Encryption VC Perspective: Market Opportunities and Industry Outlook for 2025

With the arrival of 2025, the encryption industry has ushered in a new development node. Over the past year, the market has experienced recovery, innovation, and adjustment, with leading projects continuously solidifying their positions and emerging tracks quietly rising. As a barometer of the industry, VC has not only witnessed market changes but also shaped the direction of the industry at the intersection of capital, community, and technology.

Standing at a new starting point, several top VCs shared their observations and thoughts on the encryption industry. They reviewed the highlights of 2024, analyzed the current market opportunities and challenges, and made predictions about future development trends. Let's delve into the perspectives of the VCs and explore the "yesterday, today, and tomorrow" of the encryption industry.

Most Impressive Projects of 2024

James Wo, the founder and CEO of DFG, pointed out that Hyperliquid, as a high-performance perpetual contract DEX, has attracted a large number of users. The platform is expanding its products and launching the HyperEVM ecosystem, which includes multiple native dApps. The platform earns significant fees through on-chain settlement and market-making, gradually eroding the market share of leading DEX and CEX.

Chris, co-founder of Web3Port, also highly praised Hyperliquid, being impressed by its market share, community airdrop and distribution mechanism, and wealth effect. He also mentioned that Pump.fun is the most successful Meme coin launch platform this year, successfully pushing the "Meme launch platform" to the top narrative, igniting the Meme market boom.

Wallfacer Labs CEO Ryan Rodenbaugh stated that the revival of mature lending protocols in the DeFi space like AAVE and Compound, along with the emergence of high-quality newcomers such as Morpho, Euler, and Ajna, is exciting.

Joanna, the founder and CEO of Jsquare, praised Pudgy Penguin, believing that it has single-handedly revitalized the entire NFT sector. As an early investor, she fully experienced the powerful energy emanating from the fusion of Web2 and Web3 thinking represented by the founder Luca, as a representative of a new generation of entrepreneurs.

Jsquare partner Dinghan stated that Ethena has performed remarkably in the DeFi field with the USDE stablecoin, profiting from high funding rates by establishing 1x long and 1x short positions on CEX. The collaboration with the BlackRock BUIDL fund ensures that even if the funding rate is negative, USDE can maintain stable returns.

Bitcoin Market Outlook

Chris, co-founder of Web3Port, believes that the Bitcoin bull market is likely to continue, with a high probability of breaking $200,000 by 2025. As the market matures, the supply-demand relationship of Bitcoin will be further strengthened, and Bitcoin priced below $50,000 may become a thing of the past in future cycles.

Ryze Labs research analyst Allen determines the peak using technical indicators Pi Cycle and 2Y MA Multiplier. According to the 2Y MA Multiplier estimate, the Bitcoin peak may be around $200,000. Both indicators have ready-made tools on TradingView that can set alerts for peak determination and position reduction decisions.

Evan Lu, investment manager at Waterdrip Capital, predicts that Bitcoin's next peak could reach between $120,000 and $150,000, followed by fluctuations between $100,000 and $150,000. Assuming the market value of gold remains unchanged, as long as Bitcoin's market value does not exceed that of gold, it can be considered a growth asset, with prices potentially reaching $600,000, but this may take 5 to 10 years.

Evan believes that, unlike before, the current market dynamics will be profoundly influenced by multiple factors, including the external liquidity brought by Bitcoin spot ETFs and the continued influx of funds driven by future Bitcoin reserve policies. This means that from now until the peak next year, the Bitcoin market may not experience significant corrections but rather maintain a trend of fluctuating upward.

The Future of the Meme and "VC Coin" Debate

Will Wang, a partner at Generative Ventures, proposed that once the scale of a primary market VC fund exceeds 30-50 million USD, it becomes difficult to deliver excess returns to LPs. He believes that only with a sufficiently compact scale can VC be compelled to dive into the early stages, supporting entrepreneurs in urgent need of help, and nurturing true "myths." Large-scale VC funds often fall into the trap of expanding management scale, participating in later rounds, and launching the market-criticized "VC coin."

Chris, co-founder of Web3Port, pointed out that the competition between Meme and VC coins is essentially a contest between the market's existing capital and liquidity. In an environment with limited new funds, VC coins struggle to sustain market capital due to their low circulation, high FDV characteristics, and the continuous emergence of new projects. The advantage of Meme coins lies in their full circulation and fair distribution mechanism, which aligns with the psychology of retail investors.

However, the PVP attribute of Meme coins is essentially unsustainable. Chris believes that there is currently no good solution to the VC coin dilemma in the short term. In the context of tight market liquidity and the strengthening of institutional investment advantages, the alleviation of the problem requires going through a complete bull-bear cycle, allowing the market to naturally clear and rebuild trust and fairness.

Evan Lu, the investment manager at Waterdrip Capital, emphasized that issuing tokens is not the end point, but rather the starting point for the real operation of the project. Project parties need to seriously consider the implementation of application scenarios, stable cash flow income, and maintaining active users and a real community after the token issuance.

Jiawei, the investment principal of IOSG Ventures, believes that "VC coin projects" need to think better about Token Market Fit, the necessity and use of token launches, and how to engage a broader community to decentralize chips and strengthen interest binding.

Potential Tracks and Tomorrow's Stars

Will Wang, a partner at Generative Ventures, believes that RWA essentially allows blockchain to account for global mainstream financial assets. Currently, the penetration rate of "on-chain accounting" is less than 0.1%, and even improving it by one order of magnitude could give rise to multiple secondary assets similar to ONDO and USUAL.

Jiawei, the investment principal of IOSG Ventures, stated that re-staking will be a major narrative in 2024, which has not yet been fully reflected in the coin prices. With the gradual launch of AVS, we may see a peak in 2025. In addition, ZK projects ( such as RiscZero and hardware-accelerated Ingonyama will also gradually show market potential.

Ryze Labs research analyst Allen is optimistic about AI Agents. AI Agents can process massive amounts of market data and can make precise trading decisions in real-time in the future; they can optimize lending rates and liquidity pool pricing mechanisms in the DeFi sector; and they open up new possibilities for the intelligent management of encryption assets.

The PayFi track is receiving a lot of attention. Jsquare partner Dinghan predicts that projects connecting traditional finance with encryption, such as Layer 2 solutions and stablecoin issuers ), will attract widespread attention in the future. Payment protocols that can deeply integrate with mainstream services and conveniently realize the conversion between encryption and fiat currency will become a key force in promoting the integration of encryption into daily life.

The integration of AI and blockchain is seen as an important development direction. Dinghan stated that with the rise of decentralized AI infrastructure and AI agent (Agent), this field is entering a new growth cycle. Projects aimed at building decentralized AI networks or AI-driven applications are poised to emerge, expected to become new highlights in the industry.

"Mass Adoption" Breakthrough Outlook

James Wo, founder and CEO of DFG, believes that vertical fields such as DePIN are attracting Web2 users. The payment sector could drive the next wave of mass adoption, as infrastructure providing efficient encryption payment and fiat conversion solutions for physical stores will propel a new wave of users.

Zeke, the investment research manager at YBB Capital, is optimistic that the payment sector will become the first breakthrough point for blockchain "Mass Adoption". Stablecoins are demonstrating capabilities that surpass the efficiency of traditional banking finance in non-US dollar countries, providing various utilities for residents in third-world countries. Once a compliance framework is established, the potential of this sector is comparable to the trillion-dollar traditional payment systems of Web2.

Joanna, the founder and CEO of Jsquare, is optimistic about "mass adoption." She believes that on one hand, it is about bringing money into ( institutions/retail investors ), and on the other hand, bringing users into ( mainly retail investors ). Traditional institutions are more likely to enter the market driven by policy factors, while at the retail level, the Solana ecosystem has a greater competitive advantage.

Wallfacer Labs CEO Ryan Rodenbaugh stated that the breakthrough will be driven by new front-end user experiences, making it easier for less experienced users to use DeFi. Products with existing distribution channels like wallet ( will also become key by providing users with seamless interactions through embedded DeFi experiences.

Bull Market Phase Judgment

Zeke, the investment research manager at YBB Capital, believes that we may be in the mid-stage of a bull market. The approval of Bitcoin ETFs means that trading is legal and regulated, which will lead to the emergence of a wider range of financialized derivative products. The participants are becoming more diverse, directly reducing market price volatility. In the future, it is unlikely to see a halving or a significant drop in the short term, as the cyclical impact of Bitcoin halving weakens, and the market may shift from a rapid bear to a slow bull in the long term.

James Wo, the founder and CEO of DFG, stated that we may be in the "optimistic phase" of the market cycle, where non-believers in encryption are starting to buy and hold some encryption assets, and more institutions and governments are expressing interest in the encryption industry. The potential return of the Trump administration will drive a more favorable regulatory environment for encryption, and the proposal for Bitcoin as a strategic reserve will further boost market confidence.

James added that predicting the end of market cycles is somewhat counterintuitive. A market crash like in 2022 is unlikely to happen because the encryption environment has improved. Many institutions are following Microstrategy's lead in accumulating a large amount of Bitcoin, making an 80% drop difficult to see. There may be adjustments in the future, but it is unlikely to return to bear market levels.

Nemo, the Director of Investments at Web3.com Ventures, believes that in the short term, Bitcoin has completed at least half of its bull market process. From an optimistic and faith-based perspective, Bitcoin will not let anyone down. The essence of Bitcoin is to combat inflation and protect wealth.

Retail Investor Recommendations

Chris, co-founder of Web3Port, advises retail investors to focus on high-certainty tracks, paying special attention to BTC, meme coins, and AI narrative tracks, and to invest cautiously in old altcoins that lack new narrative support. It is important to learn to follow the trend, understand market trends, and keep up with hotspots and points of attention. When a cycle arrives, position yourself in a timely manner, and exit before the cycle fades.

Ryze Labs research analyst Allen reminds that bull markets are actually the main reason why most people lose money. Investors may earn unexpected returns in the initial stage, but begin to use borrowed funds and leverage in the medium term, ultimately turning unrealized gains into unrealized losses during a rapid pullback, and even being forced to cut losses and exit. The best strategy is to prepare a sum of money that, even if completely lost, would not affect current living conditions, and to appropriately withdraw costs at the right time, ensuring that the remaining funds in the market are all profits. It is taboo to keep adding principal and to use leverage when the principal is insufficient.

YBB Capital's investment research manager Zeke pointed out that the market changes in 2025 will be more complex than in previous years, and the overall investment strategy needs to be more robust than before 2024. The more the market rises, the more dangerous it becomes; we should approach market changes with more reverence. Investment trading is a practice, and the encryption market is developing towards greater maturity and professionalism. Investors should first cultivate internally before learning externally, and it is especially important to maintain a stable and strong core, always prioritizing risk.

Jsquare partner Dinghan suggests that retail investors prioritize risk management. For those seeking passive investment, blue-chip assets like Bitcoin and Ethereum are usually safer. For more actively involved investors, security is crucial – using hardware wallets and trusted security tools. Focus on high-quality, sustainable projects rather than chasing short-term trends. In any market, it is essential to identify assets with long-term strong performance rather than holding assets that lag behind the market.