Compiled | Odaily Planet Daily (@OdailyChina)
Translator | Azuma (@azuma_eth)
Editor's Note: This article is a market forecast and action plan for 2025 by the well-known analyst and trader 0xKyle.
In the following text, 0xKyle analyzes and hypothesizes multiple possible scenarios for Bitcoin and Altcoins in 2025, and argues why active portfolio management will outperform passive portfolio management in the new year. 0xKyle also lists the sectors and tracks he is optimistic about, which may help with the layout for the new year.
The following is the original content of 0xKyle, compiled by Odaily Planet Daily.
GM.
Predicting the future is difficult, but as traders and investors, we should have a plan. Just like any other plan, this plan will change as the underlying scenarios change - the market is constantly evolving. This plan is based solely on my predictions for the market's development over the next year, and it provides insights into my thoughts on 2025, but should not be interpreted as financial advice.
Let me first review my 2024 plan (Odaily Note: Since this part is mainly 0xKyle's personal operation review, this article chooses to pass it directly).
Let's get right to the point. As usual, I will first discuss the macroeconomic expectations/scenario assumptions, and then move on to the thematic narrative.
Scenario Assumptions
The new cycle of "2024 - ??" has already begun. I personally believe this cycle began at the end of 2023, but if we analyze the current progress of this cycle more strictly, the process so far has been:
→ January 10, Bitcoin ETF launched;
→ BTC hit a new high, briefly triggering an Altcoin season;
→ Subsequently entered a period of volatility in Q2 and Q3, with BTC fluctuating between $50,000 and $60,000;
→ After the election, BTC set a new high and rose all the way to $100,000;
→ Temporarily unable to effectively break through the $100,000 mark, currently hovering above $90,000.
It should be noted that Altcoin seasons usually start at the peak position of Bitcoin, the first time was in the process of BTC attacking $69,000 but failing to break through effectively; the second time was in the process of BTC attacking $100,000.
The next round of Altcoin cycle is likely to start after BTC stabilizes above $100,000. I cannot predict the future, although I hope this will happen in the first quarter of 2025, but based on the facts, we may also see a repeat of the volatility in 2024 Q2 and Q3 - I must be prepared for this. Therefore, here are all the scenario assumptions I have drawn up.
Scenario Assumption 1: Bitcoin and Altcoins rise together
In that case, the rise will be the only theme in 2025, and we will also enter another round of Altcoin season. Due to the continued rise of Bitcoin, all coins will perform well, and we will repeat the market performance of the last two months of 2024, with the entire market "rising, rising, rising".
Probability: 30% - 40%;
Corresponding strategy: Buy strong Altcoins during the current "panic".
Scenario Assumption 2: Bitcoin rises, other coins have smaller gains
This will replay the plot of 2024, in the coming months we will see Altcoins remain volatile, but Bitcoin becomes more bullish (because only Bitcoin rises). Some Altcoin sectors will also perform well.
Probability: 50% - 60%;
Corresponding strategy: Still buy during the current "panic", but need to get on board with specific Altcoin sectors, the key is to avoid high-profile areas and look for the next potential narrative.
Scenario Assumption 3: Bitcoin rises, Altcoins fall
This means that the current time is the top for Altcoins, although Bitcoin will continue to perform well.
Probability: 20% - 30%;
Corresponding strategy: Sell all Altcoins. Although we have to bear some of the drawdown, if Altcoins don't rise, we may have to sell them all.
Scenario Assumption 4: Bitcoin falls, Altcoins fall
Probability: 10% - 20%.
I believe a few things will happen. I believe BTC's next new high will not take as long as in 2024, because the macroeconomic tailwind background truly exists. In a regulatory environment that can be described as hell, although the ETF has been launched, TradFi still needs to work hard to sell the story about BTC to clients, because the whole world does not believe in the importance of Bitcoin.
Now that Trump is about to take office, the talk of a strategic Bitcoin reserve (SBR) has been hyped up. The market sentiment has already changed, and I won't speculate on the possibility of establishing a strategic Bitcoin reserve system - I have no experience in the interweaving of politics and finance.
What I care about is the narrative - the fact is that the incoming new administration has brought a lot of new attention to digital assets, and it is now easier to convince people to buy Bitcoin, because even the president of the world's largest country is frequently discussing it.
This change in the macroeconomic background is very important. Therefore, I believe Bitcoin will continue to be bullish in 2025, while Altcoins have a similar but different story.
Total3 (Odaily Note: Altcoins excluding BTC and ETH) reached the 2021 high in the first quarter of 2024, and then reached the cycle high in the fourth quarter of 20424. To be honest, my Scenario Assumption 1 and Scenario Assumption 2 are not much different.
The key is positioning and timing. I am optimistic about 2025, but I don't know how long it will take for the market to arrive - although I do believe that the bullish market will come faster than 2024, but without catalysts, Altcoins will still bleed heavily.
Whether it's Bitcoin or other coins, as long as the cycle hasn't peaked, my plan is to always maintain a net long position. I don't think 2025 will see a repeat of the summer of 2024, but I think we'll encounter periods similar to the current one - the market is just relatively quiet, but prices are still well maintained.
The on-chain world is completely different, when the tide goes out, the on-chain market is easy to see -70% volatility. Therefore, for the on-chain market, my goal has always been to sell at the peak of attention, and reinvest the funds into the top Altcoins (top 20), and then gradually start to deploy further.
I don't think Altcoins will top out here, because I don't think Bitcoin will continue to rise while Altcoins die, and I don't think Bitcoin will reach a cyclical top at this position.
So my conclusion is: BTC will continue to rise, and the gains will exceed 2024; for Altcoins, my theme is still to attack, but I need to know when to switch to defense, but the defensive tendency will be lower than 2024.
Risks
Cyclical Top Risk
Regarding the prediction of the cycle top, constant self-correction is required. Although I don't think we are close to the cycle top, we must re-evaluate every week. The cycle top may not be a "event", but more like a spectrum that gradually approaches over time.
SBR Redemption Risk
With the new president taking office, everyone will be watching his actions. While Bitcoin is expected to see regulatory tailwinds, if the president completely forgets about it, that would be quite a bearish event. The risks I see potentially emerging include: SBR being forgotten; or more likely, SBR not happening, but progressing in some other way.
For the latter case (an alternative SBR plan), this could be an initially bearish but ultimately bullish event, as long as the plan itself supports Bitcoin.
In summary: The appearance of bullish signals means the bull market continues; the appearance of bearish signals means the plan needs to be re-evaluated -- the bull market may continue, but the odds will decrease.
Supply Risk
In 2024, we witnessed crazy macroeconomic conditions in the summer, with stock markets hitting new highs, but the cryptocurrency market saw more declines than gains, due to repeated selling pressure from large suppliers such as Mt.Gox, the German government, and Grayscale GBTC.
Supply risk can never be eliminated. There will always be entities holding large amounts of Bitcoin -- the UK government, the Dark Web Silk Road, FTX holdings, or any other entity. This is something you must keep an eye on, but in my view, if all goes well, these events will be good buying opportunities on the dips.
Macroeconomic Risk
I believe that smaller rate cuts are still rate cuts. While this is "not so bullish," the fact is that as long as rates continue to decline, liquidity will improve.
Again, the appearance of bullish signals means the bull market will continue. Unless there are rate hikes or no rate cuts, the macroeconomic environment should be favorable for digital assets.
Themes and Tokens
Now we come to the part everyone has been waiting for. But before listing specific themes and tokens, I want to reiterate the "attack, but know when to switch to defense" mindset I mentioned earlier -- active portfolio management will outperform passive investment in this investment cycle.
The "buy and hold forever" era is gone. Although Solana rose 10x in 2023, its overall performance in 2024 was nearly on par with Bitcoin; so-called blue chips like TAO didn't benefit from the AI hype we've seen in the past few months; and for meme tokens, the dogs don't wear hats anymore (WIF), the Chill guy is no longer chill, and the Hippo (MOODENG) seems to be on its last legs...
Nothing on this list is likely to let you "buy and hold."
Additionally, I also like to ponder a question -- who are the marginal buyers? In this market, there are basically 3 main marginal buyers -- institutions (traditional finance players), funds (liquid funds/crypto-native funds), and speculators (contract traders, on-chain players, etc.).
A good narrative must be bought by at least one of them. Let's dive right in.
Theme 1: AI
Yes, AI will still be a hot topic. As mentioned earlier, we've already seen several waves of AI hype, but if you've read my paper on AI tokens (link here), I believe the next wave is coming.
Macro level: Hype > Fundamentals > Utility;
Micro level: Reply guys > Infrastructure > Applications/Avatars.
Buy and hold will not yield good results. GOAT is the start of it all, but it has already fallen 60% from its highs and may continue to underperform.
Top picks: AI-centric on applications, Swarms, gaming, consumer-focused.
Picks like ALCH (game development), Griffain (helping control wallet agents), Digimon, ai16z (the king of all AI), in my view, are top choices, and there may be many more I've missed.
Theme 2: DeFi
This also goes without saying. DeFi will continue to be a great narrative, but investing in DeFi is very difficult, as there are really very few tokens that will benefit from it. Even if they do benefit, they may not appreciate (look at the LST race).
To be honest, this wouldn't be my top choice in terms of risk-reward, but I think this will be a growing narrative through 2025.
Top picks: AAVE / ENA / Morpho / Euler / USUAL;
Secondary picks: Stablecoin/payment-related tokens.
Theme 3: Layer 1
I may get a lot of hate for saying this, but I believe the Layer 1 trading opportunities are back. HYPE has undoubtedly performed excellently, but SUI was actually underestimated by many when it was around $1, and it has now risen to $4. I think the market has been consistently missing Layer 1 trades -- it's one of the areas that no one is paying attention to, but it's rife with huge opportunities (as evidenced by HYPE's 10x rise).
Top picks: SUI/HYPE;
Secondary pick: Abstract.
I don't know how much I like Monad and Berachain. But I'm very excited about Abstract, and I think it could be a game-changer.
Theme 4: NFT Tokens and Gaming Tokens
I also really like this theme. I've been buying into some gaming projects lately, and I think the NFT token space is also worth watching. PENGU has been slowly recovering, Azuki will have ANIME, and Doodles is also going to launch a token... I don't think NFTs will rebound, but I think their tokens will.
Gaming tokens are also interesting, with Off-The-Grid showing us the potential to create an engaging game. Given how out of favor this sector is, I think it's worth digging deeper to find genuinely interesting games that are about to launch tokens.
Top picks: PENGU / ANIME (Azuki) / Spellborne / Treeverse;
Secondary picks: PRIME / Off-The-Grid (if they launch a token) / Overworld.
Theme 5: Other Narratives
The following are on my watchlist, and I don't particularly like them, but they are interesting.
Data tokens: Kaito / Arkm;
Meme tokens: I only like PEPE, the others... seem outdated;
DePIN: PEAQ / HNT;
Ordinals;
Old Altcoins: XRP;
Old DeFi: CRV / CVX.
2025 Predictions
This is really just for fun, just some things I think sound a bit far-fetched, but not impossible.
DePIN is seriously implemented by a serious company, possibly through an acquisition;
Binance loses market share as the top exchange, not to Hyperliquid, but to Bybit/OKX;
With new advancements in VR technology, metaverse tokens see a resurgence;
ICOs become popular again;
The "Ethereum Staking Season" does not happen;
SUI price reaches double digits (at least $10);
Ethereum staking rewards are approved for ETFs, leading to more staking yield products for other tokens, as well as yield aggregators like we saw in 2021;
A major artist uses NFTs and tokens to track and reward their fan community;
Bitcoin reaches $200,000;
More Layer 1s see their CEO/founders depart after seeing Aptos;
Base loses the on-chain race, and another Layer 1 takes its place. Solana maintains its position.
Conclusion
The above content roughly summarizes my expectations for 2025. I expect the actual situation to differ significantly from my predictions, just as my plans for 2024 did.
The best advice and insight is actually "stay flexible and enjoy the journey". The market will continue to change, but this is just part of the game of life.
"No one can execute the same trade twice. Because the trades are different, and so are the people."
Good luck, and we'll meet on the other side. If you've made life-changing profits in the process, be sure to use them to change your life.
