Here is the English translation of the text, with the specified terms translated as requested:
The growth of stablecoins may bring hope for market recovery.
Author: Stacy Muur
Compiled by: TechFlow
Introduction
As the year-end approaches, various research and forecasts are pouring in. @Delphi_Digital recently released the "2025 Market Outlook", which delves into the analysis of the current market situation and the outlook for future trends, covering a series of content such as the price trend of Bitcoin, major trends and risk factors.
Given the length of the full text, it would take a lot of time to read it in its entirety. TechFlow has compiled an article by Stacy Muur summarizing the core points of the "2025 Market Outlook".
This article divides the Delphi Digital report into three main parts: the rise of Bitcoin, the bubble of Altcoins, and the trends of future development. The market capitalization of Bitcoin has now reached about $2 trillion, while the performance of Altcoins has been lackluster. Looking ahead, the growth of stablecoins may bring hope for market recovery. At the end, Stacy Muur also expresses his unique views on the crypto market in 2025, believing that the crypto market is evolving from the "Wild West" to a more regulated alternative stock market. Web3 native users will be willing to take high risks and participate in speculative trading. While newcomers will adopt a prudent risk management approach, focus on long-term value, and some narratives may be marginalized.
The Rise of Bitcoin
There was a time when a Bitcoin price of $100,000 was considered a fantasy.
But now, this view has undergone a earth-shattering change. Bitcoin's current market capitalization is around $2 trillion - impressive. If Bitcoin were viewed as a publicly traded company, it would become the sixth most valuable company in the world.
Although Bitcoin has attracted widespread attention, its growth potential is still huge:
- BTC's market cap is only 11% of the total market cap of the MAG7 (Apple, Nvidia, Microsoft, Amazon, Alphabet, Meta, and Tesla).
- It accounts for less than 3% of the total market cap of the US stock market and about 1.5% of the global stock market.
- Its market cap is only 5% of the total US public debt and less than 0.7% of the total global (public + private) debt.
- The total assets of US money market funds are three times the market cap of Bitcoin.
- Bitcoin's market value is only about 15% of the total global foreign exchange reserve assets. If global central banks were to allocate 5% of their gold reserves to Bitcoin, this would bring over $150 billion in purchasing power to Bitcoin - nearly triple the net inflows to IBIT this year.
- Current global household net worth has reached a new high of over $160 trillion, up $40 trillion from the pre-pandemic peak. This growth has been driven mainly by rising house prices and a booming stock market. In comparison, this figure is 80 times the current market cap of Bitcoin.
In a world where the Federal Reserve and other central banks are pushing for 5-7% annual currency depreciation, investors need to pursue 10-15% annual returns to offset the loss of future purchasing power.
You need to know:
- If the currency depreciates 5% per year, its real value will be halved in 14 years.
- If the depreciation rate is 7%, this process will be shortened to 10 years.
This is why Bitcoin and other high-growth industries are attracting so much attention.
The Bubble of Altcoins
Although Bitcoin has set one new high after another this year, 2024 was not friendly to most Altcoins.
- $ETH failed to break its all-time high.
- $SOL set a new high, but the gain was only a few dollars more than the previous high, which is negligible compared to its market cap and network activity growth.
- $ARB had a strong start to the year, but its performance has gradually declined towards the end of the year.
There are many similar examples. Just check the performance data of the 90% Altcoins in your portfolio.
Why is this happening?
First, Bitcoin's dominance is a key factor. BTC has performed exceptionally strongly this year, driven by ETF inflows and Trump-related factors, with its price up over 130% since the beginning of the year, reaching its highest level in three years.
Secondly, it is the phenomenon of market differentiation.
Market differentiation is a new feature of the crypto market this year. In previous cycles, asset prices usually moved in sync. When BTC rose 1%, ETH typically rose 2%, and Altcoins rose 3%, forming a predictable pattern. However, this cycle is quite different.
Although a few assets have performed extremely well, more assets are in a state of loss. Bitcoin's rise has not led to a broad-based rise in the prices of other assets, and the "Altcoin season" that many had expected has not materialized as expected.
Finally, Meme coins and AI Agents also played an important role.
The crypto market is always oscillating between "this is a Ponzi scheme" and "this technology will change the world". In 2024, the "scam" narrative has taken the lead.
In the collective imagination of the public, the crypto market is always swinging between the "unified global financial system of future technology" and "the biggest scam in human history", and this happens every two years.
Why does this narrative seem to be able to alternate between the two extremes and occur every two years?
The Super Cycle of Meme Coins and Market Sentiment
The super cycle of Meme coins further reinforces the public's impression that the crypto market is a "Ponzi scheme". Many people begin to question whether the fundamentals of the crypto market are really important, even seeing it as a "casino on Mars". These concerns are not without reason.
Against this backdrop, I would like to add a note.
When Meme coins are referred to as the best performing assets of the year, people usually only focus on the "mainstream Meme" (such as DOGE, SHIB) that have already established significant market capitalization and a successful community. However, 95% of Meme coins quickly lose value after launch, which is often overlooked. But even so, people are still "willing to believe".
This belief has led many funds previously invested in Altcoins to turn to Memecoins - a few people have profited, but most have not succeeded. As a result, capital inflows have mainly concentrated between Bitcoin (institutional funds) and Memecoins (high-risk investments), while most Altcoins have been ignored.
Delphi believes that 2025 will be a year of technology-driven market transformation, with technologies that will "change the world".
But I am not so optimistic about this. In 2024, a large number of KOLs (key opinion leaders) focused on Memecoins emerged. When I tried to create a folder of "truly valuable" channels on Telegram (you can find it here), I found that almost all the channels were discussing "ape calls" (i.e. high-risk short-term investment recommendations). This is the essence of the attention economy, and these narratives have profoundly influenced market trends.
What are the upcoming trends?
Growth of Stablecoins and Credit Expansion
A major challenge facing the current market is the oversupply of tokens. Driven by private investment and public token launches, a large number of new assets have flooded the market. For example, on the Solana pump.fun platform alone, over 4 million tokens were launched in 2024. However, in contrast, the total market capitalization of the crypto market has only grown 3 times compared to the previous cycle, while it grew 18 times in 2017 and 10 times in 2020.
Two key factors missing from the market - the growth of Stablecoins and credit expansion - are now re-emerging. With declining interest rates and an improved regulatory environment, speculative activity is expected to reactivate, helping to alleviate the current market imbalance. The core role of Stablecoins in trading and collateralization will play a crucial part in the market's recovery.
Inflow of Institutional Capital
Until last year, institutional investors remained cautious about crypto assets due to regulatory uncertainty. However, this situation is starting to change, with the SEC's reluctant approval of a spot BTC ETF, paving the way for future institutional capital inflows.
Institutional investors typically tend to gravitate towards familiar investment areas. While a minority of institutions may venture into Memecoins, they are more likely to focus on assets with stronger fundamentals, such as ETH/SOL, DeFi, or infrastructure.
Delphi predicts that the market may experience a "broad-based rally" similar to past cycles over the next year. However, this time, the market will be more focused on fundamentally-driven projects. For example, OG DeFi projects with a proven track record may become a focus of attention; infrastructure assets (such as L1 protocols) may also regain their luster. Additionally, RWA (Real-World Assets) or emerging sectors (such as AI and DePIN) may also become hot spots.
Of course, not all tokens will be able to achieve triple-digit gains like in the past, but the presence of Memes will be a part of the market. This may mark a new starting point, a widespread crypto rebound driven by an overall market upswing.
Note: Most institutional traders typically rely on options hedging strategies. Therefore, if a "broad-based rally" occurs, the assets most likely to attract institutional interest will be those with options trading - currently primarily on Deribit and potentially the Aevo platform.
The Case for Solana
@Solana has demonstrated the remarkable resilience of the blockchain ecosystem. After experiencing a 96% market cap decline due to the FTX collapse, Solana saw a remarkable recovery in 2024.
Here are the key highlights of its performance:
Developer Momentum: Through hosting hackathons and airdrop initiatives (such as the Jito airdrop), Solana has successfully re-ignited the interest of developers and users. This increased engagement not only drives innovation but also creates a virtuous cycle of technical development and user adoption.
Market Leadership: In the 2024 crypto market trends, Solana is at the forefront, spanning from Memes to AI applications. Notably, its Real Economic Value (REV, a comprehensive metric of transaction fees and MEV) exceeds Ethereum by over 200%, demonstrating its robust market vitality.
Future Outlook: Solana is seen as a potential challenger to Ethereum's dominance in scalability and user experience. Compared to decentralized Layer-2 solutions, Solana offers a seamless user experience and a highly concentrated ecosystem, giving it a significant advantage in the competition.
Stacy's Final Thoughts
The current market conditions may evoke associations with 2017-2018, when Bitcoin reached its all-time high of $20,000 just before the new year, only to start declining in early 2018. However, I believe it is inappropriate to draw a direct comparison between the crypto market of 2018 and that of 2025. They exist in vastly different market environments - the once chaotic "Wild West" is rapidly evolving into a more regulated alternative stock market.
We need to recognize that the scope of the crypto market extends far beyond the discussions on Crypto Twitter (CT) and X platform. For those not actively engaged on these platforms, their understanding and perception of the market may be entirely different.
Looking ahead to 2025, I believe the crypto market will bifurcate into two main directions:
Web3 Native Users: This group is deeply immersed in the crypto market, familiar with its unique workings, and willing to take on high-risk, speculative trades in Memes, AI agents, and pre-sale projects - reminiscent of the "Wild West" era of the crypto market's early days.
Mainstream Investors: Including both institutional and retail investors, they typically adopt a more conservative risk management approach and lean towards fundamentally-based investment strategies. They view the crypto market as an alternative to the traditional stock market, focusing on long-term value rather than short-term speculation.
So, which areas might become marginalized? Early DeFi projects, RWA (Real-World Assets), and DePIN (Decentralized Internet of Things) protocols that fail to establish a leading position in their respective domains or within the blockchain ecosystem are likely to gradually lose market attention. This is just my perspective.
PS: This article summarizes the core insights from @Delphi_Digital's 2025 Market Outlook. If you want a comprehensive understanding of Delphi's detailed predictions for 2025 and beyond, I strongly recommend reading their original research report.
