The Evolution of Bitcoin on Wall Street: 5 Predictions for 2025

The announcement by Michael Saylor, MicroStrategy's CEO, to convert $250 million in Treasury reserves to bitcoin in 2020, was initially met with skepticism by traditional banking circles. However, this move marked the beginning of a significant shift in the way Wall Street views bitcoin. Today, those same banks are now eager to participate in bitcoin-collateralized lending, recognizing its superior characteristics as institutional-grade collateral and a thriving product-market fit. Traditional collateral, such as real estate, is cumbersome and requires manual appraisals, subjective valuations, and complex legal frameworks. In contrast, bitcoin offers instant verification, 24/7 real-time settlement, and liquidation capabilities, making it an attractive option for lenders. As a result, traditional banking is being forced to adapt to bitcoin's superior characteristics. One of the predictions for 2025 is that MicroStrategy will announce a 10-for-1 stock split, allowing more investors to purchase shares and options contracts. This move will further demonstrate the deep penetration of bitcoin into traditional corporate finance. Financial services built around bitcoin are expected to explode in popularity, with rapid growth in bitcoin-collateralized loans and yield-generating products. Bitcoin-backed loans have become popular due to their true representation of financial inclusion, with business owners worldwide facing the same collateral requirements and interest rates. This standardization strips away arbitrary risk premiums historically imposed on borrowers in emerging markets. Traditional banks are being forced to confront the inefficiencies of their outdated systems, and bitcoin-backed lending is exposing these relics of the past. Nations are entering a new era of competition for bitcoin business and capital, with expectations of new tax incentives, fast-track visa programs, and regulatory frameworks designed to attract bitcoin companies. The era of bitcoin reserves is being explored by nations, with El Salvador's bitcoin treasury position representing early experimentation. Other nations will study and attempt to replicate these frameworks, preparing their own initiatives to attract bitcoin-denominated capital flows. Banks are racing against obsolescence, with debt markets driving innovation. Public companies are now routinely tapping bond markets and convertible notes to finance bitcoin-related transactions, transforming bitcoin into a cornerstone of corporate treasury management. Companies like Marathon Digital Holdings and Semler Scientific have successfully followed MicroStrategy's lead, and the market has rewarded them. Bitcoin lending markets have come a long way, with serious institutional lenders demanding proper collateral segregation, transparent custody arrangements, and conservative loan-to-value ratios. More regulatory clarity is expected to open the door for more banks to get involved in bitcoin financial products, benefiting consumers with new capital and competition driving rates down. The bitcoin and crypto M&A landscape is expected to intensify, with at least one of the top 20 U.S. banks predicted to acquire a crypto business in the coming year. The acquisition premium will shrink against the opportunity cost of delayed market entry, creating natural conditions for the banking industry's acquisition of cryptocurrency capabilities. Finally, public markets are poised to validate bitcoin infrastructure, with expectations of at least one high-profile crypto initial public offering exceeding $10 billion in valuation in the U.S. The next chapter of finance will be written by those who recognize the importance of embracing this change and adapting to the new landscape.