Editor's note: Looking back at 2025, the virtual asset market experienced significant fluctuations. Bitcoin's price once reached the US$120,000 mark, but lacking subsequent momentum, it may end the year on a subdued note. With the implementation of stablecoin policies in Hong Kong, the development of the virtual asset sector has accelerated, and discussions around the integration of traditional finance and Web3 continue to gain traction.
【Anchor】Hello everyone, welcome to DDN Business Insider. I am Yunfei Zhang.The virtual asset market in 2025 has been quite turbulent. Investors are not only focusing on the price trends of cryptocurrencies but also paying attention to the stablecoin-related policies in Hong Kong. Furthermore, the trend of integration between the market and traditional finance is also a key focus. Today, our guest hosts are Ding Zhao Fei, the Chief Analyst at HashKey Group, and Liu Xiao Fan, Associate Professor at City University of Hong Kong and scientist of the Laboratory for AI-Powered Financial Technologies Limited. Together, they will help us interpret the reasons behind the fluctuations in the virtual asset market and predict the development trends for next year. Now, let's turn the floor over to Mr. Ding.
Hello, everyone. As 2025 comes to a close, it has surely been an unforgettable year, especially in the realm of cryptocurrencies. Whether it is the progress in regulation or the price of Bitcoin, which has been a major concern for everyone, we have witnessed substantial growth and volatility. Professor Liu, looking back at Bitcoin's performance throughout 2025, we saw a significant surge followed by a considerable downturn at the end of the year. Could you explain the reasons behind this to our audience?
Sure. The surge in Bitcoin in 2025 was driven by factors markedly different from the significant fallies and corrections we have observed in the past decade or even longer. Based on data analysis and market observations, the primary reason for this surge is the large-scale rollout of ETFs. Traditional finance and retail investors can now enter the Bitcoin market and the cryptocurrency market more smoothly and quickly through ETFs, which has pushed the total market value of the sector higher.
As for the downturn at the end of the year, compared to the corrections of the past four to five years, it wasn't particularly large. But what caused this correction? Even from my perspective as a researcher, it's not entirely clear. However, we can roughly deduce that the entry of ETFs has attracted many traditional fund managers, including large asset managers. The operational logic of these fund managers and asset managers is likely to be influenced more by macroeconomic factors.
I understand. In fact, regardless of this correction or previous ones, people often perceive that Bitcoin's price fluctuations are extremely volatile, which is quite different from stocks. What characteristics do the cryptocurrency market or crypto assets possess that lead to such volatility?
First, let's review the past decade. The volatility in the entire virtual asset industry has been significantly higher than that in the stock market or the commodities market. As we entered 2025, we observed that this phenomenon has some differences compared to previous cycles. If we compare Bitcoin's market capitalization to that of some major US stocks and commodities, its current market value is less than one-tenth of gold and about half that of leading US companies like Nvidia and Apple.
If we look at the price volatility of these assets horizontally, we find that Bitcoin's volatility this year has not been significantly higher than that of other US stocks, especially considering that Tesla experienced a significant drop in the middle of the year, which was even larger than Bitcoin's maximum drops this year. In the past, we could see that the pattern behind the dramatic rises and falls involved major capitals entering the market, pushing prices up, and then taking profits. Generally speaking, in previous cycles, the major capital would exit their positions decisively after taking profits. However, this time, due to the entry of ETFs and traditional asset management, the pace and style of these players has changed significantly compared to the past.
Thus, it appears that Bitcoin's price fluctuations may now trend more towards those of major US companies.
I see. Ultimately, we are most concerned about the future and what price trends may look like. What do you believe will be the trend of Bitcoin's price in 2026? Particularly in recent weeks, the market has shifted from extreme panic to a state of fear, which may suggest a potential recovery. What do you think this current stage is, and how do you see it developing in the future?
Let's use history as a guide. In previous cycles, the typical value cycle for Bitcoin and virtual assets has been around three to four years. Many believe Bitcoin has now reached the peak of this cycle. Overall, it feels like there are two voices in the market. The pessimistic voices suggest that if cryptocurrencies follow previous cycles, there could be a significant correction of several tens of percentage points. However, some key opinion leaders in the crypto community suggest that Bitcoin could reach $150,000 by the end of this year or even $250,000 next year.
From my perspective as a Bitcoin maximalist, I think the mission of bringing Bitcoin into the traditional financial sphere has largely been accomplished. However, if we want to see Bitcoin's price comparable to gold, there doesn't seem to be a foundation for societal recognition in the short term; this may take another five to ten years.
After all, gold has a history of several hundred years, while Bitcoin has only been around for a little over a decade. Now, returning to the development of digital currencies in Hong Kong, we've seen local institutions racing to enter the market this year, and the regulatory landscape for cryptocurrencies has undergone many adjustments, such as the introduction of stablecoin policies and sandbox mechanisms. How do you view the impact of these policies launched in Hong Kong on the local market and even the global market? What problems might they pose, or what benefits could they bring?
We can see that in 2025; the promotion of policies and sandboxes is indeed progressing steadily with certain breakthroughs. Hong Kong has become a typical example globally of the positive integration of Web3 and traditional finance. This integration has two aspects: First, there is the gradual flow of traditional financial capital into the emerging Web3 market. Second, there is the gradual diffusion of Web3 technology into traditional finance to empower it. Both of these trends are observable in Hong Kong, with policies in place to encourage and regulate them.
Regarding the entry of traditional financial assets and capital into Web3, we can see that the SFC (Securities and Futures Commission) is steadily advancing Real-World Assets (RWA). We can also appreciate the government's stance, which seems to play a protective role for ordinary retail investors. The actions taken by regulatory bodies like the SFC are commendable, as they are solidly studying various Web3 technologies and market player behaviors to mitigate risks. We'll have to wait and see if more opportunities to bring traditional assets into Web3 will open up in 2026.
On the other hand, the diffusion of Web3 technology into traditional finance is also notable. The HKMA (Hong Kong Monetary Authority) has made significant efforts in this area, launching three to four different sandboxes to promote HKD stablecoins, digital Hong Kong dollars, digital CBDCs, and digital cross-border central bank currency settlements. These initiatives have a very positive starting point and are progressing robustly. However, given the pace of Web3 technological development, traditional institutions tend to adopt new technologies a bit more slowly. We hope to see the HKMA establish a relatively complete infrastructure that can rival traditional large blockchains like Ethereum. Such infrastructure could empower the local market in Hong Kong, enabling the tokenization of traditional assets through these systems.
The impact of the Hong Kong government's initiatives on the world remains to be seen. We hope to see these measures solidly implemented in Hong Kong, and after that, I believe they will naturally attract global players.
Yes, from a policy perspective, it is definitely a process of first establishing regulations, then gradually implementing them to see results. Once positive outcomes are observed locally, the focus can shift from Hong Kong to a global perspective. This is a gradual process. We believe that by 2026, everyone will see different developments in the digital currency market, especially in the realm of compliance, as the trend of integration between traditional finance and digital finance will remain unchanged. This path is already being walked.
Recently, the People's Bank of China held a meeting to combat speculation in virtual assets, conveying a message of strengthening regulation from Beijing, which has raised concerns among many. What do you think this means for Hong Kong, and will this meeting have significant short-term or long-term effects on the digital currency market?
From my personal perspective, I don't place much importance on this work coordination meeting because we've seen stronger policy implementations domestically in 2017 and 2018. Generally, the impact of such regulatory measures tends to diminish over time. Perhaps we can view this meeting as just one of many regulatory emphases; when previous policies start to lose their effectiveness, another policy meeting or coordination meeting may be needed to remind the market about these issues.
From my observations, the fundamental approach to regulating virtual currencies on the mainland has not changed. Those outside the virtual currency industry often see it as filled with many dark and gray areas, as well as deceptive practices. While we cannot deny that there are indeed individuals within the industry with impure motives who exploit emerging fintech to deceive ordinary investors through information asymmetry.
With such issues being impossible to eradicate completely, the consistent theme in the mainland government's policy seems to be cracking down on this industry. In this context, what development opportunities exist for Hong Kong? I believe that practitioners in Hong Kong should not be overly concerned about such policies but rather focus on doing their own jobs well and staying true to their original intentions. If we can engage in principled actions in this alluring industry and empower traditional finance, I believe the future of the entire sector will be positive.
Absolutely, we can all envision the future landscape and what developments should take place. Finally, Professor Liu, I would like to ask you about your expectations or aspirations for market development in 2026.
Alright, let's make a wish here that Bitcoin could double again in 2026. Of course, I also hope that everyone in the industry can come in quietly and focus more on building. I hope regulators can accelerate their learning and trial-and-error processes, so we can see a healthier and deeper integration between Web3 and traditional finance.
Yes, with just a few days left until 2026, we also hope for a continuously improving market. We'll see you in 2026.
Goodbye. Thank you to our guests for their insightful analysis. What opportunities and challenges will the virtual asset sector face in the future? We will continue to track and pay attention to these developments.
【Anchor】That's all for this episode. Remember to follow us on YouTube or download our APP. I'm Yunfei Zhang, thanks for watching, and see you next time.
Anchor: Laura Cheung | Edited: Kelly Yang, Laura Cheung, Rachel Liu | Translate: Kato Ip | Proofread: Chris Liu
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