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Which crypto assets will outperform Bitcoin in 2025?
The outcome of the US election last month continues to reverberate through the crypto markets. The Nasdaq Crypto IndexTM (NCITM) has risen over 57% since November 5, fueled by widespread optimism over the direction of digital asset policy in the US.
As I wrote in a previous note, crypto assets tend to follow a four-year cycle that includes a bull phase of roughly 12 months, followed by a year-long bear market, and then a two-year recovery period. In the previous two bull markets, altcoins (i.e., everything outside of BTC) have significantly outperformed the largest crypto asset.
I believe we’ve entered a bull market, reinforced by the macro environment and US election outcomes. But there’s another data point signaling a bull market—the outperformance of the NCITM relative to BTC.¹ In the last three months, the NCITM has had a higher return than BTC (78.0% vs. 76.5%) and since the election, the NCITM has outperformed BTC by 6.8%.
Crypto Asset Performance
So, which specific aspects of crypto are poised for outperformance this time around?
One key area to watch is smart contract projects, platforms that will allow users to transact not only information but value and property as well. We believe these platforms and applications will outperform BTC in the next 12-18 months as they compete for users and lay the groundwork for decentralized applications. On the back of the infrastructure developments we have seen in this area in the last few years, new applications are emerging across AI, gaming, and many other areas as tokenization continues to expand.
We also believe that new regulatory progress in 2025 will be more beneficial to these applications than to Bitcoin specifically, because Bitcoin already has regulatory clarity and a well-developed capital markets structure, with the growth of ETFs, options, and futures. In the US and Europe, this legislative and regulatory clarity that will benefit altcoins may include:
• Market structure legislation: Proposals like FIT21 will remove ambiguities regarding the commodity vs. security status of crypto assets, as well as create paths to registration that could boost adoption in the US.
• Stablecoin legislation / MiCA implementation: Both will drive the adoption of stablecoins in the US and Europe, expanding the stablecoin phenomenon beyond just emerging markets.
• Repeal of SAB121: When this obstacle is removed and US banks can hold crypto for their clients, banks and brokerages will increase their crypto trading and custody offerings, which will benefit altcoins the most.
• New ETF launches: With the new SEC chair, there are renewed hopes for additional ETF approvals, including indices and single assets like Solana and XRP. There’s still much uncertainty here, but new assets having ETFs as on-ramps is highly positive.
In addition to Bitcoin developing as an emerging digital store of wealth and smart contract platforms becoming a new way to exchange information, value, and property, there are three other altcoin use cases we believe will benefit in the coming year:
- DeFi: Projects aimed at creating an internet-based financial system, running on smart contract platforms, will create a new global capital markets infrastructure for payments, with stablecoins and tokenized money market funds being the first important use cases.
- Web3: A new iteration of the internet that will let us own our data and make the internet decentralized and more usable for things like AI agents and other innovations.
- Digital Culture: An emerging digital-native generation will have more demand to own digital assets and collectibles, with gaming being a natural first application.
If we compare crypto to the internet, this industry is like the internet in the 1990s and Bitcoin could be compared to email—the only application most people hear about. But fast forward 20 years and while email is still very useful, it has not been the internet’s application that created the most societal value. We believe this could be true for how Bitcoin is currently viewed relative to crypto.
Benefits of diversification
Our team at Hashdex are firm believers that getting broad exposure to this market is necessary to capture the growth we believe we will experience in these other areas. Indices like the Nasdaq Crypto IndexTM (NCITM) can provide broader market exposure and, as crypto matures as an asset class, better risk-adjusted returns. Additionally, indices provide more significant optionality as investors don’t need to rely on an active manager to do this for them. The complexity and fast-evolving nature of crypto make it hard to pick individual winners and an index simplifies investing by offering a balanced, data-driven selection of assets that can align with modern portfolio theory principles.
This is why index ETFs have been at the core of our mission. Accessing crypto through these familiar structures allows investors to benefit from the growth of this asset class with minimal friction. For most investors, we most often recommend a very small allocation to crypto, from 1% to 5%. We strongly believe that a benchmark like the NCITM is an excellent way to “buy the market” and benefit from a strategic allocation into this promising asset class.
[1] The Nasdaq Crypto Index includes Bitcoin, Ethereum, Solana, Ripple, Cardano, Chainlink, Avalanche, Litecoin, Polygon, and Uniswap as of 9/30/24
Welcome to the first monthly edition of the State of Crypto, cutting through the noise and helping guide your investment decisions at the start of every month.
April saw bitcoin’s strongest monthly performance in over a year, rallying 12% to $79,500.
While $78,000 remains a stubborn resistance level, the underlying market structure suggests a fundamental shift: the market’s largest holders are treating this correction as a structural buying opportunity.
BITCOIN IN THE MACRO BACKDROP
• Risk–on rebound: A recovery in tech and AI spilled into crypto, giving BTC the momentum to climb from $69,000.
• Policy and energy: With the Strait of Hormuz closed and energy–driven inflation sticking, markets now price in zero rate cuts for 2026.
• Patient capital: Institutional conviction is high. US spot ETFs absorbed $2.4 billion in April, while corporate treasuries – led by Strategy’s $2.5 billion purchase – are building a massive price floor.
MARKET DYNAMICS TO WATCH
• Flight to quality: Capital is slowly moving up the risk curve. Bitcoin dominance is at its highest since mid–2025 as investors favor blue chips over the DeFi sector, which has been hit by recent protocol exploits.
• Liquidity resilience: Stablecoin supply reached a record $321 billion. Unlike in prior cycles, when capital exited the market during dips, today’s dry powder is staying onchain.
• Miner health: Despite high energy costs, large–scale miners are accumulating BTC, signaling they expect higher prices ahead.
WHAT NOW?
The $74,400 zone has flipped from resistance to support. We are still waiting for a catalyst to clear the macro uncertainty, but the current consolidation looks more like a launchpad than a ceiling. A decisive weekly close above $78,000 would confirm a regime shift and open the path toward $85,000.
Get the full deep–dive: technical charts, an analysis of the ”mythos” AI effect, and our bull/bear scenario mapping for Q2.
IN CASE YOU MISSED IT: 21SHARES IN THE WORLD
Bitcoin ETFs and the $100,000 question
21shares Chief Investment Strategist Adrian Fritz spoke with CoinDesk about the nearly $2 billion in spot bitcoin ETF inflows year-to-date, calling it a sign of structural – not speculative – demand, and flagging $100,000 as a realistic year-end target if geopolitical conditions ease and inflows hold.
The Fed’s divided hold dampens bitcoin’s pivot hopes
Speaking to The Block, 21shares Senior Crypto Research Strategist Matt Mena weighed in on the Fed’s most split decision in over 30 years, arguing that hawkish dissenters threw cold water on the market’s rate-cut expectations heading into the Warsh era.
Warsh inherits a fractured Fed
21shares Head of Macro Stephen Coltman told Axios that Warsh will struggle to build a rate-cut majority at the FOMC so long as core PCE stays above 3%, noting that Wednesday’s dissents sent an early and unambiguous signal of the internal resistance ahead.
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If you have any questions or want to discuss a product in detail, please visit our website at www.21shares.com
Research Newsletter
Each month the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com
Disclaimer
The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.
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