What crypto and stock investors should watch out for next year

Crypto is skyrocketing, stocks are hitting the ceiling, and everyone is drinking the same Kool-Aid: American exceptionalism. Despite inflationary policies, Trump’s return to the White House, and sky-high valuations, analysts still think the U.S. market is unbeatable. But cracks are starting to show.

Katie Martin, Financial Times columnist, isn’t buying the hype. “Everyone’s saying the same thing,” she said. “And if something goes wrong with this narrative, everyone runs to the other side of the ship at the same time.”

At an investment roundtable in London, financial giants tackled 2025’s biggest issues: Trump’s tariffs, stock market bubbles, crypto’s historic Bitcoin rally, and the ongoing regulatory nightmare. Experts from Schroders, Fidelity International, and the FT’s own columnists dissected every angle. Now let’s take a look.

Wall Street is overconfident — and dangerously so

Wall Street predicts the S&P 500 will climb to 6,630 by the end of 2025. That’s a modest 9.6% jump, fueled by strong economic activity, easing interest rates, and Trump’s pro-business agenda. But let’s not forget: these are the same experts who underestimated 2024.

Back then, they predicted the S&P would close at 5,705. It surpassed that in September. Tom Lee from Fundstrat expects the index to hit 7,000 by midyear before cooling off. He calls it a “tale of two years,” where gains in the first half won’t last in the second.

Some strategists are more cautious. UBS’s Jonathan Golub set a conservative target of 6,400, while Oppenheimer’s John Stoltzfus went big with 7,100. No one, however, predicts a market drop.

Here’s the problem: the bull market is losing steam. After surging 24% in 2023 and 27% in 2024, returns are expected to be more subdued. Stuart Kirk called it “frothy,” likening it to the dot-com and Japanese equity bubbles. Stocks like Apple, trading at 37 times earnings, are “ludicrously expensive,” said Simon Edelsten. 

Passive investing is inflating valuations for big-name stocks, creating the perfect conditions for a bubble. Europe, meanwhile, is being sidelined. But Kirk pointed out that investors could still make absolute gains there, even if the continent underperforms the U.S. The final stretch before a market peak often delivers massive returns. Missing out could be costly.

Bitcoin is not yet too big to fail

Crypto investors are riding high after Bitcoin smashed through $100,000. Trump’s victory has turned the market bullish, with promises of a friendlier regulatory approach. At a Nashville conference, Trump compared Bitcoiners to Edison and Ford, calling them pioneers of a new era.

His pro-crypto policies, combined with a crypto-friendly SEC, have already driven Bitcoin up by over 40%. Brian Armstrong, Coinbase CEO, is all in. He called Trump’s win “the dawn of a new era” and met with him at Mar-a-Lago to discuss crypto policy.

Brian’s Super PAC, Fairshake, poured $135 million into pro-crypto candidates during the election. Since Trump’s victory, Coinbase’s stock has soared, boosting Brian’s holdings to $11 billion.

Michael Saylor of MicroStrategy is doubling down, too. His company holds $43 billion worth of Bitcoin and plans to buy $42 billion more. MicroStrategy’s stock skyrocketed 550% in 2024, making it a leveraged Bitcoin play. Saylor called Bitcoin “the monetary network” and warned investors not to miss out.

The Winklevoss twins, once crypto moderates, are now Trump’s biggest fans. They donated $1 million each in Bitcoin to his campaign and spent millions more supporting crypto-friendly candidates. After the SEC sued Gemini over a failed lending product, their frustration with regulators boiled over.

Cameron Winklevoss accused the Biden administration of destroying the American dream, calling outgoing SEC Chair Gary Gensler “a disgrace.”

Paolo Ardoino, Tether’s CEO, has also joined Trump’s camp. Tether issued $138 billion in tokens this year, backed by U.S. Treasuries, but remains a favorite target for law enforcement.

Paolo defended Tether’s role, pointing to its collaborations with authorities worldwide. “If the U.S. wanted to kill us, they could press a button,” he said.

Even Binance, after paying $4.3 billion in fines for money laundering charges, sees a fresh start under Trump. CEO Richard Teng said Trump’s policies could usher in global crypto adoption, calling the new administration a turning point. But all technical indicators are pointing to a correction coming in the near future.

Crypto and stocks both face hidden risks

Optimism aside, 2025 won’t be smooth sailing. Stocks are dangerously overvalued, and the third year of a bull market is historically weak. Meanwhile, the crypto market faces its own challenges. Regulatory uncertainty, potential bubbles, and geopolitical tensions are all on the radar.

Vitalik Buterin, Ethereum’s co-founder, isn’t impressed by the Trump hype. He criticized crypto leaders for supporting “power-seeking narcissists” and warned against abandoning the movement’s core values. 

Vitalik, who runs a nonprofit focused on Ethereum’s ecosystem, called out the industry’s shift toward authoritarianism. Ripple’s Brad Garlinghouse is taking a different approach.

After winning a partial legal victory in 2024, Ripple’s XRP token surged to become the fourth-largest cryptocurrency. Brad continues to push for clear regulations, wearing a “F**k the SEC” T-shirt at a recent conference.

Even Silicon Valley is changing. Marc Andreessen and Ben Horowitz, known for their Democratic ties, shocked the tech world by endorsing Trump. Their company, Andreessen Horowitz, is the largest VC fund for crypto companies. Andreessen called Trump’s win “a boot off the throat” of crypto innovation.

The financial world is at a crossroads. Crypto’s explosive growth and Wall Street’s overconfidence could lead to massive gains—or devastating losses. Investors are betting big, but the risks are bigger. Whether it’s Bitcoin, Tesla, or Treasury bonds, 2025 will be a wild ride.

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