2024 Crypto Market Review and 2025 Outlook

2024 is an important year in the history of cryptocurrency. Centered around two core topics: ETFs and the U.S. presidential election, the crypto industry has made breakthroughs led by Bitcoin. Publicly listed companies, traditional financial institutions, and even national governments have all entered the market, significantly increasing its mainstream acceptance and recognition. The regulatory environment has also gradually become clearer and more lenient with the new government taking office, with mainstream integration, path differentiation, and regulatory evolution becoming the main themes of the industry this year.

2024 Year in Review

Bitcoin is undoubtedly the core protagonist this year. ETFs and national reserves have driven Bitcoin to exceed $100,000, marking its formal transcendence beyond the crypto market, becoming a globally recognized anti-inflation asset and a means of value storage. Bitcoin is advancing from digital gold to a super-sovereign currency, with Satoshi Nakamoto's financial experiment achieving a significant milestone. At the same time, the Bitcoin ecosystem is also expanding; although applications like inscriptions and runes fluctuate, a diverse ecosystem has begun to take shape. The total locked value of Bitcoin DeFi has surged from $300 million at the beginning of the year to $6.755 billion, growing over 20 times. The broader BTCFi has performed impressively, with Bitcoin ETF shares skyrocketing, and MicroStrategy being included in the Nasdaq 100 and being emulated, reflecting Bitcoin's overwhelming advantage in the CeFi sector.

Ethereum has had a relatively tough year, with poor asset performance, a decline in value capture and user activity, and a weakening narrative power. There is consensus on the revival of DeFi, but apart from the re-staking that has sparked a TVL nesting trend, actual investments are insufficient. The emergence of the derivatives dark horse Hyperliquid at the end of the year not only impacts CEX but also brings hope to DeFi. On the other hand, the acceleration of Layer 2 competition after the Dencun upgrade is eating into the mainnet's share, triggering a major discussion in the market about Ethereum's mechanism. Even the rapid growth of Base has led to speculation in the market that Ethereum's future may belong to Coinbase.

Solana has risen strongly this year, forming a striking contrast. From the perspective of TVL, Ethereum's market share has decreased from 58.38% at the beginning of the year to 55.59%, while Solana has surged from zero to 6.9%, becoming the second largest public chain after Ethereum. The price of SOL has skyrocketed from 6 dollars two years ago to 200 dollars, with an increase of over 100% this year. With its low-cost and high-efficiency advantages, Solana targets core liquidity positioning and has become the undisputed "MEME King" and a hub for retail investors, aided by Degen culture. Solana's average daily on-chain fees have repeatedly surpassed those of Ethereum, and the number of new developers has also exceeded that of Ethereum, showing a clear trend of overtaking.

TON and SUI have also emerged as standout players. Telegram has propelled TON into a fast growth lane, accumulating over 38 million on-chain users and a trading volume exceeding $2.1 billion. SUI has rapidly risen due to its price performance and the advantages of the Move language. During the same period, Aptos, despite weaker price performance, has garnered more interest from traditional capital, successfully collaborating with institutions like BlackRock, potentially seizing opportunities in the new cycle of RWA and BTCFi.

MEME is the main driving force in the market this year. The rise of MEME marks a shift in the market landscape, with VC tokens losing favor as excess liquidity flows towards segments with stronger fairness and profit-seeking. The connotation of MEME continues to expand, evolving from pure speculation to a representation of cultural finance, with "everything can be MEME" happening in reality. Although its market cap share is not high, MEME's trading volume consistently accounts for 6-7%, recently reaching 11%, making it the primary track of concentrated liquidity. According to data, MEME has captured 30.67% of investors' attention this year, ranking first among all tracks. Pre-sale fundraising, celebrity tokens, zoo battles, PolitFi, and AI have all become hot topics within the industry.

The infrastructure surrounding MEME continues to improve, and the fair launch platform Pump.fun has emerged, reshaping the MEME landscape and becoming one of the most profitable and successful applications this year. In November, Pump.fun became the "first Solana protocol to break $100 million in monthly revenue." As of December 22, its cumulative income exceeded $320 million, with a total of about 4.93 million tokens deployed.

However, platform profitability does not equate to user profitability. Considering the extremely low success probabilities and the increasingly prominent trend of MEME institutionalization, users find it difficult to avoid the fate of being cut or cutting others. Therefore, adding fundamentals to MEME has become a new model for projects, but most are still fleeting, with "quick in and quick out" remaining the mainstream.

Affected by the U.S. elections, the prediction market platform Polymarket has emerged. In October, it reached 35 million visits, double that of mainstream betting sites, with monthly trading volume skyrocketing from $40 million in April to $2.5 billion. A broad user base and genuine demand highlight its value, earning high praise from Vitalik Buterin. Although large-scale conversion of crypto users has not been achieved, a new hybrid model of media and betting is taking shape.

At the end of the year, AI has transitioned from technology to application, becoming a dark horse in the Web3 field once again. MEME has taken the lead, and Truth Terminal has brought forth the hundredfold legends of GOAT, ACT, Fartcoin, igniting a frenzy of AI Agent applications. Mainstream institutions generally have a positive outlook on AI Agents, believing they are likely to become the second phenomenal track after DeFi. Currently, the infrastructure in this field is not yet complete, and applications are mostly concentrated on the surface with MEME, Bots, etc., while the deep integration of AI and blockchain is relatively rare. However, newness also means opportunity, and cyber-style coin trading is worth anticipating.

PayFi serves as a bridge connecting traditional finance and Web3, playing an important role in this bull market. Stablecoins and RWA are typical representatives of this trend. This year, stablecoins have rapidly grown in the crypto market, securing a place in the global payment and remittance market. Regions such as Africa, Latin America, and Eastern Europe are beginning to bypass traditional banking systems, directly adopting stablecoin transaction settlements, with a year-on-year growth of over 40%. Currently, the circulating value of stablecoins exceeds $210 billion, with approximately 20 million addresses conducting stablecoin transactions each month. Ethena is the most outstanding stablecoin project this year, sparking a wave of yield-bearing stablecoins. RWA was completely ignited after BlackRock's entry; it had a market value of only $2 billion three years ago, but has now expanded to $14 billion, covering multiple fields including lending, real estate, stablecoins, and bonds.

PayFi is developing in line with market trends. Due to internal growth hitting a bottleneck, the mainstream institutional market has become a new area for growth. It is worth noting that PayFi is also the most favored Web3 track by the government, as Hong Kong has listed stablecoins and RWA as key development areas for next year.

Despite the positive outlook, the crypto field has undergone severe tests under the dual pressures of macroeconomic tightening and industry downturn in the past two years. Innovative applications are hard to emerge, internal disputes have intensified, and ongoing restructuring and mergers have led to weakened liquidity, resulting in a differentiated path in the crypto industry, with Bitcoin core inflows siphoning off other cryptocurrencies. The altcoin market has been sluggish for most of this year, only rebounding towards the end of the year under Wall Street's attention, marking the beginning of the altcoin season. In the short term, the trend of path differentiation is expected to continue to intensify.

Outlook for 2025

As the new government opens a new era of encryption, well-capitalized institutions are poised to take action. Currently, more than 15 institutions have released market forecasts for next year.

In terms of price, institutions generally have a positive outlook on Bitcoin, with most predicting a peak next year in the range of $150,000 to $200,000. Some institutions like VanEck and Dragonfly predict $150,000, while Presto Research, Bitwise, and Bitcoin Suisse predict $200,000. If strategic reserve factors are considered, Unstoppable Domains and Bitwise even propose a target of $500,000 or higher. Regarding other cryptocurrencies, ETH is expected to be between $6,000 and $7,000, Solana between $500 and $750, and SUI may rise to $10. Presto and Forbes anticipate the total market capitalization of encryption to reach $7.5 trillion to $8 trillion, while Bitcoin Suisse predicts a fivefold increase in the total market capitalization of altcoins.

Institutions generally expect a soft landing for the U.S. economy next year, with an improving macro environment and relaxed encryption regulations. Several institutions are optimistic about the strategic reserve potential of Bitcoin, expecting at least one sovereign nation and multiple listed companies to include Bitcoin in their reserves. The increase in ETF capital inflows has become a consensus.

In terms of specific sectors, stablecoins, tokenized assets, and AI are the most focused on. VanEck expects the settlement volume of stablecoins to reach $300 billion next year, Bitwise predicts it will reach $400 billion, and Blockworks Mippo has a more optimistic estimate of $450 billion. A16z believes that enterprises will generally accept stablecoin payments, and Coinbase points out that stablecoins could become the next killer application in the crypto market.

Regarding tokenized assets, multiple institutions hold an optimistic attitude. A16z predicts that as infrastructure costs decline, the tokenization of non-traditional assets will become a new source of revenue. VanEck and Bitwise expect the value of tokenized securities to exceed $50 billion. Messari believes that with interest rates falling, tokenized government bonds may face resistance, but idle on-chain funds may receive more favor.

In the direction of AI, A16z highly anticipates the integration of AI and encryption, predicting that AI agent capabilities will be significantly enhanced, allowing for the possession of exclusive wallets to realize autonomous actions. Coinbase believes that AI agents will be a disruptive frontier. VanEck estimates that there will be over 1 million on-chain activities by AI agents, while Robot Ventures predicts that the market value of related tokens will increase at least 5 times. Bitwise and Defiprime are optimistic about the application of AI in the Meme and DeFi fields, respectively. Messari points out three major directions for the integration of AI and encryption: new types of AI casinos, blockchain for professional model fine-tuning, and the combination of AI Agents and MEME.

On other aspects, YBB is optimistic about the DeFi revival, Robot Ventures expects the integration of application chains and L2, Messari predicts the popularization of ZK technology in infrastructure, and VanEck along with Bitcoin Suisse are optimistic about the return of NFTs.

Conclusion

Despite differences in details, institutions generally hold an optimistic attitude towards 2025, expecting price increases, ecological expansion, and mainstream adoption to continue.

The price increase of mainstream coins has become almost a certainty, especially with the favorable policy support expected in Q1 2025. The differentiation in the altcoin market continues, with compliant coins being more likely to receive funding and narrative support, while other coins face the risk of contraction. The tightening macro liquidity will exacerbate the risks associated with altcoins.

In terms of industry structure, established public chains still hold an advantage, but the impact of new public chains is inevitable. Ethereum's value capture and narrative continue to ferment, with external capital inflows expected to alleviate pressure. Scalability and account abstraction will be important breakthroughs in 2025. Solana still has growth momentum, but its excessive reliance on MEME poses risks, and competition with Base is becoming increasingly fierce. New public chains like Monad and Berachain will also join the competition.

The focus of the industry is shifting from infrastructure to applications, with consumer-level applications becoming a key area for the future. Application chains and chain abstraction may become the main construction methods for DAPPs. The consensus on DeFi revival has been established, but it is still focused on AAVE at the moment. In the centralized domain, attention is particularly on the payment track, with Hyperliquid and Ethena being noteworthy.

The MEME speculation trend will continue in the short term, but the pace will slow down, especially under the influence of the altcoin season. However, key directions such as PolitFi still have a longer narrative space. The MEME infrastructure is expected to improve, with user experience optimization, lower thresholds, and institutionalization being the inevitable trend. New token launch methods may explode the market at any time.

The incremental market comes from institutions, and the tracks favored by institutions such as stablecoins, AI, RWA, and DePin will accelerate development. In the context of tight liquidity, on-chain liquidity tools and protocols that can increase leverage may be favored.

A new cycle is coming, and investors should discover the cycle, follow the cycle, conduct in-depth research, participate, and seize opportunities.

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