- Title: The 2025 Gameplan
- Author: 0xkyle
- Translated by: TechFlow
Good morning! Predicting the future has never been an easy task, but as traders and investors, we need a clear plan. Like all plans, this one will be adjusted as the market environment changes - after all, the market is a constantly evolving ecosystem. This memo is just based on my current perspective, some preliminary thoughts on 2025, for reference only, and does not constitute investment advice.
Before talking about 2025, let me first review the 2024 plan. If you're not interested, you can skip it.
To be honest, there were quite a few issues with my 2024 plan. Let's go through them one by one:
- The impact of the Bitcoin halving was underestimated
At the time, many people debated whether the Bitcoin halving would be a "buy the rumor, sell the news" event, or would it be a "bullish expectation" like in history? It turned out that this halving did not cause much of a stir, but became the starting point of the bull market.
- The misjudgment that rate cuts would be bearish
This judgment was clearly wrong. However, before the rate cuts, I had already publicly adjusted my view. The initial assumption was: "With inflation remaining high, rate cuts may only appear when economic data deteriorates significantly, becoming a passive response."
It turned out that the Fed's actions broke this assumption. For most of 2024, the right strategy was to believe the Fed's statements.
- Failure to execute scenario planning
My core plan for 2024 was: "Reduce risk by partially reducing positions before rate cuts, then buy back in after prices have fallen, while keeping some positions unchanged."
But in reality, I didn't execute this plan at all, haha.
The market trends in 2024 were completely beyond expectations - from the initial sell-off after the ETF launch, to the rebound in the first quarter, to the weakness in the summer, and finally the positive impact of rate cuts on the stock market, but it plunged the crypto market into chaos. Bitcoin prices fluctuated between $50,000 and $60,000 until the election at the end of the year finally brought a real breakout.
Looking back, my biggest mistake was not realizing that 2024 was the year traditional financial institutions gradually accepted Bitcoin. This should have been the main theme of 2024 - traditional finance slowly but steadily entering the Bitcoin space.
- Judgments on narratives:
- Beneficiaries of ETFs: COIN (stock)/BTC/ETH
I mentioned some tokens like STX and TRAC, but they performed poorly. COIN's performance was very impressive, with the price around $120 when I wrote the article.
In addition, niche narratives like BRC-20 and LST performed well in the first quarter of 2024, but didn't last too long.
- The success of SOL
SOL was priced at $60 at the time! This may be one of my most successful trades. I wrote this article when the price was only $20 and predicted that "SOL will reach triple digits in the next cycle." This prediction turned out to be completely correct.
- Regulatory fit with product market
While I grasped the regulatory narrative, I chose the wrong tokens. The idea at the time was to select projects that had passed the DeFi regulatory threshold but had not yet fully proven market demand. However, I chose MMX and dYdX, which was clearly a wrong decision.
- The failure of decentralized AI
I was very optimistic about decentralized AI, but in the first quarter of 2024, I realized that the actual products developed were very different from my expectations. Projects like Render and Akash lacked real application scenarios and were more like "air coins".
- The success of GameFi v2
In the first quarter of 2024, GameFi-related assets performed very well, with BEAM price surging significantly, and many GameFi projects experiencing a wave of enthusiasm. However, only those who sold at the top were able to profit.
- Other potential narratives
- DePIN / RWAs
- DeSci
- Meme (BONK / DOGE / PEPE / HPOS10INU)
- RUNE / CACAO
- GambleFi
- Airdrops (LayerZero / Starknet / ZKSync)
Among these narratives, apart from Meme, nothing seemed particularly outstanding - Meme performed very well in the first quarter of 2024, with Bonk's price basically doubling or tripling from when I mentioned it. dePIN also had its moment of glory, with projects like Geodenet and Helium; however, I didn't focus on it too much. A few months ago, decentralized science (deSci) began to emerge, with BIO tokens even listing on Binance. However, to be honest, I'm not particularly optimistic about this field.
- Cycle top
At the end of the article, I wrote: "There's one thing I haven't talked about, and that's how I think this cycle will end - recently, I've been thinking more about GCR's view that 'the pico-top of the last cycle was when funds entered, and the pico-top of the next cycle will be when countries start buying.'"
Looking back now, with the benefit of hindsight, I feel this view is very convincing, and I plan to incorporate it into my 2025 investment plan. This will definitely be on my list of "key signals of this cycle." The logic is very clear and reasonable.
Table of Contents
2025 Plan
Now that the review of 2024 is complete, let's dive into the main topic. As usual, I will start with a macro and scenario planning analysis, and then explore the specific investment narratives.
Scenario Planning
The 2024-?? cycle has already been triggered. I personally believe it started at the end of 2023, but this is just a detail. So far, the market trend has been as follows: On January 10th, the BTC ETF was listed → Reached a new all-time high, triggering an Altcoin season (altszn), followed by a period of volatility in the second and third quarters of 2024, with BTC price fluctuating between $50,000 and $60,000. By election day, BTC broke through the historical high and climbed to $100,000, but was unable to break further, and is currently fluctuating around $90,000.
It is worth noting that the Altcoin season or the so-called "good times" often accompany BTC reaching a high point. The first time was when BTC surged to $69,000, but failed to break through; the second time was when it surged to $100,000.
The next Altcoin cycle may be triggered after BTC successfully breaks through $100,000. Although I hope it will happen in the first quarter of 2025, it may also repeat the volatile pattern of the second/third quarter of 2024. This is something I need to be mentally prepared for. Therefore, I have planned the following possible market scenarios:
Here are my scenario illustrations:
- Scenario 1: BTC and Altcoins rise together. If 2025 becomes a unidirectional uptrend, with BTC continuing to rise and Altcoins performing well, we may see a repeat of the across-the-board rally we saw a couple of months ago.
- Probability: 30%-40%
- Action Plan: Buy quality Altcoins on dips, seize the opportunity to position.
- Scenario 2: BTC rises, Altcoins have limited gains. This is similar to the 2024 market, where the market may still be volatile in the coming months, but more optimistic than 2024 (because BTC continues to rise). Certain areas may perform well.
- Probability: 50%-60%
- Action Plan: Buy selected Altcoins on dips, avoid overheated sectors, and look for the next potential direction.
- Scenario 3: BTC rises, Altcoins decline. If this is the top for Altcoins, BTC may continue to be strong, while Altcoins may perform weakly.
- Probability: 20%-30%
- Action Plan: Decisively clear out Altcoin positions, although there may be some drawdowns, if Altcoins lack the momentum to rise, it is still necessary to cut losses in time.
- Scenario 4: BTC and Altcoins both decline. If the market reaches a top, all assets will enter a downward cycle.
- Probability: 10%-20%
I believe BTC breaking new highs will not take as long as in 2024, as the current macroeconomic environment has already provided favorable support for BTC. During the "summer doldrums" of 2024, although the ETF had just been launched, traditional financial institutions were still trying to explain the value proposition of BTC to their clients. However, at that time, the global consensus on the importance of BTC had not yet formed.
Now, with Trump in office, the discussion around a "Strategic Bitcoin Reserve (SBR)" is gradually heating up, and this narrative has undergone a significant change.
While I won't speculate on the likelihood of SBR being established, it is undeniable that this new political environment has brought more attention to the digital asset space. Especially when the president of the world's largest economy frequently talks about BTC, people are more easily convinced to buy it.
Recognizing the importance of this political transition is crucial. Therefore, I believe BTC will continue to sail smoothly in 2025, while for Altcoins, it's a similar but different story.
Looking at the performance of the Altcoin total market cap (Total3), it reached the historical high of 2021 in the first quarter of 2024 and set a new cycle high in the fourth quarter. The overall trend is similar to the historical cycle. To be honest, the difference between my Scenario 1 and Scenario 2 is not that great.
The key is how to grasp the positions and timing. I am optimistic about 2025, but I cannot predict how long this will all take. Although I believe the unidirectional uptrend will be faster than 2024, Altcoins may still experience significant declines during periods lacking catalysts.
My strategy is: As long as the cycle has not reached its peak, I will maintain a net long position, whether in BTC or other assets. I don't think 2025 will repeat the "summer doldrums" of 2024, but similar volatile periods may occur - market sentiment may be low, but prices can still remain relatively stable.
For on-chain assets, their volatility is greater, and they may experience declines of up to 70% during market adjustments. Therefore, my goal is to sell when the Altcoin hype is at its highest, and then gradually reallocate to large-cap Altcoins (top 20 by market cap).
I don't believe Altcoins have reached their peak here, as I can't imagine BTC continuing to rise while Altcoins are underperforming. And I also don't believe BTC will top out at this stage.
Conclusion:
- Bitcoin will continue to rise, with its gains expected to exceed the performance in 2024.
- For altcoins - maintain an offensive stance, but know when to switch to defense. However, compared to 2024, the defensive intensity can be appropriately weakened.
Risks
- Cycle Top
The cycle top is usually a self-fulfilling phenomenon. Although I believe we are still far from the top, this needs to be reassessed weekly. The cycle top is not necessarily a specific "event", but rather a state that gradually approaches over time.
- Risks of Strategic Bitcoin Reserve (SBR)
After the new president takes office, everyone is focused on the policy direction. Although Bitcoin currently has tailwind factors, if the president completely ignores Bitcoin, this will be a rather unfavorable signal.
I believe the risks are mainly reflected in two aspects: either the SBR plan is shelved, or SBR is not implemented, but an alternative plan is launched. If it's the latter, although it may bring short-term negative news, as long as it is beneficial to Bitcoin, it will ultimately turn into a positive factor.
- Supply Risk
In the summer of 2024, global stock markets hit new highs, but the crypto market faced huge selling pressure, mainly from the sales of Mt. Gox, Germany, Grayscale GBTC and other supply sources.
Supply risk always exists, as there are always institutions or individuals holding large amounts of Bitcoin in the market, such as the UK government, Silk Road liquidation assets, FTX distribution, etc. Although these events may bring short-term pressure, if everything goes well, they may also become good opportunities to buy at low prices.
- Macroeconomic Risks
I believe that even if the rate cut is relatively small, as long as interest rates continue to decline, market liquidity will improve, which is still a positive signal.
If the signal is negative (inflation rises again, the Fed has to raise interest rates), it may have a negative impact on digital assets.
Themes and Tokens
Now we come to the part that everyone is most looking forward to. But before we start the discussion, I want to emphasize again: "Take the offensive as the main strategy, but know when to switch to defense." In this cycle, active investment management will far outperform passive management.
The old "buy and hold" strategy is no longer applicable. For example, although Solana rose 10 times in 2023, its performance in 2024 was almost on par with Bitcoin. Similarly, top tokens like TAO did not benefit from the recent AI craze. And memes have lost their former glory, such as "Dogecoin is no longer popular", "Doge Guy is no longer calm", and "Pepe the Frog is no longer in vogue".
It can be foreseen that in this cycle, there is almost no asset suitable for "buy and hold".
In addition, I like to think about who are the marginal buyers in the market? Currently, there are three main types of marginal buyers in the market: institutional investors (traditional financial institutions), funds (liquidity funds/crypto-native funds), and speculators (perpetual contract traders, on-chain players, etc.).
A successful investment narrative needs to attract the attention of at least one of these buyer groups. Based on this, let's start the analysis:
- AI Theme
AI is still an important investment theme. But as mentioned earlier, we have experienced several rounds of hype. If you've read my views on AI tokens, you'll know that I believe the next wave is about to come.
- Macro Trend: From "hype" to "fundamentals" to "actual utility".
- Micro Trend: From "social buzz" to "fundamentally driven" to "actual application and virtual image".
However, "buy and hold" is not a good strategy. For example, Goat, which kicked off all this, has already fallen 60% from its high and may continue to underperform.
Recommended Tokens: Application tech/clusters/games/consumer-facing AI
For example, ALCH (game development), Griffain (helps manage wallets with smart agents), Digimon, Ai16z (leaders in the AI field). Of course, there are many other potential tokens that may be overlooked, but these are my top picks.
- DeFi
DeFi (Decentralized Finance) is still an important investment theme, but it is more challenging. The number of tokens that can truly benefit from it is small, and even if these tokens have potential, their prices may not rise significantly (e.g., the performance of the LST-related field).
From a risk-return perspective, DeFi is not my top choice, but I believe this field will continue to develop in 2025.
Recommended Tokens: AAVE, ENA, Morpho, Euler, USUAL
Secondary Tokens: Stablecoins, payment-related tokens
- Layer 1 (L1) Blockchain Trading
Although it may be controversial, I believe L1 trading will regain the market's focus in the future. The hype potential of the L1 field is obvious. Take Sui as an example, the rise from $1 to $4 shows that the market's interest in L1 is recovering.
L1 trading is currently an underestimated but potentially huge field, just like Hype has already risen 10 times.
Recommended Tokens: SUI, Hype
Secondary Tokens: Abstract
I'm not very enthusiastic about Monad and Berachain, but I'm very excited about Abstract - I think it could be a hit project.
- NFT Tokens and Game Tokens (New Wave)
I'm also very optimistic about this field. Recently, I've invested in some game projects and believe the NFT token field is worth watching. For example, Pengu's price is gradually recovering, Azuki has launched $ANIME, and Doodles also has its own characteristics. Although I don't think NFTs themselves will make a comeback, their related tokens may present new opportunities.
Game tokens are also worth paying attention to. Off-The-Grid has proven that it's possible to develop an interesting game. Given that this field is currently underestimated, I think it's a good strategy to thoroughly research quality game projects that are about to issue tokens.
Recommended Tokens: Pengu, Anime (Azuki), Spellborne, Treeverse
Secondary Tokens: Prime, Off the Grid (if they issue tokens), Overworld
- Other Narratives
Here are some narratives I'm paying attention to, although I'm not particularly optimistic about them, but they still have a certain appeal:
- Data Tokens: Kaito, Arkm
- Meme: The only one I'm currently interested in is PEPE, the rest are mostly out of fashion
- Decentralized Internet of Things (DePIN): PEAQ, HNT
- Ordinals
- Classic Altcoins (Dino Alts): XRP, etc.
- Old DeFi Projects: CRV, CVX
2025 Predictions
Here are some of my bold predictions for 2025, which may sound a bit far-fetched, but are not entirely impossible:
- DePIN (Decentralized Internet of Things) is officially implemented by a major company through acquisitions.
- Binance's market share in the exchange market declines, but is surpassed by Bybit or OKX, not Hyperliquid.
- With the advancement of VR technology, metaverse tokens regain their vitality.
- ICOs (Initial Coin Offerings) become popular again.
- The ETH chain's "DeFi Summer" never arrives.
- Sui's price breaks into the double digits (at least $10).
- ETH staking yields are approved through ETFs, leading to the creation of more staking tokens and yield aggregation products, similar to the situation in 2021.
- A renowned artist uses NFTs and tokens to interact with and reward their fans.
- Bitcoin reaches $200,000.
- More L1 project CEOs or founders choose to leave, following the example of Aptos.
- Base loses the chain competition and is replaced by another L1 project, while Solana maintains its leading position.
Concluding Thoughts
Thank you for reading this far! These are the investment plans I have set for 2025. I expect these plans may be adjusted as the market changes, just like the plans for 2024.
The most important advice here is: stay flexible, like water, and go with the flow. Enjoy the journey, as market changes are inevitable, but that's what makes investing so fascinating. As the famous saying goes:
"No one can step into the same river twice, for the river is always changing, and the person is also changing."
Good luck and safe travels! If you've gained life-changing benefits from this journey, don't forget to use those gains to truly change your life.
