Author: Torofinance
2024 is undoubtedly an important year in the history of cryptocurrency.
This year, revolving around the two core narratives of ETF and the US election, with Bitcoin as the main leverage, the cryptocurrency industry has successfully broken through in the year, with listed companies, traditional financial institutions, and even national governments rushing in, mainstream adoption and recognition have increased significantly, and the regulatory environment has also moved towards a clearer and more relaxed path with the inauguration of the new government, mainstream collision, path differentiation, and regulatory evolution have become the industry's main theme this year.
01 Review of 2024: Bitcoin tops, Ethereum is chased, MEME casino is highly concerned
Looking at the industry's main developments this year, Bitcoin is undoubtedly the core narrative.
ETF and national reserves have enabled Bitcoin to successfully reach $100,000, officially announcing that Bitcoin has surpassed the connotation of cryptocurrency, and its extension has become a globally resilient anti-inflation asset, its value storage has been recognized, and BTC is gradually transitioning from digital gold to a supranational currency, marking a stage victory in this grand financial experiment initiated by Satoshi Nakamoto. On the other hand, the Bitcoin ecosystem has been expanded this year, although Runes, Runes, and even L2 are in a state of hot and cold, the diverse Bitcoin ecosystem has already taken shape, with BTCFi, NFT, gaming, social and other applications continuing to develop, the Bitcoin DeFi TVL has soared from $300 million at the beginning of the year to $6.755 billion, an increase of more than 20 times year-on-year, among which Babylon has become the largest protocol on the Bitcoin chain, with a TVL of $5.564 billion as of December 20, accounting for 82.37% of the total. The broader BTCFI has also performed brilliantly this year, with the share of Bitcoin spot ETFs soaring and MicroStrategy, which was included in the Nasdaq 100, being widely imitated, reflecting the overwhelming success of Bitcoin in the Cefi field.
Returning to the public chain field, the leader Ethereum this year did not fare so well. Compared to other assets, its performance was poor, with a decline in value capture and user activity, and its narrative was not as good as before, the "value theory" has made Ethereum suffer greatly.Although the slogan of the revival of the Defi consensus has been sounded, apart from the TVL pyramid frenzy triggered by re-pledging, it seems that only Aave has taken on the entire burden, and actual investment is clearly insufficient. However, the emergence of the year-end derivative dark horse Hyperliquid has not only half-killed the CEX, but also sounded the bugle of a counterattack for DeFi. On the other hand, after the Dencun upgrade, the internal circulation of Ethereum Layer 2 has accelerated, and it has continued to encroach on the share of the mainnet, to the extent that the market has sparked a major discussion on the Ethereum mechanism, with doubts emerging one after another, and even the rapid growth of Base has led to market rumors that Ethereum's future is Coinbase's.
The strong rise of Solana forms a sharp contrast with this. From the perspective of TVL, Ethereum's market share in the public chain has dropped from 58.38% at the beginning of the year to 55.59% at the end of the year, while Solana has soared from being unknown at the beginning of the year to 6.9% at the end of the year, becoming the second largest public chain after Ethereum.From the perspective of the recovery path, relying on the unique advantages of low cost and high efficiency, Solana has targeted the core of liquidity positioning, and relying on the Degen culture, it has risen to the undisputed MEME king, becoming the retail concentration camp of the year. This year, Solana's daily on-chain fees have surpassed Ethereum multiple times, and the growth of new developers has also exceeded Ethereum, with the overtaking trend being significant.
TON and SUI also broke through this year. With 900 million users, Telegram single-handedly ignited the Web3 traffic entrance, giving a strong stimulus to the market that had been dormant for a long time before September, and the TON backed by the big tree has finally entered the fast lane of growth after lingering in the dawn for a long time. According to Dune data, TON currently has over 38 million cumulative on-chain users and over $2.1 billion in cumulative transaction volume. SUI, on the other hand, has completely risen by virtue of its price, with the Move language public chain making rapid progress, opening up hardware, diversifying protocols, and airdropping to introduce three-pronged approaches, and the prospects seem bright. Compared to the price-driven SUI, the public chain Aptos, which had a relatively weak price performance during the same period, has been more favored by traditional capital, successfully establishing cooperation with BlackRock, Franklin Templeton, and Libre this year, and its compliance tone may bring it dawn in the new RWA and BTCFI cycle.
From the application perspective, MEME has been the main driver of the market this year, and essentially, the rise of MEME is a sign of the current market pattern change, with VC tokens not being bought, and the excess liquidity having no target to find, ultimately pouring into the more equitable and profit-seeking sectors.In this process, the connotation of MEME is also constantly expanding, from a single speculative target to gradually developing into a typical representative of cultural finance, "everything can be MEME" is happening in reality. Although in terms of market capitalization, MEME only accounts for less than 3% of the top 300 cryptocurrencies (excluding stablecoins), its trading volume has continued to account for 6-7% of the share, reaching 11% at one point recently, making it the most liquid major track. According to Coingecko data, MEME accounted for 30.67% of investor attention this year, ranking first among all tracks. Where attention is, money naturally follows, and this is indeed the case. Looking at this year's MEME, pre-sale fundraising, celebrity tokens, animal zoo wars, PolitFi and AI, each one is a top influencer in the circle.
Against this backdrop, the infrastructure around MEME has continued to solidify, with the fair launch platform Pump.fun emerging, which not only reshapes the MEME landscape, but also successfully tops the list of the most profitable and successful applications of the year, becoming "the first Solana protocol to have a monthly revenue of over $100 million" in November. According to Dune data, as of December 22, Pump.fun has accumulated revenue of over $320 million and has deployed a total of about 4.93 million tokens.
Of course, the platform making money does not mean that the retail investors make money, considering the one-in-ten-thousand probability of the large MC memecoin, and only 3% of users can profit more than $1,000 on Pump.fun, coupled with the increasingly prominent trend of MEME institutionalization, from the user's perspective, no matter how fair it may seem, being sheared is inevitable. Perhaps it is for this reason that adding fundamentals to MEME has become a new development model for projects, and most Desci and AIMEME projects with relatively long cycles have adopted this model, but so far, the one-time wonder is still the mainstream, and the "the faster you run, the better you live" is still on the rise.
And under the influence of the US election, another godlike application has surfaced. Polymarket has surpassed all the betting platforms on the market, becoming an overnight sensation in the prediction market with its high accuracy. In October alone, Polymarket's website had 35 million visits, twice that of popular betting sites like FanDuel, and its monthly trading volume surged from $40 million in April to $2.5 billion.Broad user base and real demand equals clear value application, not to mention V God's endless praise for it, the only regret is that it has not achieved large-scale conversion of crypto users. But the new hybrid of media + betting is undoubtedly coming step by step.
As the year draws to a close, large models have transitioned from technology to application, and a white-hot competitive landscape has emerged. After a year of AI swaying in the Web3 hotspot, it has finally staged a counterattack and become the dark horse of the year. MEME was the first to ignite, and Truth Terminal, accompanied by the large MC memecoin GOAT, ACT, and Fartcoin, quickly arrived, reviving the myth of hundredfold returns and unveiling a frenzy of AI Agent applications. Currently, almost all mainstream institutions are optimistic about AI Agent, believing it to be the second phenomenon-level track after DeFi. However, the infrastructure in this field is still not fully developed, and applications are mostly concentrated in MEME, Bot, and other superficial areas, with limited deep integration of AI and blockchain. But the newness also means opportunities, and the cyberpunk-style altcoin speculation remains to be seen.
On the other hand, from the perspective of the core driving institutions of this bull market, PayFi, which seamlessly connects traditional finance and Web3, is undoubtedly at the forefront. Stablecoins and Real-World Assets (RWA) are typical representatives. Stablecoins have truly begun to show large-scale application this year, not only growing rapidly in the crypto field but also starting to occupy a share in the global payment and remittance market. Sub-Saharan Africa, Latin America, and Eastern Europe have begun to bypass the traditional banking system and directly use stablecoins for transaction settlement, with year-over-year growth exceeding 40%. The total value of circulating stablecoins has exceeded $210 billion, significantly higher than the billions of dollars in 2020, with an average of over 20 million addresses conducting stablecoin transactions on public blockchains per month, and the settlement value of stablecoins is expected to exceed $2.6 trillion in the first half of 2024 alone. In terms of new products, Ethena is the most eye-catching stablecoin project this year, further catalyzing the fever of yield-bearing stablecoins, which is also a major driver of AAVE's revenue this year. As for RWA, it was completely ignited after BlackRock's announcement of entry, with the market size expanding from less than $2 billion three years ago to $14 billion this year, covering multiple areas such as lending, real estate, stablecoins, and bonds.
In fact, the development of PayFi is consistent with the market's performance. It is precisely because the internal market growth has encountered a bottleneck that the mainstream institutionalization market, as an incremental market, is at the beginning of a new cycle. To seek incremental space, PayFi has entered a critical process at this stage. It is worth noting that due to the integration with the traditional financial system, this field is also the most favored Web3 track by government agencies, such as Hong Kong, China, which has listed stablecoins and RWA as important areas for development next year.
Of course, although it seems to be on the upswing, it cannot be denied that under the dual background of nearly 2 years of macroeconomic tightening and the industry's downward cycle, the crypto field has also experienced an exceptionally difficult stress test. Innovative applications are difficult to emerge, internal conflicts have intensified, and restructuring and mergers and acquisitions are ongoing. The weakening of liquidity has led to a path differentiation in the crypto industry, forming a pattern where Bitcoin is the core inflow, continuously siphoning off other altcoins. The altcoin market was in the doldrums for most of this year, and the "no altcoin bull market this cycle" narrative was repeatedly confirmed and refuted until the end of the year, when it rebounded under the attention of Wall Street, ushering in the altcoin season. From the current perspective, path differentiation will continue in the short term and will have an increasingly intensified trend.
02 Outlook for 2025: New Cycle, New Applications, New Directions
Looking back to the present, the new year's bell is about to ring. Looking ahead to 2025, with the Trump administration ushering in a new era of crypto, well-capitalized institutions are also eager to try. As of now, more than 15 institutions have released their market forecasts for next year.
In terms of price forecasts, all institutions are optimistic about the value of Bitcoin, with 6 institutions believing the peak price will be in the range of $150,000 to $200,000. Among them, VanEck and Dragonfly believe the price will reach $150,000 next year, while Presto Research, Bitwise, and Bitcoin Suisse believe it will reach $200,000. If based on strategic reserves, Unstoppable Domains and Bitwise have even proposed forecasts of $500,000 or higher. As for other cryptocurrencies, VanEck, Bitwise, and Presto Research have provided forecasts, believing that ETH will be around $6,000-$7,000, Solana around $500-$750, and SUI may rise to $10. Presto and Forbes believe the total crypto market cap will reach $7.5-$8 trillion, while Bitcoin Suisse believes the altcoin market cap will increase 5-fold.
The price forecasts are also supported by fundamentals. Almost all institutions believe that the US economy will experience a soft landing next year, with an improved macroeconomic environment, and crypto regulations will also be relaxed. More than 5 institutions hold a positive view on Bitcoin strategic reserves, believing that at least one sovereign state and many listed companies will include Bitcoin in their reserves. All institutions believe that increased ETF inflows will become an objective fact.
In terms of specific tracks, stablecoins, tokenized assets, and AI are the areas of greatest concern for institutions. From the perspective of stablecoins, VanEck believes the stablecoin settlement volume will reach $300 billion next year, while Bitwise believes it will reach $400 billion, driven by accelerated legislation, the application of financial technology, and the promotion of global settlement. Blockworks Mippo is even more optimistic, giving an estimate of $450 billion. A16z also believes that enterprises will increasingly accept stablecoins as a payment method, and Coinbase has pointed out in its report that the next wave of real-world crypto adoption (killer app) may come from stablecoins and payments.
In terms of tokenized assets, A16z, VanEck, Coinbase, Bitwise, Bitcoin Suisse, and Framework are all optimistic about the track. A16z's forecast mentions that as the cost of blockchain infrastructure decreases, the tokenization of non-traditional assets will become a new source of revenue, further driving the decentralized economy. VanEck gives a specific figure, believing that the value of tokenized securities will exceed $50 billion, which is consistent with Bitwise's forecast data. Messari, on the other hand, provides a differentiated conclusion based on actual conditions, believing that as interest rates decline, the tokenization of government bonds may face resistance, but idle on-chain funds may receive more attention, and the focus may shift from traditional financial assets to on-chain opportunities.
In the AI direction, A16z, which has already placed a heavy bet in the AI field, remains highly optimistic about the integration of AI and crypto. It believes that the autonomous agency capabilities of AI will be greatly enhanced, with artificial intelligence able to have its own wallet to achieve subjective behavior, and decentralized autonomous chatbots will become the first truly autonomous high-value network entities. Coinbase also recognizes this, directly pointing out that AI agents equipped with crypto wallets will be at the forefront of disruption. VanEck states that the on-chain activity of AI agents will exceed 1 million, and Robot Ventures believes the total market cap of AI agent-related tokens will grow at least 5-fold. Although Dragonfly agrees that tokens will rise significantly, it still holds a relatively conservative view on actual applications, believing that the application of underlying protocols may be relatively limited.
Bitwise and Defiprime have identified the core use cases, with the former believing that AI Agents will lead to a MEME explosion, and the latter stating that DeFi is the deep integration scenario. Messari provides a more specific path, believing that the integration of AI and crypto has three main directions: the emergence of new AI casinos like Bittensor and Dynamic TAO, the use of blockchain technology in small-scale and specialized model fine-tuning, and the combination of AI Agents and MEME.
In other aspects, the focus of institutional forecasts varies. For example, YBB believes that the revival of DeFi will be the main theme of 2025, Robot Ventures believes there will be a wave of integration in the application chain and Layer 2 tracks, Messari predicts that almost all infrastructure protocols will adopt ZK technology by 2025, DEPIN industry revenue will reach 8-9 figures by 2025, and VanEck and Bitcoin Suisse believe that NFTs will make a comeback. Due to the length of the text, I will not go into further details.
03 Conclusion: Which Way for Investors?
Although the viewpoints are slightly different and there are differences in the subdivided fields, it is not difficult to see that all institutions have optimistic and positive expectations for next year, whether it is the rise in prices, the expansion of the ecosystem, or mainstream adoption, they all expect to continue scaling new heights in 2025.
It can be foreseen that, in terms of price, the rise in the prices of mainstream Altcoins is inevitable, especially in Q1 of next year, which will be a period of intensive policy incentives. The Altcoin market will continue to be differentiated, and under the influence of ETFs, Altcoins that meet compliance requirements will be more likely to attract capital inflows and narrative continuity, while other Altcoins will contract slowly. If macroeconomic liquidity tightens, the risks of Altcoins will become more prominent.
From an industry perspective, although the dominant legacy mainchains still have an advantage in the ecosystem, the impact from new mainchains is also inevitable. The value capture and narrative of Ethereum will continue to ferment, but optimistically, the inflow of external capital may provide some relief, and the scaling and account abstraction proliferation on the technical level will also become important breakthroughs for Ethereum in 2025. Solana still has growth momentum under the capital discourse, but the high dependence on MEME poses latent crisis, and the competition between Base and it will become increasingly fierce. In addition, it is expected that a batch of new mainchains will join the market competition, such as Monad and Berachain.
The development from basic infrastructure to applications is the general direction of the industry's future development, and consumer-level applications will be the focus of applications in the next few years, with application chains and chain abstraction likely to become the main way of DAPP construction. In terms of tracks, the revival of DeFi has become a consensus, but at this stage it is still projected on Aave, while the focus of centralization is on the payment track, with Hyperliquid and Ethena still worth close attention.
The speculative craze of MEME will most likely continue in the short term, but the pace will slow down significantly, especially under the influence of the Altcoin season, however, the focus direction such as Politifi still has a relatively long narrative to go. Nevertheless, the infrastructure around MEME is still expected to be improved, user experience optimized, usage threshold lowered and MEME institutionalized as an inevitable trend. It is worth noting that new token launch methods will always trigger a new round of sensation.
As the incremental market comes from institutions, the tracks favored by institutions are expected to accelerate their development, with stablecoins, AI, RWA, and DePin still becoming the focus narratives of the next round. In addition, in the context of tight liquidity, any on-chain liquidity tools and protocols that can increase leverage will most likely be favored.
The new cycle is about to come, and as an investor, except for the old and welcoming the new, discovering the cycle, following the cycle, in-depth research and participation, is the only choice.
