Author: Luo Cai Finance
2024 was undoubtedly an important year in the history of cryptocurrency.
This year, with Bitcoin as the main leverage, the cryptocurrency industry successfully broke through, driven by the two core narratives of ETF and the US election. Listed companies, traditional financial institutions, and even national governments rushed in, leading to a significant increase in mainstream adoption and recognition. The regulatory environment also moved towards a clearer and more relaxed path with the new government taking office, making the industry's mainstream collision, path differentiation, and regulatory evolution the main themes of the year.
01 Review of 2024: Bitcoin Tops, Ethereum Chased, MEME Casino Attracts Attention
Looking at the industry's major developments this year, Bitcoin was undoubtedly the core narrative.
ETF and national reserves have helped Bitcoin successfully reach $100,000, officially announcing that Bitcoin has transcended the connotation of cryptocurrency and has become a globally resilient anti-inflation asset, with its value storage being recognized. BTC is gradually transitioning from digital gold to a supranational currency, marking a stage victory in the grand financial experiment initiated by Satoshi Nakamoto. On the other hand, the Bitcoin ecosystem has been expanded this year. Although Runes, Runes, and even Layer 2 are in a state of hot-to-extinction, a preliminary Bitcoin multi-ecosystem has been formed, with applications such as BTCFi, Non-Fungible Tokens, games, and social media continuing to develop. The TVL of Bitcoin DeFi 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 them, 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 domain, the leading Ethereum did not fare so well this year. Compared to other assets, its performance was poor, with a decline in value capture and user activity, and its narrative was not as strong as before. The "value theory" has made Ethereum suffer. 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 shouldered the entire burden, with actual investment clearly insufficient. However, the emergence of the year-end derivative dark horse Hyperliquid not only revolutionized half the life of the CEX, but also sounded the bugle of a counterattack for DeFi. On the other hand, the acceleration of the internal circulation of the Ethereum Layer 2 after the Dencun upgrade has continued to encroach on the share of the mainnet, leading to a major discussion in the market 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.
The strong rise of Solana formed a sharp contrast. 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%, 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. SOL has also created a miracle of growth, soaring from $6 two years ago to $200 now, and has risen by more than 100% just this year. In terms of the recovery path, relying on the unique advantages of low cost and high efficiency, Solana has targeted the core liquidity positioning, and with the support of the Degen culture, it has risen to the undisputed MEME king, becoming the gathering place for retail investors this 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 a significant catch-up trend.
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 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 introductions, with a seemingly bright future. Compared to the price-driven SUI, the public chain Aptos, which had a relatively weaker price performance during the same period, was 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 round of RWA and BTCFI cycle.
From the application perspective, MEME was the main driver of the market this year. 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 seek, 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, and "everything can be MEME" is happening in reality. Although in terms of market capitalization, MEME 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 the attention is, the money naturally follows, and this is indeed the case. Looking at this year's MEME, from pre-sale fundraising, celebrity tokens, animal park battles, PolitFi and AI, they are all top-tier figures 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 reshaped the MEME landscape, but also successfully topped the most profitable and successful application of the year. In November, Pump.fun became "the first Solana protocol to have a monthly revenue of over $100 million in history". According to Dune data, as of December 22, Pump.fun's cumulative revenue has exceeded $320 million, with about 4.93 million tokens deployed.
Of course, the platform making money does not mean that the retail investors make money. Considering the one-in-ten-thousand probability of a 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 cut and being cut 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-off phenomenon is still the mainstream, and the value of "running fast to survive" is still rising.
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 as many as 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, which is why V God praised it so highly. 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 language models have transitioned from technology to application, presenting a fiercely competitive landscape, and AI has once again become the dark horse of the year after a year of fluctuating in the Web3 hotspot. MEME was the first to ignite, and Truth Terminal, accompanied by the large MC memecoin GOAT, ACT, and Fartcoin, quickly emerged, reviving the myth of hundredfold returns and unveiling a frenzy of AI Agent applications. Currently, almost all mainstream institutions are optimistic about AI Agents, 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 RWA are typical representatives. Stablecoins have truly emerged as the long-awaited large-scale application this year, not only growing rapidly in the crypto field, but also beginning 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-on-year growth exceeding 40%. The value of stablecoins currently in circulation exceeds $210 billion, significantly higher than the billions of dollars in 2020, with an average of more than 20 million addresses conducting stablecoin transactions on public blockchains, 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 fueling the enthusiasm for yield-bearing stablecoins, which are also a major driver of AAVE's revenue this year. As for RWA, it was completely ignited after BlackRock's announcement, with the market value expanding from less than $2 billion 3 years ago to $14 billion this year, covering lending, real estate, stablecoins, bonds, and other fields.
In fact, the development of PayFi is consistent with the market's performance, and it is precisely because the internal market growth has reached a bottleneck that the mainstream institutionalization market, as an incremental market, is at the beginning of a new cycle. To seek incremental space, PayFi is entering 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 already 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 are intensifying, 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 altcoins in this bull market" narrative of the "big fish" 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 the trend will become more and more intense.
02 Outlook for 2025: New Cycle, New Applications, New Directions
Looking back to the present, the new year's bell is about to ring, and 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 15-20,000 being the peak price range for Bitcoin according to 6 institutions. Among them, VanEck and Dragonfly believe that 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 the possibility of $500,000 or higher. As for other altcoins, 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 also rise to $10. Presto and Forbes believe that the total crypto market cap will reach $7.5-8 trillion, while Bitcoin Suisse believes that 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 a favorable macroeconomic environment, and crypto regulation will also be relaxed accordingly. More than 5 institutions hold a positive view on Bitcoin's 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 that the settlement volume of stablecoins will reach $300 billion next year, while Bitwise believes that the scale of stablecoins will reach $400 billion under the acceleration of legislation, the application of financial technology, and the promotion of global settlement. Blockworks Mippo is even more optimistic, giving an estimate of $450 million. A16z also believes that enterprises will increasingly accept stablecoins as a payment method, and Coinbase has also 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 gave 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, has drawn a differentiated conclusion based on actual conditions, believing that with the decline in interest rates, 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 on the AI field, remains highly optimistic about the integration of AI and crypto, believing that the autonomous agency capabilities of AI will be greatly enhanced, with AI having its own wallets to achieve subjective behavior, and decentralized autonomous chatbots becoming 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 also stated that the on-chain activity of AI agents will exceed 1 million, and Robot Ventures believes that the total market value of AI agent-related tokens will grow at least 5-fold. Although Dragonfly agrees that tokens will rise sharply, 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 pointed out 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 has provided a more specific path, believing that the integration of AI and crypto has three main directions: the emergence of new AI casinos such as Bittensor and Dynamic TAO, the use of blockchain technology in the field of small and professional model fine-tuning, and the combination of AI Agents and MEME.
In other areas, 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 that there will be a wave of integration in the application chain and L2 tracks, Messari predicts that almost all infrastructure protocols will adopt ZK technology by 2025, DEPIN industry will achieve 8-9 digit revenues by 2025, VanEck and Bitcoin Suisse believe that NFTs will make a comeback, and so on. Due to the length of the text, I will not go into further details.
03 Conclusion: What path 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 an optimistic and positive expectation for next year, whether it is the rise in prices, the expansion of the ecosystem, or the mainstream adoption, they all expect to continue to scale new heights in 2025.
It can be foreseen that, in terms of price, the rise in the prices of mainstream cryptocurrencies is inevitable, especially in Q1 of next year, which will be a period of intensive policy-driven positive news. 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 continuation, while other cryptocurrencies will contract slowly. If macroeconomic liquidity tightens, the risks of Altcoins will become more prominent.
From an industry perspective, although the dominant legacy blockchains still have an advantage in the ecosystem, the impact from new blockchains is also inevitable. The value capture and narrative of Ethereum will continue to evolve, but optimistically, the influx of external capital may provide some relief, and the scaling and account abstraction adoption on the technical level will also become important breakthroughs for Ethereum in 2025. Solana's growth momentum remains under the capital discourse, but the high dependence on MEME poses latent risks, and the competition between Base and it will become increasingly fierce. Additionally, a batch of new blockchains, such as Monad and Berachain, are expected to join the market competition.
The transition from infrastructure to application development is the general direction of the industry's future, and consumer-level applications will be the focus of applications in the coming years, with application chains and chain abstraction likely to become the main approaches for DAPP construction. In terms of tracks, the revival of DeFi has become a consensus, but at this stage, it is still mainly reflected in Aave, while the focus of centralized tracks is on the payment track, with Hyperliquid and Ethena still worth close attention.
The speculative fever of MEME is likely to continue in the short term, but the pace will slow down significantly, especially under the influence of the Altcoin season. However, the relatively long narrative of some key directions, such as Politifi, is still worth exploring. Nevertheless, the infrastructure around MEME is expected to be improved, user experience optimized, access thresholds lowered, and the institutionalization of MEME is an inevitable trend. It is worth noting that new token launch methods will always trigger a new round of excitement.
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. Furthermore, in the context of tight liquidity, any on-chain liquidity tools and protocols that can increase leverage are likely to be favored.
The new cycle is about to arrive, and for investors, the only choice is to embrace the new, discover the cycle, follow the cycle, conduct in-depth research, and participate.
