service Providers (VASPs), regulations on virtual asset listing and disclosure, stablecoin rules, and IT stability obligations.[68] Additionally, a roadmap is being implemented to gradually permit corporate participation in the virtual asset market.[68, 69, 70, 71, 20, 72] This involves expanding participation scope step-by-step for different entities like non-profit organizations, listed companies, and professional investors, with related guidelines (internal controls, anti-money laundering, etc.) under development.[68, 71] Furthermore, financial authorities continue efforts to establish market order by strengthening listing review standards (especially for meme coins), improving exchange internal controls, and enhancing market surveillance and investigation of unfair trading.[68] Taxation on income generated from virtual asset transactions (classified as other income) is also scheduled to begin in 2025.[73, 74]

Global Standards and Other Regions: The implementation of the Financial Action Task Force (FATF) Travel Rule is spreading globally, strengthening Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) standards.[28, 55] The Financial Stability Board (FSB) provides international recommendations for the regulation and supervision of virtual assets and stablecoins, guiding regulatory coordination among countries.[52, 53] In Asia, Hong Kong is actively positioning itself as a global virtual asset hub by introducing a VASP licensing regime and allowing retail investor trading [28, 75, 76], while Singapore has also established a leading regulatory framework.[28] New regulatory regimes are also emerging in the Middle East.[28]

Thus, the regulatory direction setting and specific implementation processes in major countries significantly impact the development of the global virtual asset market. Regulatory clarity positively contributes by facilitating institutional investor entry and enhancing market credibility [27, 37, 43], but differences in national regulations and implementation speeds create complex operating environments for global businesses and increase the risk of market fragmentation.[49] Particularly, the differing approaches of the US (selective, gradual) and the EU (comprehensive, simultaneous) could influence future regional market competition dynamics. MiCA provides a comprehensive framework but faces transitional uncertainty [28], while the US might move quickly on specific products (ETFs, stablecoins) but overall market structure regulation is still evolving.[28, 58] South Korea is pursuing a tailored regulatory strategy considering its unique market characteristics (retail-driven, altcoin preference) [42, 68], interpreted as an effort to balance global standards with domestic market stability.

Table 2: Comparison of Virtual Asset Regulation Status in Major Jurisdictions (April 2025)

C. Technological Innovation Trends

Detailed Analysis of Ethereum Pectra Upgrade:

Pectra, the next major upgrade for the Ethereum network, is currently undergoing testnet phases aiming for a mainnet deployment on May 7, 2025 [29, 31] (some sources estimate Q1 2025 [30, 32]). Pectra involves simultaneous upgrades to the execution layer (Prague) and the consensus layer (Electra) [29, 30, 31, 35], aiming to resolve existing network issues, improve user experience (UX), and lay the groundwork for future upgrades.[35] More than 11 EIPs are currently planned for inclusion.[29, 35]

• Key EIPs and Impacts:
  • EIP-7702 (Set EOA account code): This proposal allows Externally Owned Accounts (EOAs, standard user wallets) to temporarily function like smart contracts during a single transaction.[29, 30, 31, 32, 34, 35, 36] This enables EOAs to utilize features like transaction batching, gas fee sponsorship (meta-transactions), and execution of custom validation logic without permanently converting the account.[29, 34, 36] It is considered more compatible and less risky than the previously discussed EIP-3074 [30, 32] and better aligns with the goals of ERC-4337 account abstraction.[32, 34, 36] Potential Impact: Could significantly boost decentralized application (dApp) adoption by providing a seamless user experience similar to Web2 services.[29, 34] Risk Factors: May introduce new security issues (initialization race conditions, storage conflicts, permission management, etc.), requiring wallet service providers to implement robust warning features and software updates.[34, 36]
  • EIP-7251 (Increase MaxEB): Increases the maximum effective balance (MaxEB) for validators from the current 32 ETH to 2,048 ETH.[29, 32, 77, 35] This allows validators to compound their rewards and enables large stakers or staking service providers to consolidate multiple validators into one, simplifying operations.[29, 77] Potential Impact: Reduces the number of validators, thereby decreasing network load and attestation overhead [29, 77], and improves capital efficiency for stakers.
  • EIP-7742 / EIP-7691 (Blob Scaling): Increases the target number of blobs per block from 3 to 6 and the maximum number from 6 to 9.[29, 35] This expands on EIP-4844 (Proto-Danksharding) introduced in the previous Dencun upgrade.[37, 35] The blob base fee adjustment mechanism will also be modified.[29] Potential Impact: Increases data availability for Layer 2 Rollups, potentially lowering L2 transaction fees and improving throughput and scalability.[27, 37, 29]
  • EIP-2537 (BLS12-381 Precompile): Adds a precompile for BLS curve operations, making related computations faster and cheaper.[31, 35] Potential Impact: Enhances the efficiency and security of Zero-Knowledge (ZK) proofs, validator operations, and cross-chain bridges.[31, 35]
  • Other EIPs: Includes proposals related to validator deposit supply (6110), execution layer triggerable withdrawals (7002), committee index movement (7549), execution layer requests (7685), providing historical block hashes (2935), increasing calldata cost (7623), among others.[35]

Major technical upgrades like Pectra present significant opportunities to enhance Ethereum's functionality and scalability, but they also introduce new technical complexities and potential security vulnerabilities. The security concerns associated with EIP-7702 [30, 32, 34, 36] exemplify how innovation can bring new risks. Therefore, balancing the pace of technological advancement with security verification and stabilization efforts is crucial.

Growth of Bitcoin DeFi (BTCFi):

The decentralized finance (DeFi) ecosystem built on the Bitcoin network (BTCFi) has shown explosive growth throughout 2024 and into 2025. The Total Value Locked (TVL) surged from approximately $300 million in early 2024 to over $6.5 billion by early 2025.[22, 26] This growth is attributed to a combination of factors including anticipation of the Bitcoin halving, price appreciation, and advancements in related infrastructure.[22] Bitcoin Layer 2 solutions are a core driver of BTCFi growth.[78, 79]

• Key Protocols and Technologies:
  • Babylon: A native Bitcoin staking protocol allowing Bitcoin holders to contribute to the security of Proof-of-Stake (PoS) chains and earn rewards while maintaining self-custody of their assets.[80] It utilizes Bitcoin without wrapping or bridging and introduces the concept of restaking.[80] Since its launch, it has grown rapidly, securing significant TVL (reported over $5.2 billion [22, 26]) and leading the BTCFi ecosystem.[22, 81]
  • Stacks (STX): A Layer 2 (or Layer 1 anchored to Bitcoin) that implements smart contract functionality on Bitcoin.[8, 78, 82] It uses a Proof-of-Transfer (PoX) consensus mechanism and is developing sBTC for decentralized Bitcoin pegging.[78] TVL is reported between $72 million and $94 million.[8, 78]
  • Merlin Chain: An EVM (Ethereum Virtual Machine)-compatible Layer 2 ZK-Rollup.[78] Accessible via BTC wallets (BTC Connect), it launched in February 2024 and quickly grew to a TVL of approximately $148 million.[78]
  • Rootstock (RSK): One of the oldest Bitcoin sidechains, offering EVM compatibility and secured by approximately 60% of Bitcoin's hash power through merged mining.[78] TVL is reported between $167 million and $177 million.[8, 78]
  • Lightning Network: Primarily a payment channel network for fast and low-cost Bitcoin micropayments.[78, 81]
  • Others: Various projects contribute to the BTCFi ecosystem, including B2 Network, Thorchain (supporting cross-chain swaps), Maya Protocol, and wrapped Bitcoin like tBTC.[22, 81]

The rise of BTCFi is significant as it expands Bitcoin's use cases beyond a simple store of value into the realm of DeFi applications.[22, 26, 83, 78, 81] This holds the potential to unlock trillions of dollars worth of Bitcoin capital into the DeFi ecosystem, creating a new competitive dynamic in the DeFi market currently dominated by Ethereum.

Convergence of AI and Virtual Assets (DeFAI):

The combination of Artificial Intelligence (AI) technology and virtual assets is emerging as a new trend. The concept of 'DeFAI (DeFi+AI)', utilizing AI agents to automate or optimize DeFi investments, is gaining attention.[22, 83, 63, 84] AI can be used to analyze and execute complex DeFi strategies, potentially increasing returns or managing risks.[63] Furthermore, concepts like 'Swarms' where AI agents collaborate, and integration with other fields like the metaverse and DeFi are also being explored.[83] However, AI technology is a double-edged sword. There's a growing risk of malicious actors using AI for more sophisticated scams, phishing attacks, or automating money laundering processes.[85] Therefore, regulatory authorities and financial institutions need to enhance their understanding of AI technology to effectively counter these threats.[85]

Real World Asset Tokenization (RWA):

The tokenization of traditional real-world assets (RWA) like real estate, bonds, and funds onto blockchain-based digital tokens is rapidly growing, driven by the active participation of financial institutions.[23, 83, 68, 86, 87, 88] Major players like BlackRock, Fidelity, JPMorgan, and Franklin Templeton are already involved in related projects or have entered the RWA market.[23, 87, 88] The market size, currently around $600 billion in 2025, is projected to grow exponentially to between $2 trillion and potentially up to $18.9 trillion between 2030 and 2033, according to reports from McKinsey and BCG/Ripple.[23, 87, 88] Initially focused on relatively safe and standardized assets like money market funds (MMFs) and government bonds, tokenization is gradually expanding to include private equity, real estate, and private credit.[23, 83, 88] RWA tokenization offers benefits such as increased asset liquidity, improved transaction efficiency, enhanced transparency, and greater accessibility through fractional ownership.[23, 87] However, challenges like infrastructure fragmentation, regulatory uncertainty, and cross-border inconsistencies remain, requiring collaborative efforts towards standardization and resolution.[23, 87]

Table 3: Ethereum Pectra Upgrade - Key EIP Summary

Table 4: Key Bitcoin DeFi Protocols (by TVL, April 2025)

Note: TVL data can vary depending on the reporting time and source.

D. Institutional Investor Trends and Fund Flows

Institutional investors' participation in the virtual asset market continues to expand and is becoming increasingly sophisticated.

Investment Intent and Asset Allocation Expansion: A survey revealed that 83% of institutional investors plan to increase their virtual asset investments in 2025.[43, 46, 89] A significant portion (59%) intends to allocate 5% or more of their assets under management (AUM) to virtual assets [46], based on the expectation that virtual assets will offer attractive risk-adjusted returns over the next three years.[46, 89] High-net-worth individuals (HNWIs) also show high interest and intention to transfer assets into virtual assets.[90] This trend is expected to accelerate with increasing regulatory clarity.[43, 46]

ETF Market Trends: U.S. Bitcoin spot ETFs initially saw record inflows (over $20 billion within months [37]) but have recently experienced significant outflows, becoming a factor in market volatility.[2, 24, 26] Conversely, Ethereum spot ETFs have recently recorded net inflows, showing a contrasting trend.[24] The ETF market is projected to expand further. Options trading on Bitcoin ETFs has been approved [37], and the possibility of launching Ethereum ETFs with staking features or spot ETFs based on other altcoins like Solana, Ripple, and Litecoin is being discussed.[27, 28, 43] Regulatory changes enabling banks to custody spot virtual assets (repeal of SAB 121) could further boost ETF market growth.[27] The total AUM of global virtual asset exchange-traded products (ETPs) surpassed $100 billion in October 2024, with predictions of growth up to $250 billion.[37]

Increased Stablecoin Utilization: Institutional investors' interest in and use of stablecoins are rising. 84% of survey respondents reported holding or considering holding stablecoins [43], utilizing them for various purposes beyond simple transaction facilitation, including yield generation (73%), foreign exchange (69%), internal cash management (68%), and external payments (63%).[43] Regulatory clarity, such as stablecoin legislation in the U.S. and MiCA implementation in Europe, is expected to further accelerate stablecoin adoption and strengthen the influence of digital dollars and euros.[14, 27, 86] The emergence of interest-bearing stablecoin models (e.g., Ethena's USDe) also presents new growth potential.[83]

Prospects for Increased DeFi Participation: While the current usage rate of DeFi platforms by institutional investors is relatively low at 24%, it is expected to increase to nearly 75% within the next two years.[43] Institutions are showing interest in various DeFi use cases, including derivatives trading, staking, lending, altcoin accessibility, cross-border payments, and yield farming.[43] The growth of the BTCFi ecosystem is also attracting institutional attention.[22, 26, 83]

Key Players and Strategy Shifts: Large asset managers like BlackRock and Fidelity are actively participating in the market, leading ETF launches and RWA tokenization projects.[23, 26, 87, 88] Investment banks such as Goldman Sachs and Morgan Stanley are expanding their virtual asset-related services or increasing investment exposure.[25] Consulting firms like BCG, McKinsey, and EY are publishing in-depth research reports on institutional investor trends, providing market analysis.[23, 43, 46, 87, 88, 91, 92, 93, 94] These institutional movements suggest an evolution beyond simple market entry towards sophisticated, strategic asset allocation based on specific technologies (e.g., Ethereum upgrades [24]) or use cases (e.g., stablecoin utilization [43], RWA tokenization [23, 87, 88]). This indicates that institutional investors are beginning to play the role of active managers rather than passive participants in the virtual asset market, a significant indicator of market maturity.

III. Regional Market Trends and Outlook

A. North America (Primarily the U.S.)

The U.S. market continues to exert the greatest influence on the global virtual asset ecosystem. Decisions by regulatory bodies like the SEC and CFTC, policy directions from Congress and the administration, especially the unpredictable policies of the Trump administration (tariffs, pro-crypto appointments, etc.), act as key variables determining global market volatility.[2, 4, 5, 7, 25, 27, 28, 54, 55, 56] U.S. policy decisions significantly impact global capital flows and the regulatory approaches of other countries. For example, U.S. ETF approval decisions directly influenced global investor sentiment [14], and changes in U.S. tariff policies caused sharp fluctuations in global virtual asset prices.[1, 2, 5] International organizations (FSB, IMF) and other regions (APAC) are also closely monitoring U.S. regulatory trends.[28, 55, 53]

The U.S. remains the center for institutional capital (ETF inflows, venture capital investment, etc.) [95] and serves as a hub for major exchanges (like Coinbase [42, 43]) and technological development.[16, 27] Recent moves towards regulatory clarity can be seen as part of an effort to maintain and strengthen this market leadership.[28, 55]

Efforts to integrate virtual assets into the traditional financial system are particularly prominent, through ETF approvals, the potential allowance of bank custody services (SAB 121 repeal discussion), and stablecoin legislation.[27, 28] Major financial institutions like BlackRock, Fidelity, and JPMorgan are playing key roles in this integration process.[23, 26, 87, 88]

B. Europe

The primary focus in the European region is the successful implementation and harmonization among member states of the comprehensive virtual asset regulatory framework, MiCA.[37, 28, 55, 61, 62, 65] MiCA aims to create a single regulatory market across the EU, but during the transitional period extending to mid-2026, national regulations will coexist, potentially creating uncertainty and inconsistency.[28]

MiCA governs a wide range of areas including stablecoin issuance and operation, authorization for Crypto-Asset Service Providers (CASPs), market abuse prevention, and consumer protection.[33, 28, 63] Additionally, the DORA regulation, which enhances the digital operational resilience of financial institutions, plays an important role in cybersecurity.[55] Europe's regulatory approach may have initially proceeded somewhat slower than the U.S., but once implemented, it holds the potential to provide a more comprehensive and unified environment.

The full implementation of MiCA could foster the growth of Euro-denominated stablecoins [27], and attract virtual asset-related businesses preferring a clear and unified regulatory environment. There's also speculation that products like staked Bitcoin ETFs might be permitted in Europe before the U.S.[96] Europe's comprehensive regulatory approach and the U.S.'s selective, product-focused approach could influence future regional competitive advantages.

C. Asia (Primarily South Korea and Hong Kong)

South Korea: The South Korean virtual asset market has unique characteristics, including a high proportion of retail investors, active trading volume (Upbit's volume is comparable to major U.S. exchanges like Coinbase [42]), strong preference for Won (KRW)-based trading, and high interest in altcoins (especially Ripple).[42] The 'Kimchi Premium' phenomenon, where prices occasionally differ from global rates, also occurs.[2] Considering these market traits, South Korean financial authorities are adopting a phased regulatory introduction strategy. Following the implementation of the 'Virtual Asset User Protection Act' (Phase 1) [68], they are pursuing Phase 2 legislation covering VASP conduct regulations, listing/disclosure standards, etc.[68] Corporate market participation is being approached cautiously, starting with limited entities like non-profit organizations and gradually expanding.[68, 69, 71] There is also a focus on managing specific domestic market risks, such as market volatility issues like 'listing pumps/delisting dumps', concerns about listing unsound assets like meme coins, and inadequate internal controls at exchanges.[68] The taxation of virtual asset income, set to begin in 2025 [73, 74], is another major variable expected to impact the market. Thus, South Korea's regulation is evolving as a tailored strategy to manage the unique risks and opportunities of the domestic market while aligning with global trends.

Hong Kong: Hong Kong is actively pursuing policies to strengthen its position as a global virtual asset hub.[75, 76] By introducing a Virtual Asset Service Provider (VASP) licensing regime, it has allowed retail investors to legally trade major virtual assets like Bitcoin and Ethereum through licensed exchanges.[28, 76] It is also continuously developing its regulatory framework, such as establishing detailed guidelines for specific activities like staking services.[75] This can be seen as part of a competitive move within the Asian region, alongside Singapore, to create a crypto-friendly regulatory environment.[28]

IV. Risk Environment and Market Opportunities

A. Analysis of Key Risk Factors

The virtual asset market remains exposed to various risk factors, which investors and market participants must fully recognize and manage.

Market Volatility: Extreme sensitivity to macroeconomic uncertainties (inflation, growth slowdown concerns, interest rate policy changes), heightened geopolitical tensions, and unpredictable policy announcements (especially U.S. tariff policies) remain the most significant risk factors.[1, 2, 3, 4, 5, 6, 17, 18, 97, 19, 38, 48, 49, 50, 20] Price volatility can be further amplified by cascading leverage liquidations.[5]

Regulatory Uncertainty and Fragmentation: While major jurisdictions are moving towards regulatory clarity, uncertainties regarding specific rules, enforcement methods, and application timing persist.[28, 49, 68] The lack of a unified federal licensing framework in the U.S. remains an ongoing issue.[28] Furthermore, differences in national regulatory approaches and implementation speeds can deepen global market fragmentation, creating opportunities for regulatory arbitrage while imposing complex compliance burdens on global businesses. This regulatory environment could also hinder innovation or constrain market growth.

Security Threats: Illicit activities are becoming more sophisticated and remain a significant threat.

• Hacking and Theft: Asset theft due to hacking, such as private key and seed phrase compromises, amounted to $2.2 billion in 2024, a 17% increase from the previous year. Activities by North Korean-linked hacking groups were particularly prominent (approx. $800 million stolen).[85, 98] Recent major exchange hacks have also exposed platform vulnerabilities.[55]
• Illicit Financing and Laundering: Sanctioned entities still account for a significant portion (33%) of illicit transaction volume [98], and terrorist organizations are using more sophisticated financing methods involving mixers, privacy coins, and unregistered wallets.[98] Ransomware attacks have surged, with attackers increasingly exploiting cross-chain bridges to evade tracking.[98] AI technology poses a risk of being misused to develop sophisticated fraud schemes and automate money laundering processes.[85]
• Platform Risks: In the Korean market, concerns are raised about inadequate internal controls at exchanges or the potential misappropriation of customer assets by financially weak operators.[68]

Technological Risks: Large-scale upgrades like Pectra, due to their complexity, could introduce unexpected bugs or security vulnerabilities (e.g., security concerns related to EIP-7702 [30, 32, 34, 36]). Additionally, the proliferation of Layer 2 solutions could lead to ecosystem fragmentation, liquidity dispersion, and degraded user experience [83], while also creating new attack surfaces like bridges. The possibility of systemic issues arising from failures in core infrastructure cannot be ruled out (though the IMF currently assesses that cyber incidents have not yet become systemic risks [48]).

Macroeconomic Risks: Deepening global growth slowdown [47, 50], unexpected inflation resurgence leading to delayed or halted rate cuts [4, 47], intensifying global financial system fragmentation [49], sovereign debt issues [47], and other macroeconomic downside risks could negatively impact the virtual asset market.

These risk factors, particularly the persistent and evolving security threats [85, 98], undermine market confidence and act as fundamental obstacles to mainstream adoption. New vulnerabilities arising during technological innovation [34, 36] also cannot be overlooked. Therefore, a comprehensive and proactive approach to security issues is not just risk management but a prerequisite for realizing the long-term growth opportunities of the virtual asset market.

B. Identification of Growth Opportunity Factors

Despite various risk factors, the virtual asset market holds remarkable growth opportunities in several aspects.

Increased Adoption and Improved Accessibility:

• Expanding Institutional Capital Inflow: Driven by increasing regulatory clarity, the launch of diverse ETF products beyond Bitcoin and Ethereum (altcoins, staking products, etc.), and expectations of attractive returns, institutional investor fund inflows are expected to continue.[25, 27, 37, 43, 46] Participating entities may expand beyond asset managers to include banks, corporations, and even government agencies.[16, 25, 27, 28, 68]
• Enhanced Retail Investor Accessibility: Improvements in user experience through upgrades like Pectra (especially EIP-7702) [29, 34], a clearer regulatory environment (MiCA, etc.), and diversification of investment products like ETFs will contribute to lowering entry barriers for retail investors.[37]
• Payment and Remittance Utilization: The increasing use of stablecoins as a means for cross-border transactions and payments [14, 15, 43], enhances the practical utility of virtual assets.

Accelerating Technological Innovation:

• Advancement of Scalability Solutions: Continuous development and adoption of various Ethereum Layer 2 solutions (Arbitrum, Optimism, Base, zkSync, etc.) and Bitcoin Layer 2 solutions (Stacks, Merlin Chain, Rootstock, etc.) will increase network throughput and reduce transaction fees, accelerating the mass adoption of blockchain technology.[29, 8, 78, 82] The Ethereum Pectra upgrade also aims to enhance mainnet efficiency and strengthen Layer 2 support.[29, 35]
• Expansion of BTCFi Ecosystem: The growth of DeFi services utilizing Bitcoin assets (staking, lending, etc.) broadens Bitcoin's utility and channels vast idle capital into productive activities, representing a significant growth engine.[22, 26, 37, 83, 78]
• Account Abstraction: Technologies like EIP-7702/3074 have the potential to dramatically improve wallet usability, enabling more users to access dApp services without needing complex technical understanding.[29, 30, 32, 34, 36]
• Convergence of AI and Virtual Assets: The fusion of AI and virtual asset technologies, such as DeFAI, automated investment strategies, and AI-based security solution development, can offer new opportunities for innovation and value creation. The potential use of blockchain technology to combat AI-driven misinformation is also suggested.[22, 37, 83, 63, 84]
• RWA Tokenization: With a massive potential market estimated in the trillions of dollars, RWA tokenization is expected to serve as a key bridge connecting traditional finance and blockchain technology, with growth accelerating due to participation from major financial institutions.[23, 37, 83, 68, 87, 88]

Emergence of New Products and Services: The appearance of innovative financial products and services, such as ETFs based on altcoins beyond Bitcoin and Ethereum, ETPs offering staking rewards, yield-bearing stablecoins [83], DeFi derivatives [43], and tokenized funds [83], will provide investors with more choices and add depth to the market.

These growth opportunities demonstrate that the virtual asset market has the potential to move beyond being merely a speculative asset market and drive real technological innovation and financial system efficiency. It is noteworthy that opportunities are shifting towards integration and synergy with traditional systems, such as RWA tokenization [23, 87, 88], sophisticated DeFi utilization by institutional investors [43], expansion of stablecoin payment functions [15, 43], and convergence with AI.[37, 83] This suggests a potential path where virtual assets evolve to complement and improve existing systems rather than completely replacing them.

V. Outlook and Future Scenarios

A. Synthesis of Expert Predictions and Market Outlook

Expert predictions for the 2025 virtual asset market outlook are widely distributed, reflecting various factors and scenarios.

Bitcoin Price Forecasts: Bullish analysts suggest a potential rise above $100,000, possibly reaching $150,000 within the current cycle, citing continued institutional inflows, potential government adoption (e.g., as reserve assets), and the supply reduction effects post-halving.[7, 22, 25, 26] Conversely, cautious analysts believe prices could adjust down to the $70,000-$75,000 range or lower if macroeconomic headwinds persist or ETF outflows continue.[2, 3, 21, 25] Neutral scenarios also posit the possibility of sideways trading within a broad range of $30,000 to $50,000.[25] The divergence in these predictions starkly illustrates the high degree of uncertainty surrounding the variables influencing the market.

Ethereum Price Forecasts: Ethereum's outlook is also mixed. In the short term, relative weakness compared to Bitcoin and potential further declines (towards $1,300 or $990) have been suggested by some analysts.[2, 17, 10, 12, 38] However, medium-term forecasts for the end of 2025, assuming successful completion of the Pectra upgrade and overall market recovery, range widely from $2,500-$2,700 [13], $3,500-$3,700 [13], up to a maximum of $4,887.[99] Long-term predictions extending to 2030 vary even more broadly, from $2,095 based on Binance user inputs [11] to $6,400-$12,300.[13]

Overall Market Outlook: The general sentiment for the 2025 market tends towards cautious optimism, acknowledging significant risk factors.[4, 22, 27, 37, 39, 40, 83, 46, 20, 85, 100, 84, 92, 101] Key positive drivers include expanding institutional participation, technological advancements (especially in scalability and UX), and increasing regulatory clarity. Delphi Digital analyzed the market as maturing, bifurcating into investments for trading purposes versus long-term holding.[40] BlackRock emphasized the need to navigate markets amidst economic structural changes driven by mega forces like AI [102], while Standard Chartered anticipates a risk asset recovery by year-end, assuming an economic soft landing as their base scenario.[4] Fidelity predicted significant changes and differentiation across assets and regions.[103]

Key Themes for 2025 (Synthesized): Based on expert analyses, the major themes expected to drive the market in 2025 include: (1) **Expansion of ETF products** beyond Bitcoin and Ethereum, (2) ** 본격적인 growth of the RWA tokenization market**, (3) **Maturation of the BTCFi ecosystem** and increased Bitcoin utility, (4) Deepening **convergence of AI and virtual assets**, (5) Acceleration of **Layer 2 solution expansion and user experience abstraction**, (6) Potential emergence of **improved token value models** directly accruing value to holders, and (7) Rise of **yield-bearing stablecoins**.[83]

B. Potential Market Scenarios

Based on these factors, several scenarios can be envisioned for the direction of the virtual asset market in 2025.

Bullish Scenario: Assumes the U.S. economy achieves a soft landing and regulatory clarity for virtual assets is established. Institutional investor inflows continue strongly through ETFs and direct investments, and the Ethereum Pectra upgrade is successfully completed, stimulating ecosystem activity. If the BTCFi and RWA tokenization markets grow as expected, supported by a positive macroeconomic environment (e.g., interest rate cuts), major virtual asset prices could see significant rallies, potentially surpassing previous highs (e.g., Bitcoin $100k-$150k+, Ethereum $3,500+). [4, 7, 13, 25, 27, 83, 43, 46]

Bearish Scenario: Occurs if macroeconomic conditions worsen, leading to a recession, or if inflation resurges, delaying or reversing interest rate cuts. Regulations in major countries like the U.S. could be implemented more stringently than expected or take a negative turn. Market confidence could be severely damaged by large-scale hacks or technological failures (e.g., issues with the Pectra upgrade). Intensification of geopolitical conflicts or trade wars could also trigger sharp market corrections. In this scenario, major virtual asset prices could fall significantly, breaking below previous support levels (e.g., Bitcoin below key support, Ethereum below $1,500-$2,000). [2, 4, 5, 6, 17, 10, 12, 18, 19, 21, 25, 38, 47, 49, 50]

Neutral/Sideways Scenario: Positive factors like technological innovation and institutional interest are offset by negative factors such as macroeconomic and regulatory uncertainties, leaving the market without a clear direction. The market might undergo a consolidation phase after previous gains, while Layer 2 and BTCFi ecosystems gradually mature. ETF flows could remain volatile, alternating between inflows and outflows. In this case, major virtual asset prices are likely to continue fluctuating within a specific range (e.g., Bitcoin $70k-$90k, Ethereum $1,500-$2,500). [2, 4, 25, 28, 20]

C. Conclusion and Analyst Perspective

2025 appears to be a pivotal year that will shape the future direction of the virtual asset market. The market is navigating a balance between external pressures from macroeconomics and policy, and internal drivers from technological innovation and institutionalization.

The core competitive dynamic will play out between the innovative potential of virtual assets as a technology and asset class (Pectra, BTCFi, RWA, AI convergence, etc.) and their vulnerability to traditional financial system risk factors (macroeconomic instability, regulatory hurdles, security issues). Successful market development hinges on establishing effective regulatory pathways (especially the role of the U.S.), fulfilling technological promises (scalability and UX improvements), embedding robust security practices, and securing a relatively stable macroeconomic environment.

Going forward, differentiation between assets and sectors is expected to intensify. Specific use cases and platforms demonstrating clear value propositions and technological advantages are more likely to gain market traction, rather than simply riding a general market upswing. The overarching trend of "crypto goes mainstream" [27, 37] is ongoing, but the process remains complex and fraught with uncertainty.

Market participants must recognize this multifaceted environment. Instead of reacting solely to short-term volatility, they should adopt a long-term perspective, comprehensively analyzing technological trends, regulatory changes, and the macroeconomic context to formulate prudent investment and business strategies. The wide divergence in expert predictions [11, 13] underscores the current high level of market uncertainty, making scenario-based approaches and risk management essential. Nevertheless, the increasing sophistication of institutional participation [43], tangible integration efforts like RWA tokenization [23, 87, 88], and the emergence of comprehensive regulatory frameworks like MiCA [63] are positive signals suggesting gradual market maturation. Bitcoin and Ethereum remain the core pillars of the market [1, 24], and the development and stability of these two assets will likely determine the health of the entire ecosystem.