2024 Economic Review & 2025 Market Outlook

The Return of Trade Protectionism: Geopolitical Shocks Intensify 2025 Market Volatility 

North America Macroeconomic Review & Projections

The Canadian Economy

In 2024, Canada achieved a real GDP growth rate of 1.6%, slightly higher than the 1.5% recorded in 2023. However, this growth appears to be notably weak against the average global economic growth rate of 3.2%. Furthermore, this economic growth did not translate into tangible gains for individuals: Canada’s per capita GDP declined by 1.4% in 2024, marking the second consecutive year of negative growth. This trend reflects that population growth has outpaced economic growth, resulting in reduced per capita output and a diminished sense of economic well-being among Canadians as well.

In contrast, the United States had both overall and per capita GDP growth by 2.8% during the same period, significantly outperforming Canada. This also indicates a more structurally and distributionally sustainable economic growth model. Historically, the divergence in per capita GDP between Canada and the U.S. began around 2015, and the gap has only widened further in the post-pandemic era—highlighting a expanding disparity in the quality and the economic growth rate between the two countries.

According to the latest forecasts from the Organization for Economic Co-operation and Development (OECD), Canada’s economic growth is projected to be just 0.7% in both 2025 and 2026—well below the United States (2.2% in 2025 and 1.6% in 2026) and the global average (3.1% and 3.0%, respectively). This indicates that Canada’s “triple weakness” in capital investment, technological advancement, and demographic structure has pushed the country into a state of structural stagnation.

Raymond James notes that Canada’s challenge is not a lack of population, but rather a “decline in per capita productivity.” While immigration-driven population growth may provide short-term support for GDP figures, it cannot offset the structural disadvantage of persistently declining labor productivity. Since the second half of 2022, Canada’s labor productivity has recorded negative growth for multiple consecutive quarters, in contrast to the continued positive growth seen in the United States. This suggests that Canada’s GDP growth is increasingly reliant on adding more people, rather than each person doing more—growth driven by quantity, not quality.

North American Trade War: U.S. Offensive Strategy

The Shadow of Tariffs Looms: “Trump 2.0” Sparks a North American Trade War

Following Donald Trump re-election in 2024, he swiftly reinstated his “tariffs-first” policy. In early 2025, the United States imposed a uniform 25% tariff on nearly all non-energy goods from Canada and Mexico, extending the measure to global steel and aluminum products. Canada was among the first targets. In retaliation, Canada imposed reciprocal tariffs on 29.8 billion CAD worth of U.S. goods and levied a 100% tariff on Chinese electric vehicles, prompting countermeasures from China, including increased tariffs on Canadian agricultural products. These developments have further heightened global trade tensions.

Canada’s vulnerable position in this round of trade friction is not coincidental—it stems from its heavy reliance on exports, particularly to the United States. Approximately 76% of Canada’s total exports are destined for the U.S., reflecting an extremely high dependence on a single market. Exports account for about 34% of Canada’s GDP, with exports to the U.S. alone contributing roughly 20%.

This high concentration means that any disruption in U.S.-Canada trade relations would directly impact the Canadian economy, which lacks effective buffers and the capacity to diversify into other external markets. Among major economies, Canada’s dependence on U.S. exports is second only to Mexico and Vietnam. In contrast, countries like Japan, the European Union, and China exhibit significantly lower levels of reliance on the U.S.

Key Impacted Sectors: Energy, Automotive, Agriculture, and Primary Manufacturing

• Energy Products (26%): Including oil, natural gas, and electricity. Although the U.S. imposed a relatively lower tariff of 10%, the impact remains significant.

• Automobiles and Parts (10%): The U.S. plans to impose a 25% tariff, which is expected to raise the cost of each vehicle by $4,000–$12,000.

• Agricultural Products, Plastics, and Basic Metals: These sectors are caught in the crossfire of U.S.-China trade tensions, facing restricted export markets.

Due to the high concentration of these products in exports to the U.S., the establishment of tariff barriers poses systemic risks to Canada’s export supply chain.

Current Reactions: Consumer Inflation, Corporate Price Adjustments, and Rising Support for Domestic Goods

In response to escalating trade tensions, the Canadian government announced in April 2025 that they would impose a 25% tariff on all U.S.-made vehicles that do not comply with the United States-Mexico-Canada Agreement (USMCA) rules. The move aims to curb further conflict and strengthen protection for domestic industries. This policy triggered immediate market reactions: On the retail side, slogans like “Buy Canadian Instead” emerged, reflecting a surge in domestic protectionist sentiment. At the corporate level, businesses accelerated adjustments to import schedules and inventory strategies to mitigate potential supply disruptions and cost pressures.

Meanwhile, consumers have already begun to feel the inflationary effects with rising product prices as companies pass on higher costs. Financial markets have also shown signs of risk aversion: the Canadian dollar weakened in the short term, asset volatility increased, and investor risk tolerance declined, leading to a more cautious market sentiment.

U.S. vs. Canada Economic Conditions

Growing Concerns Over the Ineffectiveness of Canada’s Monetary Policy

Despite the Bank of Canada cutting its policy interest rate seven times since mid-2024, lowering it from 5% to 2.75%, a total reduction of 2.25 percentage points—far exceeding the 18% cut by the Federal Reserve during the same period—the effects of the easing policy have been limited.

Economic growth remains sluggish, with the OECD forecasting a GDP growth rate of only 0.7% in 2025. Meanwhile, inflation has rebounded to 3.1%, significantly above the 2% target, indicating that monetary policy is struggling to stimulate the economy and control prices, thus putting the country at risk of stagflation.

 U.S. Policy Longevity and Macroeconomic Management

In contrast to Canada’s aggressive rate cuts, the U.S. Federal Reserve has demonstrated greater policy restraint, reducing interest rates modestly from 5.5% to 4.5%. Despite the smaller adjustment, the U.S. economy is expected to grow by 2.8% in 2025, with inflation easing to 2.8%, achieving a near economic soft landing. Since peaking in 2022, U.S. inflation has steadily declined, whereas Canada experienced a rebound in early 2025, with February’s CPI rising to 2.6%—an eight-month record high—underlining the limited effectiveness of its accommodative policy stance.

Canadian Dollar Depreciation + Inflation Rebound: A Double-Edged Pressure

Since 2024, the Canadian dollar has experienced continuous depreciation against the U.S. dollar, falling from 1:0.7553 at the beginning of the year to 1:0.6965 by year-end—an over 8% decline. This trend intensified in 2025, with the exchange rate hitting a low of 1:0.6796, marking a cumulative drop of 10% and reaching a multi-year low. This reflects Canada’s weakening position in global capital flows.

In 2024, Canada’s Consumer Price Index (CPI) briefly fell to 1.6%. However, with the combined effects of currency depreciation and rising tariffs, inflation quickly rebounded to 2.6% by early 2025, once again exceeding the policy target. The main channels for this inflationary pressure include:

• Rising costs of imported goods

• Increased input costs for production equipment and intermediate goods

• Businesses passing on price pressures onto consumers

This not only erodes real purchasing power for households but also further constrains the room for monetary policy maneuvering.

A Clear Contrast with the U.S.:

• The U.S. Consumer Price Index (CPI) has remained around 3%, falling to 2.8% in 2025.

• A strong U.S. dollar has helped lower import costs, effectively easing imported inflation.

• Inflation targets were met with just three rate cuts.

The Federal Reserve’s strategy of high interest rates with minimal intervention has proven more effective in curbing inflation, demonstrating strong policy impacts.

Canada Trapped in Stagflation, While the U.S. Maintains Steady Growth

In 2025, Canada is gradually slipping into a classic stagflation scenario: stagnant economic growth, rising inflation, increasing unemployment, and virtually no room left for monetary policy maneuvering. From 2023 to 2024, Canada’s per capita GDP declined for two consecutive years, with a 1.4% drop in 2024. The OECD projects that economic growth will remain below 1% through 2025 and 2026. Despite the Bank of Canada cutting rates seven times over nine months—amounting to a 45% reduction—CPI rebounded to 2.6% in early 2025, indicating diminishing policy effectiveness. The labor market has also continued to deteriorate, with the unemployment rate rising to 6.8% in 2024. TD and BMO forecast it will climb further to 7% in 2025. Structural issues are becoming more apparent: limited capacity to absorb immigration and weakening consumer spending are putting continuous pressure on per capita economic growth.

In contrast, the U.S. has demonstrated stronger growth resilience and policy flexibility. Per capita GDP continues to rise in 2025, with overall economic growth expected to exceed 2%. CPI remains at 2.8%, close to the policy target, and the unemployment rate is stable at around 4.4%, with potential for further improvement. The Federal Reserve has adopted a gradual approach to policy adjustments, preserving ample room for future actions. Although the Trump administration’s high-tariff measures may temporarily push inflation to 3.2%, the strong U.S. dollar helps mitigate imported inflation, and a robust labor market continues to support domestic demand. Conversely, Canada finds itself in a state of policy exhaustion, marked by limited interest rate flexibility, uncontrolled inflation, and currency depreciation—conditions that are compounding the risk of prolonged stagflation.

Rising Risks in Secondary Market Investments

The Sword of Damocles Hanging Over the U.S. Stock Market: A Concentration Risk Analysis of the Magnificent Seven

In 2024, U.S. stocks delivered an impressive performance, with the S&P 500 posting a 24% annual return. However, beneath this surface-level prosperity lies a structural risk: over 55% of the index’s gains were driven by just seven companies—the so-called Magnificent Seven: Apple, Nvidia, Amazon, Alphabet (Google’s parent company), Meta, Microsoft, and Tesla.

Together, these seven companies account for 35.4% of the S&P 500’s total market capitalization and contributed more than half of its annual returns—underscoring a “rising tide lifts all boats, sinking tide drags all down” dynamic. Nvidia stood out with its stock price surging 171% over the year—far outpacing Bitcoin’s 120% gain—and alone contributing one-fifth of the S&P 500’s total return.

Moreover, these tech giants face systemic vulnerabilities in their business structures. A key concern is geographic concentration: 60% of the Magnificent Seven’s profits come from outside the United States. As global consumer demand slows, the U.S. dollar strengthens, and geopolitical uncertainties persist, these external factors could significantly undermine their earnings potential.

2025 Investment Strategy Assessment

As economic divergence becomes increasingly pronounced in 2025, investment strategies must adapt accordingly. Based on a risk-return analysis across multiple asset classes, two primary directions emerge: one includes high-risk sectors that should be avoided or approached with caution, while the other comprises preferred assets that align with macroeconomic trends and offer sustainable growth potential.

Investment Areas Unlikely to Deliver Sustainable Returns：

Amid a complex macroeconomic environment and heightened policy uncertainty, the following three sectors face structural headwinds and are unlikely to provide stable returns in the near term:

1.  U.S. and Canadian Manufacturing, Automotive, and Export-Oriented Industries

These sectors are under dual pressure from frequent tariff policy shifts and supply chain disruptions. Elevated tariffs are driving up import costs and squeezing profit margins. The situation is particularly acute given the increasingly complex trade dynamics between North America and Asia, which are exacerbating risks around the supply of critical components. The U.S. auto parts industry is especially vulnerable to sudden trade barriers.

2. Canadian Real Estate Construction Sector

The construction industry is facing a structural blow from rising costs and weakening demand. Labor shortages, surging material prices, and persistently high interest rates are driving up construction expenses. Meanwhile, the unemployment rate is projected to rise to 6.2% in 2025, dampening housing demand. Non-residential development appetite is waning, and with home prices expected to decline by 4.1% in 2025, overall market momentum remains weak. Data from British Columbia shows a simultaneous drop in both housing project initiatives and transaction volumes, underscoring the sector’s fragile fundamentals.

3. Small and Mid-Sized Tech Firms in the U.S. and Canada

While the AI boom has concentrated market attention on the “Magnificent Seven,” small and mid-sized tech companies are struggling to attract capital and visibility. Their valuations are overly dependent on thematic narratives, and in a high-interest-rate environment, financing remains difficult. These firms often lack pricing power and face mounting pressure from R&D, operational costs, and capital expenditure. As a result, their performance is highly sensitive to external shocks, making it difficult to deliver sustainable returns.

Investment Directions Aligned with Economic Trends

Under the current background of stable macroeconomic projections, shift in interest rate policy, and easing inflation, the following three asset classes are more closely aligned with prevailing economic trends:

1. U.S. and Canadian Residential Real Estate (Completed Houses)

Real estate, as a counter-cyclical asset, is once again demonstrating its resilience due to its inelastic demand. As the Federal Reserve enters a rate-cutting cycle, mortgage pressure is expected to ease, gradually restoring homebuyer confidence. In Canada, major cities are already showing signs of recovery in transaction volumes, with price corrections largely completed and room for valuation recovery beginning to open-up. As inflation declining and interest rate expectations falling, the residential real estate market in both the U.S. and Canada presents solid short- to medium-term allocation value—particularly suitable for conservative capital.

2. Defensive Assets and Infrastructure Investments

In an environment of heightened market volatility, Alpha-focused hedge funds—designed for absolute returns—can effectively hedge against beta risk and demonstrate greater resilience. At the same time, infrastructure assets offer natural inflation protection, especially in sectors closely tied to economic cycles such as transportation and power grids, as well as essential public services. These assets provide stable cash flows and a low correlation with broader markets. Both the U.S. and Canada are expanding infrastructure spending, these government fiscal supports will offer long-term growth prospects for infrastructure investment projects and companies.

3. Valuation Recovery Opportunities

Private equity and secondary market assets are undervalued while showing strong rebound potential driven by expectations of interest rate cuts. These assets benefit from a dual engine of recovery & growth, offering investors attractive risk-adjusted returns. Additionally, Alpha strategy funds leveraged their low correlation and active management to prove themselves more stable and appealing than traditional 60/40 portfolios in today’s high-valuation and low-growth environment; poised to become a core pillar in modern asset management frameworks.

Hedge Fund Market Projections: Reassessing Traditional 60/40 Portfolio

Hedge Fund: The “New Core Asset” Amidst Failure of 60/40

For decades, the traditional 60% equities + 40% bonds portfolio has been regarded as the golden standard for balancing risk and return. However, in today’s environment of simultaneous equity, bond declines, and persistently high interest rates, this model is steadily losing both its defensive and growth attributes. From a valuation standpoint, U.S. stocks have significantly deviated from historical norms. As of the end of 2024, the S&P 500’s 10-year price-to-earnings ratio (P/E10) had reached +2.0 standard deviations above the mean, signaling a notable bubble risk and limited room for future returns.

At the same time, the traditional buffering role of the bond market has weakened. In 2022, U.S. bonds posted a historic -13% annual return. Although there was some recovery in 2024, the annual return remained negative at -0.7%. Two consecutive years of negative returns—an extremely rare occurrence—highlight the diminished hedging effectiveness of fixed income assets in a high-inflation and high-interest-rate cycle. This points to a structural challenge for traditional asset allocation models.

As the defensive strength of the 60/40 strategy erodes, markets are increasingly turning to more resilient alternatives. Hedge funds, with their multi-strategy frameworks, low market correlation, and robust risk-adjusted returns, are emerging as a new generation of core assets. Their greatest advantage lies in strategic flexibility—employing long/short, market-neutral, and event-driven approaches to adapt to varying market conditions. By leveraging derivatives and selective use of leverage, hedge funds enhance capital efficiency and generate alpha. Unlike traditional assets that rely on beta-driven returns, hedge funds emphasize active management, offering greater independence and downside protection in high-valuation & high-volatility environments.

This trend is supported by long-term data as hedge funds have outperformed the traditional 60/40 portfolio, particularly, in periods of high interest rates and valuation bubbles. According to Preqin, hedge funds delivered an annualized return of 10% in 2024, with equity strategies reaching 12% and crypto-related strategies as high as 16%. Institutions such as Barclays and Deloitte also report that institutional investors are shifting from traditional assets toward more liquid and stable-return hedge fund vehicles.

 (Long-term performance approaches stock indices, outperforming bonds, commodities, and the 60/40 portfolio.)

Data further shows that when the Federal Reserve’s benchmark rate exceeds 2%, hedge fund indices tend to outperform significantly compared to low-rate periods. Additionally, when the S&P 500’s P/E ratio exceeds 25 (currently between 26–28), approximately 70% of hedge funds achieve annualized returns 3–4% above the stock market. In today’s environment of elevated rates and valuations, institutional investors widely recognize hedge funds as a compelling and essential component of modern asset allocation.

Increase of Allocation Ratio: Fast Inflows from Institutional Capitals

Hedge funds have emerged as the most preferred asset class among all investment categories - a trend that is particularly evident across various types of institutional investors.

The proportion of pension funds and insurance companies planning to allocate to hedge funds is expected to rise from 9% to 19%. Similarly, the share of endowments, foundations, and sovereign wealth funds with such plans is projected to increase from 21% to 25%. Within private banking channels, hedge funds have even greater acceptance rates, approximately 50% of high-net-worth clients intend to maintain or increase their allocations, making them the most actively engaged investor group in this space.

Private Equity Investments: A Strategic Asset to Break “Impossible Trinity”

The Impossible Trinity of Private Equity

In the asset allocation process, investors often face a structural challenge - difficulty of achieving return, safety, and liquidity simultaneously. Traditional asset classes each have their strengths but also inherent limitations as stocks offer growth potential yet are highly volatile. While bank deposits or fixed-income products provide safety and liquidity but deliver relatively modest returns. This “investment impossible triangle” represents a fundamental dilemma in long-term portfolio construction.

Private equity, by sacrificing some liquidity, offers higher long-term returns and stronger risk management, making it a strategic tool to overcome structural constraints. Its longer investment horizon allows it to grow with companies and capture valuation benefits at exit. It is also less affected by short-term market fluctuations, providing good cyclical resilience and optimizing portfolio risk. With active management, investors can enhance value through governance and operations, improving both fundamentals and valuations.

As demand for stable returns and diversification grows, many sovereign wealth funds, pension funds, and long-term capital institutions have added private equity to their core asset pools, seeing it as a long-term engine for navigating economic cycles.

Why Now to Invest in Private Equity?

The period from 2024 to 2025 is widely regarded as a strategic window for positioning in the private equity market, driven by valuation recovery potential, turning point in the interest rate cycle, and broad-based industry rebound three key factors:

First, the valuations are at a low. Public market valuations have surged, S&P 500’s price-to-earnings ratio has climbed to 28x, well above historical averages, but private market valuations have remained suppressed over the past two years due to financing constraints and delayed exits. Many high-quality projects are currently undervalued, offering significant room for revaluation.

Secondly, a turning point in the interest rate cycle is forming. Private equity valuations are highly sensitive to interest rate trends. Elevated rates suppress deal activity and compress valuations, but once rate cuts begin then improved financing conditions typically lead to a rebound in both deal flow and valuations. The current environment marks the early stage of a global rate-cutting cycle, making the next 2–3 years a critical period for improving liquidity.

Thirdly, industry’s rebound trends are positive. According to forecasts from institutions such as BlackRock and Morgan Stanley, as market sentiment recovers and capital costs decline, exit activity, particularly M&A and IPOs, is expected to rebound significantly. This will directly enhance asset liquidity and investment returns, injecting fresh momentum into the private equity market.

Whether viewed from the lens of valuation, capital environment, or exit outlook, private equity stands out as a scarce-value asset class in today’s macroeconomic landscape. For investors seeking stable medium- to long-term returns, early allocation to private equity offers the potential to capture valuation recovery gains across the cycle.

Resurgence of Trade Activities; Capital Poised to Enter Market

As the financial landscape continues to recover, transaction activities in the private equity market are picking back up. BlackRock forecasts that 2025 will mark a turning point for the return of M&A and IPO activities, with the reopening of exit channels expected to drive a broader recovery in valuations. Morgan Stanley also notes that declining financing costs will enhance deal-making efficiency, improve valuation flexibility, and strengthen price discovery mechanisms.

On the valuation front, the private equity market is exhibiting a rare value gap effect. As of mid-2024, the EV/EBITDA multiple for S&P 500 had rebounded to 16.5x, while private assets remained at just 12.7x—a valuation gap of 3.8x, nearing historical extremes. This divergence between public and private market pricing presents a highly attractive strategic entry point for long-term capital allocations.

From a long-term perspective, private equity has demonstrated strong capital appreciation capabilities. According to data from Franklin Templeton, private equity delivered annualized returns of 15.15% and 15.90% over the past 10 and 16 years respectively, significantly outperforming public equities, which returned 7.43% and 9.34% over the same periods. This performance highlights private equity’s resilience across economic cycles and its powerful compounding advantage.

Artificial Intelligence: Soaring Growth Amid Valuation Bubbles

2024 has been crowned as the breakout year for generative artificial intelligence, with the technology continuing to gain momentum and becoming a central focus for both the tech industry and capital markets. Major players such as Microsoft, Google, Meta, OpenAI, and Amazon have been rapidly iterating on their large language model offerings. At the same time, emerging challengers like xAI (Grok), Anthropic (Claude), and Google Gemini have quickly risen to prominence, creating a competitive landscape.

The rapid evolution of AI technology has also accelerated its real-world application. Leading enterprises across sectors, including financial institutions like Morgan Stanley and Bank of America, retailers like Walmart and the Big Four accounting firms have deeply integrated generative AI into their business operations, driving a comprehensive transformation toward AI automated industries.

Risks Behind the Market: The Valuation Bubble Amid Capital Frenzy

Despite the transformative potential of AI, signs of a valuation bubble are beginning to emerge. Deepseek, for instance, achieved performance close to GPT-4 with a training cost of under $5 million, challenging the conventional logic of high-cost model development. This development triggered a sharp market reaction: Nvidia’s stock plummeted 17% in a single day, wiping out nearly $589 billion in market capitalization, the largest single-day value loss in U.S. stock market history. This event underscores the overheating risk embedded in the market’s overly optimistic sentiment toward AI.

According to data from Precedence Research, the AI market is expanding rapidly, with a compound annual growth rate (CAGR) exceeding 27%, indicating vast growth potential:

• Global AI Market Size: $1.7 trillion in 2023 projected to reach $233.4 billion in 2024, Estimated at $294.2 billion in 2025, CAGR: 27.67%

• Generative AI Market Size: Estimated at $25.86 billion in 2024, Expected to surpass $1 trillion by 2034, CAGR: 30%

Dissecting the AI Industry: Data Collection at the Core

The explosive growth of generative AI has led to the formation of a highly structured value chain, which can be broadly divided into three core segments: upstream hardware supply, midstream computing infrastructure, and downstream model development and application deployment. At the center of this ecosystem are data centers, which serve as the backbone platform connecting the entire value chain and are now considered the foundational infrastructure for AI commercialization.

Upstream: Computing Hardware Manufacturers Drive Core Supply

The foundational layer of AI technology relies on high-performance computing hardware. This segment is dominated by companies such as NVIDIA, AMD, and Huawei, which focus on the production of GPUs, AI chips, and server hardware. Notably, NVIDIA holds an estimated 92% market share in the global data center GPU market, placing it in a near-monopoly position and making it the central supplier in the AI compute ecosystem.

Midstream: Compute Infrastructure and Energy Systems

The midstream is led by cloud service providers such as AWS, Microsoft Azure, and Google Cloud, which deploy large-scale training model platforms within internet data centers (IDCs). These platforms provide essential support services including power supply, cooling systems, and GPU configurations. According to BCG, global data center electricity demand is expected to grow 122% in 2025 as driven by generative AI, highlighting the sector’s heavy reliance on energy and physical infrastructure.

Downstream: Model Development and Industry-Level Applications

AI companies such as OpenAI, Anthropic, and Deepseek leverage midstream platforms to train large models and deploy them across a wide range of industries, including finance, retail, enterprise productivity, and education. The rapid commercialization of downstream applications is becoming the key driver of value realization across the entire AI value chain, propelling the technology from research labs into large-scale, real-world utilization.

Challenges in Power & Capacity: Data Centers Struggle to Meet Demand

Despite the rapid global expansion of data centers, the explosive computing power demands driven by generative AI remain difficult to meet. Over the next decade, global data center electricity supply is projected to grow at an annual rate of 15%–16%, yet this still lags behind the pace of AI model training and deployment. As of 2024, global in-construction IDC (Internet Data Center) capacity has reached 6,350 megawatts, which is double that of 2023.

However, the vacancy rate for U.S. data centers has dropped to a historic low of 1.9%, highlighting a structural supply-demand imbalance. This resource strain is also driving up operational costs. Between 2023 and 2024, U.S. data center rental rates rose by 12.6%, reaching a record high of $184.06 USD/ kilowatt/ month. The dual scarcity of power and space is becoming a bottleneck to the large-scale development of the AI industry.

Faced with long construction cycles and tight power supply, tech giants and major capital players are accelerating their use of mergers and acquisitions as a shortcut to scale. In 2024, global M&A activity related to data centers surpassed a record high of $73 billion. Key acquirers include tech leaders such as Amazon, Meta, and Google, as well as top private equity firms like Blackstone and KKR. According to BCG, these “super buyers” are expected to drive approximately 60% of industry growth over the next three years, becoming a central force in the global expansion of the data center market.

This trend not only underscores the value of data centers as a new class of real estate assets—characterized by high liquidity, high demand, and high returns—but also signals a shift in computing infrastructure from behind-the-scenes utility to a core focus of capital markets. Data centers are rapidly becoming a strategic priority in global asset allocation.

Institutionalization of the Crypto Industry: Bitcoin Enters Mainstream

2024 is widely regarded as a turning point for the formalization and institutionalization of Bitcoin along with the broader cryptocurrency sector. Regulatory breakthroughs, the launch of financial products, and supportive policy developments have collectively enabled Bitcoin to enter the global mainstream financial system for the first time.

Spot Bitcoin ETFs Approved: Institutional Access Officially Opens

In January 2024, the U.S. Securities and Exchange Commission (SEC) approved the first spot Bitcoin ETFs, marking the first time Bitcoin received formal recognition as a regulated financial asset. Leading asset managers such as BlackRock, Fidelity, and ARK to quickly launched their own products. By mid-year, total assets under management in spot Bitcoin ETFs had surpassed $134.5 billion, significantly lowering the entry barrier for institutional investors and enabling large-scale participation from hedge funds, pension funds, and other traditional capital sources.

Policy Momentum: Trump Pushes for Bitcoin as a “National Strategic Asset”

Following the 2024 U.S. presidential election, Donald Trump’s strong endorsement of Bitcoin further boosted market confidence. He advocated to include Bitcoin in the national strategic reserve, becoming the first presidential candidate to accept Bitcoin for political donations, and hosted a Bitcoin summit at the White House after winning the election. He also established a dedicated federal agency for digital asset management. These actions are widely seen as the first systematic endorsement of crypto assets by the U.S. government.

Multi-Sector Development: From Trading Asset to Pillar of Infrastructure

With the official approval of spot Bitcoin ETFs, 2024 marks a critical turning point for the cryptocurrency industry, ushering in a new era of diversified access, institutional integration, and cross-sector evolution.

Dual Access Channels: Exchanges + ETFs

Bitcoin is now primarily accessed through a dual channel structure. Traditional trading platforms such as Coinbase, Binance, and Kraken remain the main entry points for some institutional capital and retail investors. At the same time, the launch of spot ETFs has attracted significant institutional inflows. Products from asset managers like BlackRock, Grayscale, and Fidelity have further standardized the circulation pathways, enhancing Bitcoin’s regulatory compliance and investment attractiveness.

Mining Remains the Sole Supply Mechanism

Despite the growing institutionalization of Bitcoin circulation, its supply remains strictly dependent on mining as the sole issuance mechanism, a foundational logic that has yet to be replaced. As the systemic source of new Bitcoins, mining continues to underpin the long-term sustainability of the Bitcoin network.

Industry Trends: From Volatile Assets to Infrastructure Participant

High Market Volatility and Ongoing Regulatory Progress

Bitcoin continues to exhibit significant price volatility and remains highly correlated with stock markets. Major markets led by the United States are accelerating regulatory efforts, and traditional financial institutions such as Morgan Stanley and JPMorgan have begun incorporating Bitcoin into their long-term allocation strategies, viewing it as a hedge against inflation and a source of non-traditional alpha.

Growing Utility in the Public Sector

Bitcoin’s payment functionality is gradually expanding into public-sector applications. Discussions are underway at both the U.S. federal and state levels to allow Bitcoin for tax payments and public service transactions. In Switzerland, Bitcoin is already accepted for paying utility bills, signaling a shift from private sector use to broader public adoption.

Mining Industry Transformation: From Coin Issuance to AI Infrastructure

As Bitcoin price volatility increases and mining returns decline, Bitcoin mining is evolving from a pure arbitrage activity into a strategic play for control over computing power and energy. Only large-scale operators with access to low-cost electricity, land, cooling systems, and GPU resources are positioned for long-term survival. Notably, the “power + compute” infrastructure accumulated by mining companies over the years aligns closely with the operational demands of today’s generative AI models. This synergy is enabling mining firms to pivot into AI infrastructure providers—repurposing their GPUs, data centers, and energy assets into platforms for model training. This marks a significant cross-sector leap from minting coins to powering AI.

2025 Investment Projections & Strategies

Enoch Wealth remains a positive outlook on North American Residential Real Estate, with a focus on the following areas:

• Canadian Multi-Family Residential REITs: Enoch Wealth will continue its close collaboration with Avenue Living & Centurion. Through selective asset acquisition and active management strategies, we will continue to invest deeply in multi-family rental properties across key regions including the Prairie Provinces (ex. Alberta, Saskatchewan, Manitoba), Vancouver, Calgary, and Ottawa, capturing both rental income growth and capital appreciation.

• U.S. Residential REITs: We are actively seeking high-quality U.S. residential REITs, with a focus on premium mid- to upper-tier rental assets. Partnering with leading asset managers, we aim to leverage their expertise in acquisition, post-lease management, and asset disposition to enhance portfolio value and cash flow stability.

• High-Quality Residential Mortgage Investments: Given the attractive yield spreads and manageable credit risk, we continue to focus on mortgage platforms with strong credit quality. Strategic partnerships have been established with Capital Direct, Peakhill, and Ginkgo to provide a reliable source of fixed income for our portfolios.

Beyond traditional real estate, we are also actively expanding into the following alternative asset classes:

• ICM Crescendo Music Royalty Fund：By leveraging long-term tracking and professional valuation of music copyright cash flows, this fund offers investors predictable returns and strong downside protection in inflationary environments.

• Private Equity—North Haven Capital Partner Series：We are introducing the long-established NHCP series to the Canadian market, targeting high-quality and mature service-sector companies in the U.S. Through structured equity and M&A strategies, the fund aims to mitigate global trade risks while securing sustainable cash flows and valuation upside.

• Secondary Market Hedge Fund Strategies: For investors seeking liquidity and tactical market opportunities, we offer a curated portfolio of BlackRock’s global hedge fund strategies. These are designed to capture Alpha gains in volatile markets while reducing overall portfolio volatility through diversified approaches.

• Crypto Assets – Bitcoin Mining Exposure: Based on Bitcoin’s long-term value trajectory, we are investing in proprietary data centers and hardware infrastructure to provide clients with direct exposure to Bitcoin mining. This approach offers inflation protection through tangible assets while sharing in the upside of emerging digital assets.

With deep allocations across North American residential real estate, high-quality credit, music royalties, private equity, hedge funds, and digital assets—and in partnership with top-tier industry players—Enoch Wealth is committed to delivering sustainable, risk-adjusted returns through diversified asset allocation and active management, effectively mitigating uncertainty from market volatility.

RISK DISCLOSURE

Investing in securities and other financial products involves a variety of risks that may result in partial or total loss of principal. The strategies and market insights discussed herein are subject to, among others, the following risks:

• Market Risk: The value of securities can fluctuate daily due to economic, political, and market-specific factors. There is no assurance that any investment strategy will achieve its stated objectives.

• Liquidity Risk: Some investments may be less liquid than others or illiquid, meaning they might be difficult to sell within a reasonable timeframe, or without significantly impacting their price, potentially preventing a sale at or near their stated value.

• Capital at Risk: Some investments may include a high degree of risk, including the possibility of total capital loss. Investors may not recover the initial amount invested, and past performance is not indicative for future returns, as actual outcomes may differ materially from historical results.

• Credit and Counterparty Risk: The possibility exists that issuers or counterparties may fail to meet their financial obligations.

• Currency and Political Risk: Investments in foreign markets may be adversely affected by fluctuations in currency exchange rates, changes in governmental policies, or political instability.

• Concentration Risk: Non-diversified portfolios, or those concentrated in a specific sector or asset class, may experience higher volatility if conditions affecting that area deteriorate.

• Derivatives and Leverage: The use of derivative instruments or leverage can amplify both gains and losses, and may introduce additional risks including valuation, correlation, and counterparty risks.

• Lack of Information or Operating History: Investments in exempt securities with limited operating histories or information may carry additional risk, as there may be insufficient data to assess the stability, performance, or management track record. The absence of a proven history increases the uncertainty and potential for unforeseen challenges. 

Investors should be aware that these and other risks can cause investment results to vary significantly from the objectives set forth in this publication. No assurance is given that any investment strategy or market insight will be successful, and all investments carry inherent risks, including the potential loss of principal.

IMPORTANT NOTICE

The views and opinions expressed herein are solely those of the author(s) as of the publication date and do not necessarily reflect the views of Enoch Wealth Inc. or its affiliates. This material is not intended for distribution to, or use by, any person or entity in any jurisdiction where such distribution or use would be contrary to applicable laws or regulations. Recipients of this material should ensure that they comply with all relevant local legal and regulatory requirements.

Before acting on any information contained in this publication, readers should consider their own financial situation and risk tolerance and seek independent professional advice as necessary.

DISCLAIMER

The information contained herein is for general informational and educational purposes only and does not constitute an offer, solicitation, or recommendation to buy or sell any securities or financial products. The market insights, opinions, and analyses expressed in this publication are those of the author(s) as of the date of publication and are subject to change without notice. They are not intended to be, and should not be construed as, personalized investment advice or a substitute for professional advice tailored to your specific financial circumstances. Neither Enoch Wealth Inc. nor its affiliates shall have any liability or obligation to any party for any loss or damage arising directly or indirectly from the use of, or reliance on, the information provided herein.

Investors are advised to perform their own due diligence and consult with an independent financial advisor, accountant, or attorney before making any investment decisions. Past performance is not indicative of future results, and no representation is being made that any account will or is likely to achieve profits or losses similar to those reported.