Since the current bull market cycle began in 2024, the cycle so far is: January 10th BTC ETF launch → until Bitcoin reaches a new all-time high, fueling the Altcoin season, entering a volatile 2024 Q2/Q3, with Bitcoin continuing to break through $50,000 and $60,000, currently hovering around $90,000.
It is worth noting that the Altcoin season begins when BTC reaches its peak, the first round was BTC approaching $69,000 but failed to break through properly, the next round is towards $100,000.
The next Altcoin season is likely to occur when Bitcoin stabilizes at $100,000, hopefully in Q1 2025. But it may replay the story of Q2/Q3 2024 in the next few months. Here are all the possible scenarios:
Scenario 1: BTC + Altcoins generally rise. Rises all the way to 2025, then enters another Altcoin season, as BTC continues to rise, all tokens perform well, repeating the past 2 months (30-40% chance).
Strategy: Select well-performing Altcoins and buy the dips.
Scenario 2: BTC rises, Altcoins rise less; Replay the 2024 story, fluctuating up and down in the next few months, but more bullish than 2024 (because BTC is rising); so select well-performing tokens (50-60% chance).
Strategy: Buy the dips on selected Altcoins. Avoid high-profile tracks, find the next "moonshot coin".
Scenario 3: BTC rises, Altcoins generally decline (20-30% chance).
Strategy: Sell all Altcoins. Reduce Altcoin investments; if the Altcoins held have not risen in the long run, may have to sell them all.
Scenario 4: BTC declines, Altcoins generally decline. Everything has reached its peak (10-20% chance).
Due to macro tailwinds, a new BTC ATH breakthrough may not take as long as in 2024. In this year's hellish summer, 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 strategic Bitcoin reserves is low, but Bitcoin's reputation has already changed.
The narrative is important - in fact, the new administration 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 trend of all Altcoins) hit a new all-time high in 2021 in Q1 2024, then reached a cycle high in Q4 2024. It more or less follows the same pattern (the scenarios 1 and 2 above are not much different).
The key is positioning and timing. While bullish on 2025, it's unknown how long it will take. Although the 2025 rise may be earlier than 2024, Altcoins will still plummet significantly in periods without catalysts.
As long as the cycle hasn't ended, stay bullish on both Bitcoin and Altcoins. 2025 won't see the situation of summer 2024 again, although it may encounter periods like now (just a consolidation period), but the prices will still remain quite good.
The on-chain situation is different, when the tide goes out, on-chain can easily see a 70% drop. Altcoins are not expected to peak at this time, as it is not seen how BTC can continue to rise when Altcoins "die", nor is it seen how BTC can peak here.
Conclusion:
- BTC rises, exceeding the gains of 2024
- Altcoins are in an uptrend, although there will be declines, but less severe than 2024
Risk
Cycle Top
We are still far from the cycle top, but must constantly re-evaluate it every week. 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 a new presidential term, all eyes will be on Trump's actions. While the bullish factors for Bitcoin 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: as long as it's beneficial to Bitcoin, it's initially bearish but ultimately a bullish event.
TLDR: Bullish signals = cycle continues. Bearish signals = plan needs to be revised. The cycle may continue, but the chances are lower.
Supply Risk
The summer of 2024 experienced a crazy macro environment, with the stock market hitting new highs. However, due to repeated blows from whales like Mt. Gox, Grayscale GBTC, etc., there was no benefit, only harm.
Supply risk can never be fully mitigated. There will always be entities holding large amounts of Bitcoin - the UK government, Silk Road, FTX distribution, etc. This is just something you have to closely monitor, but if everything goes well, these events are actually good buy-the-dip opportunities.
Macro Risk
Expected smaller rate cuts, although not as optimistic, but the fact is that as long as rates continue to decline, liquidity will improve. Similarly, bullish signals = 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
The current situation has experienced several waves. The next wave is expected to arrive soon. Buying and holding will not yield good results. Goat, the token that gave rise to all this, has already fallen 60% from its peak and may continue to perform poorly.
Top picks: Applied technology / Swarms / Games / Consumer-centric AI
ALCH (game development), Griffain (helps control wallets), Digimon, Ai16z, etc. are top picks.
2. DeFi
DeFi will continue to be a great narrative, but 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 surge.
To be frank, in terms of risk-reward, DeFi is not the top choice.
Top picks: AAVE / ENA / Morpho / Euler / USUAL
Secondary picks: Stablecoins / Payment-related tokens
3. L1
L1 will make a comeback. The Hype is obvious. L1 itself is one of the areas that the market has always overlooked - it is an area that no one pays attention to, but it harbors huge opportunities (just as Hype has grown 10-fold).
Top picks: SUI / Hype
Secondary picks: Abstract
4. NFT tokens and game tokens
The NFT token field 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 return. In addition, it is interesting to dig deeper and find interesting games that are about to launch tokens.
Top picks: Pengu / Anime (Azuki) / Spellborne / Treeverse
Secondary picks: 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
2025 Forecast
- 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 fans and provide rewards.
- 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, with co-founder Avery Ching taking over).
- Base will fail in the competition with L1s, and another L1 will take its place. Solana will continue to hold.
