2024 Crypto Market Review and 2025 Outlook

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

2024 Market Review

Bitcoin is undoubtedly the core focus this year. The approval of ETFs and national reserve demand have driven Bitcoin to break through the $100,000 mark, marking its transition beyond the realm of cryptocurrency and establishing it as a globally recognized anti-inflation asset and store of value. Bitcoin is moving from digital gold to a supranational currency, achieving a significant victory.

The Bitcoin ecosystem has also expanded this year. Although inscriptions, runes, and Layer 2 solutions have experienced ups and downs, a diversified Bitcoin ecosystem has initially formed. Applications such as BTCFi, NFTs, gaming, and social continue to develop, with the Bitcoin DeFi locked value skyrocketing from $300 million at the beginning of the year to $6.755 billion, a more than 20-fold increase over the year. Among them, Babylon has become the largest protocol on the Bitcoin chain, with a locked value of $5.564 billion as of December 20, accounting for 82.37% of the total. The broader BTCFi has performed remarkably well, with the scale of Bitcoin spot ETFs surging, and the Bitcoin strategies of publicly listed companies like MicroStrategy being emulated, reflecting Bitcoin's success in the traditional financial sector.

Ethereum has had a relatively tough year. It has underperformed compared to other assets, with a decline in value capture and user activity, and its narrative strength is not as strong as before. Although the DeFi revival slogan is loud, substantial investment is obviously lacking except for the TVL arbitrage frenzy triggered by re-staking. However, the emergence of the derivatives dark horse Hyperliquid at the end of the year has not only shaken the position of centralized exchanges but also sounded the horn for a counterattack for DeFi. On the other hand, after the Dencun upgrade, competition among Ethereum Layer 2 solutions has intensified, continuously eating into the mainnet's market share, triggering widespread discussions about Ethereum's mechanism.

Solana has risen strongly, forming a sharp contrast. From the perspective of TVL, Ethereum's market share in the public chain market has dropped from 58.38% at the beginning of the year to 55.59%, while Solana has surged from a negligible amount to 6.9%, making it the second largest public chain after Ethereum. The price of SOL has skyrocketed from 6 dollars two years ago to 200 dollars now, with over 100% increase just this year. With its advantages of low cost and high efficiency, Solana aims at a core liquidity positioning, becoming the king of MEME culture with the help of Degen culture, and it has become a gathering place for retail investors this year. Solana's daily transaction fees have often 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 made a standout breakthrough this year. Telegram has driven an explosion in the blockchain gaming sector, creating a new traffic entry for Web3 and injecting strong momentum into a market that had been quiet before September. TON has finally entered a rapid growth phase, with a cumulative on-chain user base exceeding 38 million and a total transaction volume surpassing 2.1 billion USD. SUI has emerged with a strong upward trend, with the Move public chain developing rapidly, implementing a three-pronged approach of hardware layout, protocol diversification, and airdrop marketing, showing bright prospects. In contrast, while the Aptos public chain has shown weaker price performance during the same period, it is more favored by traditional capital, successfully establishing partnerships this year with BlackRock, Franklin Templeton, Libre, and others, with compliance orientation possibly bringing opportunities in the new round of RWA and BTCFi cycles.

From an application perspective, MEME is the main driving force in the market this year. The rise of MEME marks a shift in the current market landscape, where VC tokens are no longer in vogue, and excess liquidity is flowing into areas that are fairer and more speculative. The connotation of MEME is also continuously expanding, evolving from a mere object of speculation to a representative of cultural finance, "everything can be MEME" is becoming a reality. Although MEME's market cap accounts for less than 3% of the top 300 cryptocurrencies ( excluding stablecoins ), its trading volume continues to occupy a share of 6-7%, recently reaching 11%, making it the main track of concentrated liquidity.

The infrastructure around 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 exceed $100 million in monthly revenue." As of December 22, Pump.fun has accumulated over $320 million in revenue, with a total of approximately 4.93 million tokens issued.

Affected by the U.S. elections, the prediction market platform Polymarket has emerged prominently. In October, the Polymarket website received 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 have brought clear application value, and Vitalik Buterin has spoken highly of it. Although it has not achieved large-scale encryption user conversion, a new integrated model of media and betting is gradually taking shape.

At the end of the year, AI has transitioned from technological breakthroughs to practical applications, and the competitive landscape is becoming increasingly intense. After wavering in the Web3 field for a year, AI has once again emerged as the dark horse of the year. MEME has taken the lead in igniting the trend, while Truth Terminal has introduced myths like GOAT, ACT, and Fartcoin, sparking a wave of AI Agent applications. Currently, mainstream institutions generally have a positive outlook on AI Agent, believing it has the potential to become the second phenomenal track after DeFi. Although the infrastructure in this field is still not complete, and applications are mostly concentrated on superficial aspects like MEME and Bots, new fields also represent opportunities, and the deep integration of AI and blockchain still requires time.

On the other hand, PayFi, which connects traditional finance with Web3, has become the core driving force of this bull market. Stablecoins and RWA are typical representatives. This year, stablecoins have seen rapid growth in the crypto market and have also gained a foothold in the global payments and remittances market. Regions in Africa, Latin America, and Eastern Europe have begun to bypass traditional banking systems, directly using stablecoins for transaction settlements, with a year-on-year growth of over 40%. Currently, the circulating value of stablecoins exceeds $210 billion, far higher than the tens of billions in 2020, with approximately 20 million addresses conducting stablecoin transactions on public chains each month. In the first half of 2024, the settlement value of stablecoins is expected to exceed $2.6 trillion.

Ethena is the most outstanding stablecoin project this year, driving the surge of yield-bearing stablecoins and is also the main source of income for AAVE this year. RWA was completely ignited after BlackRock announced its entry, expanding from a market value of less than $2 billion three years ago to $14 billion this year, covering multiple fields such as lending, real estate, stablecoins, and bonds.

It is worth noting that, due to the integration with traditional financial systems, PayFi is also the most favored Web3 sector by government agencies, as Hong Kong has listed stablecoins and RWA as key areas for development next year.

However, under the dual pressure of macroeconomic tightening and the industry's downturn over the past two years, the encryption field has also undergone severe tests. Innovative applications have struggled to break through, internal disputes have intensified, and mergers and acquisitions have been ongoing. The weakening liquidity has led to a divergence in the crypto market, forming a pattern where Bitcoin attracts funds at its core, continuously squeezing out other currencies. The altcoin market has been in a slump for most of this year, only rebounding at the end of the year under Wall Street's attention, marking the beginning of the altcoin season. In the short term, this trend of divergence may continue and intensify.

2025 Market Outlook

With the new government ushering in a new era of encryption, well-funded institutions are eager to try. Currently, more than 15 institutions have already released market forecasts for next year.

In terms of price, institutions generally have a positive outlook on Bitcoin, with a high point range of $150,000 to $200,000 predicted by several institutions. Some institutions, such as VanEck and Dragonfly, expect the price to reach $150,000 next year, while Presto Research, Bitwise, and Bitcoin Suisse predict $200,000. If strategic reserve factors are considered, Unstoppable Domains and Bitwise even give a prediction of $500,000 or higher. Regarding other cryptocurrencies, VanEck, Bitwise, and Presto Research expect ETH to be around $6,000 to $7,000, Solana at $500 to $750, and SUI might rise to $10. Presto and Forbes estimate that the total market value of the crypto market will reach $7.5 trillion to $8 trillion, while Bitcoin Suisse believes the total market value of altcoins will grow by five times.

Institutions generally expect that the U.S. economy will achieve a soft landing next year, with an improved macro environment, and that crypto regulation will also ease accordingly. More than five institutions hold a positive attitude towards Bitcoin as a strategic reserve, believing that at least one sovereign nation and several publicly listed companies will include Bitcoin in their reserves. All institutions expect ETF inflows to continue to increase.

Stablecoins, tokenized assets, and AI are the areas that institutions are most focused on. VanEck expects the settlement volume of stablecoins to reach $300 billion next year, Bitwise predicts the scale will reach $400 billion, and Blockworks Mippo is even more optimistic, providing an estimate of $450 billion. A16z believes that enterprises will increasingly accept stablecoin payments, and Coinbase points out that stablecoins could become the next killer application for encryption.

Many institutions are optimistic about tokenized assets. A16z predicts that as the costs of blockchain infrastructure decrease, tokenization of non-traditional assets will become a new source of income. VanEck and Bitwise expect the value of tokenized securities to exceed $50 billion. Messari believes that as interest rates decline, tokenized government bonds may face resistance, but idle on-chain funds may receive more favor.

In the field of AI, A16z remains highly optimistic about the combination of AI and encryption, expecting that the autonomous agency capability of AI will be significantly enhanced, allowing for exclusive wallets to achieve subjective behavior. Coinbase also believes that AI agents equipped with encryption wallets will be a disruptive frontier. VanEck anticipates that the on-chain activities of AI agents will exceed 1 million, while Robot Ventures believes that the total market value of tokens related to AI agents will grow at least 5 times. Bitwise and Defiprime point out the application potential of AI Agents in the Meme and DeFi sectors. Messari predicts that the integration of AI and encryption will develop in directions such as new AI casinos, specialized model fine-tuning, and the combination of AI Agents with MEME.

In other aspects, YBB believes that the revival of DeFi will become the main theme of 2025. Robot Ventures expects a wave of integration in the application chain and L2 track. Messari anticipates that most infrastructure protocols will adopt ZK technology, while VanEck and Bitcoin Suisse are optimistic about the resurgence of NFTs.

Investor Strategy

Looking ahead to 2025, the price of mainstream coins is bound to rise, especially as Q1 of next year will be a period of intensive favorable policies. The altcoin market will continue to differentiate, with compliant altcoins more likely to attract capital inflows and maintain their narratives, while other coins will gradually shrink. If macro liquidity tightens, the risks of altcoins will become more pronounced.

In terms of industry, strong public chains still hold ecological advantages, but the impact of new public chains is unavoidable. The value capture and narrative of Ethereum will continue to ferment, external capital inflow may ease somewhat, and technological expansion and the popularization of account abstraction will become important breakthroughs next year. Solana still has growth momentum driven by capital, but excessive reliance on MEME poses potential risks, and competition with Base will intensify. It is expected that new public chains like Monad and Berachain will also join the market competition.

The industry focus will shift from infrastructure to applications, with consumer-level applications becoming a key focus in the coming years. Application chains and chain abstraction may become the main construction methods for DAPPs. The revival of DeFi has become consensus, but it is still concentrated on AAVE, while the centralized sector focuses on the payment track, with Hyperliquid and Ethena being worthy of attention.

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