Author: Kyle, Crypto Researcher
Compiled by: Felix, PANews
Since the current bull market cycle began in 2024, the cycle so far has been: the launch of the BTC ETF on January 10th → until Bitcoin reaches a new all-time high, which will drive the Altcoin season, leading to a volatile Q2/Q3 2024, with Bitcoin continuing to break through $50,000 and $60,000, and currently hovering around $90,000.
It is worth noting that the Altcoin season starts when BTC reaches its peak, the first round was when BTC was approaching $69,000 but failed to break through properly, and the next round was when it was approaching $100,000.
The next Altcoin season is likely to occur when Bitcoin consolidates above $100,000, which is hoped to happen in Q1 2025. But it may repeat the story of Q2/Q3 2024 in the coming months. Here are all the possible scenarios:
Scenario 1: BTC + Altcoins generally rise. Rises all the way through 2025, then enters another Altcoin season, as BTC continues to rise, all tokens perform well, repeating the past 2 months (30-40% chance).
Strategy: Buy well-performing Altcoins on dips.
Scenario 2: BTC rises, Altcoins rise less; Replay of 2024 story, fluctuating up and down in the coming months, but more bullish than 2024 (because BTC is rising); so choose well-performing tokens (50-60% chance).
Strategy: Buy selected Altcoins on dips. Avoid high-profile tracks, find the next "moonshot coin".
Scenario 3: BTC rises, Altcoins generally fall (20-30% chance).
Strategy: Sell all Altcoins. Reduce Altcoin investment; if the Altcoins held have not risen in the long run, may have to sell them all.
Scenario 4: BTC falls, Altcoins generally fall. Everything has reached its peak (10-20% chance).
Due to macroeconomic tailwinds, a new BTC ATH breakthrough may not take as long as in 2024. In this hellish summer of this year, the ETF has just been launched, and TradFi is still struggling to sell the BTC story to clients. Most importantly, the outside world generally does not believe in the importance of Bitcoin.
Now with Trump's victory, discussions about strategic Bitcoin reserves are underway, although the likelihood of establishing a strategic Bitcoin reserve is low, but Bitcoin's reputation has already changed.
The narrative is important - in fact, the new regime currently in place has brought new attention to the digital asset space, and the fact that the next US president is now talking about Bitcoin so frequently makes it much easier to convince people to buy Bitcoin.
This regime change is extremely important. Therefore, BTC will continue to maintain a tailwind in 2025. For Altcoins, the situation is similar but different.
Total3 (the total market cap of all Altcoins) hit a new all-time high in 2021 in Q1 2024, and then reached a cycle high in Q4 2024. It more or less follows the same pattern (Scenario 1 and Scenario 2 above are not too different).
The key is positioning and timing. While bullish on 2025, it's unclear how long it will take. Although the 2025 rally may come earlier than 2024, Altcoins will still see significant declines in periods without catalysts.
As long as the cycle hasn't ended, stay long on both Bitcoin and Altcoins. 2025 won't see the same situation as the summer of 2024, although there may be periods like the current one (just a consolidation period), but prices will still remain quite good.
The on-chain situation is different, when the tide goes out, on-chain can easily see 70% drops. Altcoins are not expected to peak at this time, as it is not clear how BTC can continue to rise when Altcoins "die", nor how BTC can peak here.
Conclusion:
- BTC rises, outperforming 2024
- Altcoins in an uptrend, although there will be declines, but less severe than 2024
Risks
Cycle Top
We are still far from the cycle top, but must constantly re-evaluate it weekly. The cycle top may not be a "event", but more of a range that gradually approaches over time.
Bitcoin Reserve Plan Risk
With the start of the new presidential term, all eyes will be on Trump's actions. While the Bitcoin tailwinds exist, if Trump completely ignores the reserve plan, that would be quite pessimistic. More likely is that the reserve plan does not happen/gets delayed by some things.
In the latter case: it will initially be bearish, but ultimately a bullish event as long as it benefits Bitcoin.
TLDR: Bullish signal = cycle continues. Bearish signal = plan needs to be adjusted. Cycle may continue, but chances are lower.
Supply Risk
The crazy macroeconomic environment of the summer of 2024, with the stock market hitting new highs. However, due to supply whales like Gox, Grayscale GBTC, etc. repeatedly hitting, there is no benefit, only harm.
Supply risk can never be mitigated. There will always be someone holding a large amount of Bitcoin - the UK government, Silk Road, FTX distribution, etc. This is just something you have to keep a close eye on, but if everything goes well, these are good buy-the-dip events.
Macro Risk
Rate cuts are expected to be modest, and while not as optimistic, the fact is that as long as rates continue to decline, liquidity will improve. Similarly, bullish signal = cycle continues. Unless there are rate hikes/no rate cuts, macro should be favorable for digital assets.
The bearish signal is if inflation rears its head again, the Fed may have to raise rates to curb inflation.
Token Recommendations
1. AI
Has already gone through several waves. The next wave is expected to come soon. Buy and hold will not yield good results. Goat, the token that spawned all this, has already fallen 60% from its high and may continue to underperform.
Preferred: Applied Tech / Swarms / Gaming / Consumer-centric AI
ALCH (game development), Griffain (helps control wallet agents), Digimon, Ai16z, etc. are preferred.
2. DeFi
DeFi will continue to be a great narrative, however it is very difficult to invest in, as very few tokens can benefit from it, and even if they do, they may not see a big rally.
Frankly, DeFi is not the top choice in terms of risk-reward.
Preferred: AAVE / ENA / Morpho / Euler / USUAL
Secondary: Stablecoins / Payment-related tokens
3. L1
L1 will make a comeback. The obvious one is Hype. L1 itself is one of the areas the market has always ignored - it's one of the neglected areas, but it harbors huge opportunities (just as Hype grew 10x).
Preferred: SUI / Hype
Secondary: Abstract
4. NFT Tokens and Gaming Tokens
The NFT token space is worth watching. PENGU is slowly recovering, Azuki has the ANIME token, Doodles has... whatever. NFTs are not expected to revive, but their tokens will. Also, it's interesting to dig deeper and find interesting upcoming game tokens.
Preferred: Pengu / Anime (Azuki) / Spellborne / Treeverse
Secondary: Prime / Off the grid (if the token is launched) / Overworld
5. Other Narratives
- Data Tokens: Kaito / Arkm
- Meme: PEPE
- DePIN: PEAQ / HNT
- Ordinals
- Old DeFi: CRV / CVX
Forecast for 2025
- DePIN will be implemented by a company in some way, perhaps through acquisition.
- Binance will lose market share as the largest exchange, not to Hyperliquid, but to Bybit / OKX.
- With new advancements in VR, metaverse tokens will be revived.
- ICOs will be great again.
- There will be no Altcoin season on the ETH chain.
- Sui will reach double digits (at least $10).
- The Ethereum ETF staking will be approved, leading to more yield products for staking other tokens, as well as yield aggregators.
- A major celebrity will use NFTs and tokens to engage with and reward their fans.
- Bitcoin will reach $200,000.
- More L1 institution CEOs/founders will leave their original companies after seeing the Aptos Labs CEO departure (PANews note: On December 20, Aptos Labs co-founder Mo Shaikh resigned as CEO, and co-founder Avery Ching will take over).
- Base will fail in the competition with L1s, and another L1 will take its place. Solana will continue to hold.
Related reading: 2024 Bitcoin Year-End Review: Price Increased 131%, Not as Much as Last Year, TVL Surged 21-Fold to Over $6.7 Billion
