Compiled by Wu Blockchain about Blockchain
Original link:
https://files.bitcoinsuisse.com/assets/pdf/BitcoinSuisse_CryptoOutlook2025.pdf
Bitcoin Suisse was founded in 2013 and is headquartered in Zug, Switzerland. It is one of the earliest crypto financial service providers in Europe. The company provides a comprehensive range of services, including cryptocurrency trading, storage (such as providing secure wallet solutions) and hosting services.
Preface
1. The macroeconomic environment will ease fundamentally and support a soft landing.
2. Bitcoin (BTC) will become a strategic reserve asset for the United States, and other sovereign nations will follow suit.
3. The price of Bitcoin will break through $180,000, approaching its historical high.
4. Bitcoin volatility will be lower than that of major technology stocks, indicating that it is gradually maturing into an institutional-grade asset.
5. Financial giants will launch institutional-grade Rollups on Ethereum.
6. An Ethereum collateralized ETF would result in market cap-adjusted fund flows exceeding those of Bitcoin.
7. Bitcoin dominance will peak before the end of the year.
8. Ethereum’s monetary policy will become its anchor, accelerating its progress towards “currency” attributes.
9. The Altcoin season will reach its peak in the first half of 2025, and the total market value will increase fivefold.
10. Solana will solidify its market position as the top general-purpose smart contract platform.
11. The wealth effect will drive the NFT craze at the end of the cycle.
The US election has triggered what may be the biggest paradigm shift in the history of digital assets. This marks a dramatic change in the regulatory environment, with the world's largest economy moving from strict restrictive regulation to an institutional embrace. It can be said that this is a dramatic change. Reversal - From the suppression of banking services in "Operation Suffocation 2.0" to the discussion of establishing a national strategic Bitcoin reserve, this process shows a fundamental adjustment in the government's position on digital assets, which is far beyond the Bitcoin ETF or BlackRock's A tentative approach to crypto assets.
Crypto PACs spent over $130 million in the election, winning bipartisan victories and shaping the most pro-crypto Congress in history. We believe the coming era will be one of crypto The “late 90s dot-com boom” is back in the currency space. Back then, a relaxed regulatory environment and a friendly policy framework unleashed a wave of innovation. However, as with all political promises, words are cheap and we will be watching closely to see whether the new administration actually delivers on its promises. Fulfill its promise.
With ETF records being broken and institutions entering the market at an unprecedented speed, traditional financial giants are not only testing the waters in the crypto space, but are fully committed. However, the development pattern goes far beyond traditional finance, with emerging fields such as DePIN, DeSci and DeAI It’s no longer just a narrative, it’s a solution to a real challenge. Polymarket has crossed the chasm, and the development of on-chain privacy technology and the progress of institutional-grade DeFi provide more reasons to be excited about the next wave of crypto adoption. .
Translating the above into more actionable substance, the 2025 Outlook forecast attempts to cover the breadth of the crypto market, covering improved macroeconomic conditions and liquidity, which are critical to sustaining the current crypto cycle, as well as Bitcoin’s expected Further key themes include Bitcoin’s rise as a strategic reserve asset, Ethereum’s growing institutional adoption through staking, and the resurgence of Altcoin and NFTs.
There is much to explore here. Before I dive into the details, I would like to express my deepest gratitude to Denis Oevermann, Wolfgang Vitale, and Matteo Sansonetti, whose excellent research made this report possible.
To our esteemed readers and friends: As we close out another remarkable year in the cryptocurrency space, thank you for your continued trust and interest in our research. While the holidays are a good time to rest, you are also advised to keep an eye on the market. What's Next: All signs point to 2025 being even more exciting.
— — Dominic Weibel / Head of Research
US Elected Candidates Supporting Cryptocurrency
1. Macroeconomic conditions will ease fundamentally, supporting a soft landing
The US yield curve has been inverted for more than 24 consecutive months, one of the longest periods on record. Although the spread between 2-year and 10-year Treasury yields (2y10y) has recently normalized, the spread between 3-month and 10-year Treasury yields (2y10y) has remained inverted for more than 24 consecutive months, making it one of the longest such periods on record. The 3m10y Treasury yield curve remains severely inverted, indicating that market imbalances continue. Bitcoin (BTC) has shown significant sensitivity to these changes. For example, in August 2024, when the 2y10y curve temporarily returned to normal, Bitcoin The intraday price plunged to $9,000 (-15%). As the short end of the yield curve gradually normalizes, volatility is expected to continue, which may create short-term buying opportunities. However, downside risks appear limited due to bullish market sentiment and Economic conditions are stabilizing, but only if the risk of a major recession can be avoided.
Based on historical patterns and the duration of the 2y10y inversion, the 3m10y curve could normalize by the end of the year, with the Fed’s December 18 FOMC meeting likely to be the main catalyst. This normalization trend is consistent with an improvement in financial conditions, e.g., The decline in the Financial Conditions Index (NFCI) has brought conditions back to “normal” levels from the tight conditions in 2023. The decline in the use of emergency liquidity tools (such as the Bank Term Funding Program BTFP) also further indicates that conditions are easing. Liquidity shows signs of gradual improvement, which is a positive sign for market stability, although current growth levels are still significantly lower than the peak in 2021. Continued liquidity growth is critical to maintaining the upward momentum of the crypto market, especially As the second half of the bull market cycle unfolds.
So far, liquidity dynamics have been driven mainly by fiscal measures, with monetary liquidity lagging. However, there has been a policy shift after the elections, with macroeconomic policies shifting from demand-side stimulus to supply-side economic strategies. The new policy focus is on deregulation, targeted The strategic shift is expected to ease inflationary pressures while creating a more stable environment for economic growth. In addition, the U.S. will increase its Oil production could reinforce deflationary trends and benefit energy-dependent sectors, thus indirectly supporting the broader market. This would further facilitate the easing of monetary conditions and interest rates.
The evolving macroeconomic backdrop highlights the transition to a more sustainable growth model, as supply-side measures are replacing the top-down demand-driven strategies of recent years. This strategic shift, combined with improved liquidity and stabilization of financial conditions, has enabled cryptocurrencies to The market is well positioned for a sustained rally. Bitcoin and other major crypto assets are poised to benefit from these favorable conditions, with improving macro conditions likely to drive stronger performance and unlock significant growth opportunities in the current bull cycle.
Global net liquidity is improving but remains significantly below its 2021 peak.
Yield Spreads and the Impact of Yield Curve Normalization
Global Net Liquidity and Global M2 Money
Global net liquidity: refers to the sum of asset purchases and balance sheet expansions by major central banks around the world, and is therefore the main driver of available liquidity in financial markets. A contraction in global net liquidity often coincides with a downturn in financial markets, and liquidity The expansion of the economy drives the overall economic growth and the upward trend of asset prices.
2. Bitcoin becomes a strategic reserve asset for the United States, and other sovereign nations will follow suit
Bitcoin is at a critical stage of integration into the core of global reserve strategies. Against the backdrop of growing fiscal uncertainty, geopolitical divisions, and shifting monetary orders, we predict that Bitcoin will emerge as one of the core assets of national reserves. This trend will change the way countries hedge risks and achieve economic sovereignty, and strengthen financial resilience by diversifying public funding allocations. The record gold purchases by central banks and the increasing experimental attempts of sovereign countries on Bitcoin further demonstrate the importance of diversified reserve assets. The importance is increasing.
With the incoming Trump administration, we are seeing growing momentum for the United States to adopt Bitcoin as a strategic reserve asset. The Lummis Bitcoin Act, which proposes the purchase of 1 million BTC, is In a major watershed move, the plan could make the United States the largest national holder of Bitcoin, with about 5% of the network’s supply. That share, in dollar terms, is comparable to the U.S. share of global gold reserves. The U.S. government currently Holding 200,000 Bitcoins through enforcement actions could be the starting point for a broad reserve strategy and provide precedent support for operations.
Not only is there a push at the federal level, but state governments are also gradually following suit. For example, Florida and Pennsylvania are actively purchasing Bitcoin directly for their financial departments, while Michigan and Wisconsin are choosing to use Bitcoin-related ETFs and trust funds. Taking a more cautious approach. In addition, as adoption indicators continue to rise in both the public and private sectors, companies are adding large amounts of Bitcoin to their balance sheets, further highlighting the increasingly important role of Bitcoin in financial management.
From a global perspective, Bitcoin’s influence as a reserve asset is becoming increasingly evident. Our assessment shows that Bitcoin has surpassed the British pound to become the world’s fifth largest currency and the seventh largest asset. These milestones are significant. From a political perspective, Bitcoin’s neutrality is gaining traction, with Russia and China recently recognizing Bitcoin as property, for example.
As a hedge against the potential instability of the U.S. dollar and a force supporting the dollar’s dominance, Bitcoin is being seen as a solution to current financial challenges. The purchasing power of major fiat currencies has fallen by more than 70% since 2000, reinforcing the need for In addition, Bitcoin provides a key option for dealing with the rising sovereign debt challenge. The U.S. federal debt has now reached a record high of $36 trillion and is expected to reach $1 trillion by 2054. With the value of the U.S. dollar increasing to $153 trillion, Bitcoin’s compound annual growth rate (CAGR) could provide governments with a powerful tool to offset the effects of growing debt.
Bitcoin’s reserve asset status has the potential to not only enhance the U.S.’ fiscal resilience, but also counteract the de-dollarization efforts of hostile countries. Legislative and bipartisan interest, especially in the context of evolving monetary conditions, bodes well for Bitcoin’s future. Along with gold, it has become one of the core pillars of strategic reserves.
The impact of Bitcoin achieving reserve asset status is difficult to quantify, but it could trigger a profound shift in the global monetary landscape. Just as gold prices soared over the next decade after Nixon abolished the Bretton Woods system in 1971, Bitcoin is moving from a controversial fringe asset to a The process of becoming a nationally adopted reserve asset may also experience a similar currency repricing. Reserve asset status may lead to a snowball effect, with sovereign states competing to accumulate holdings, which will fundamentally change the market dynamics of Bitcoin. , and may break the traditional four-year cycle pattern in the next few years. The key variables are timing and implementation strategy, rather than the certainty of the development direction.
History of Global Reserve Assets
Bitcoin supply distribution
“Bitcoin could help solidify the dollar’s position as the global reserve currency while serving as a reserve asset to significantly reduce the national debt.”
— Senator Cynthia Lummis
3. Bitcoin price will exceed $180,000, approaching a record high
As we head into 2025, we continue to observe the development of Bitcoin market dynamics, which is consistent with our first cycle peak forecast released in November 2023. According to Bitcoin Suisse’s Dynamic Cycle Risk and Dynamic On-chain Cycle Risk, -Chain Cycle Risk) model, and comprehensive growth forecasts, Bitcoin is expected to reach a cycle peak valuation of $180,000 to $200,000 in 2025, setting a new historical high.
At the beginning of 2025, Bitcoin prices entered a phase of heightened risk, accompanied by higher dynamic cycle risks. However, from a cyclical perspective, the model does not indicate that this is an ideal time to take profits. It consolidated in the range of high $50,000 to high $60,000, and then rose sharply to nearly $100,000. At the same time, risk indicators show that the current price environment is more stable than at the beginning of the year.
Earlier this year, Bitcoin reached a new all-time nominal high of around $73,000 (inflation-adjusted prices are still more than 5% below 2021’s all-time high of $67,000). While on-chain risk remains elevated, it has not yet It is worth noting that long-term holders (LTHs) have shown some selling pressure, but this pressure is offset by demand from institutional investors, especially Bitcoin ETFs. These ETFs have been launched since their launch. Since then, the amount of Bitcoin that has been absorbed has been several times the daily mining output.
Bitcoin currently accounts for only 0.2% of global financial assets, far less than traditional asset classes such as real estate, bonds and gold. However, as institutional adoption increases - especially with major moves likely to come from countries such as the United States - Bitcoin is likely to gain traction. The trajectory of cryptocurrencies could change significantly, disrupting traditional markets and accelerating their exponential growth. With global assets totaling $91 trillion, even if Bitcoin accounts for 5% to 10% of these assets, All other things being equal and ignoring the significant growth in total global assets over time, the price of Bitcoin could increase 25 to 50 times to $2.5 to $5 million per coin.
While this scenario is already significant, it may only be a transitional phase in the long term. For example, Michael Saylor predicts that by 2045, the price of Bitcoin will reach about $13 million per coin. In the short term, such adoption It may trigger a "super cycle" and push Bitcoin's valuation above $300,000 during this cycle, which is consistent with the upper limit predicted by the current trend line.
Bitcoin Suisse’s Dynamic Cycle Risk Indicator and Dynamic On-Chain Cycle Risk Indicator
• Price Color Points:
Plotted using Bitcoin Suisse’s Bitcoin Dynamic Cycle Risk Indicator to assess the relative risk of Bitcoin price levels.
• Bottom Oscillator:
Built on top of Bitcoin's dynamic on-chain cycle risk indicator, it is used to analyze the relative risk level of on-chain activities.
Bitcoin Dynamic Cycle Risk Indicator
The Bitcoin Dynamic Cycle Risk Indicator is a proprietary tool from Bitcoin Suisse that assesses the relative risk of Bitcoin price levels by analyzing key factors such as momentum, trend strength, and cyclical dynamics among cryptocurrencies. The indicator can be adjusted based on market conditions. , maintain a stable risk level when prices rise moderately, and reduce risk when prices move sideways or fall.
The Bitcoin Dynamic On-Chain Cycle Risk Index is a proprietary tool from Bitcoin Suisse that assesses the relative risk of Bitcoin on-chain activity by analyzing multiple individually optimized and adjusted on-chain risk indicators. Each indicator is designed to reflect cross-cycle dynamics. Designed to independently identify market tops and bottoms, the indicator dynamically adapts to market conditions, reducing risk during periods of subdued activity and increasing risk during periods of high on-chain activity.
Comparison of Bitcoin and Crypto Assets in Global Financial Asset Market Value
4. Bitcoin’s volatility will drop below that of major tech stocks, signaling the maturity of an institutional-grade asset
Since its inception, Bitcoin has been characterized by significant volatility. However, this volatility has continued to decline, and we believe that new investment products may further narrow its volatility. The regulatory approval of listed options has attracted new capital into the Bitcoin ecosystem, enhanced infrastructure, and expanded the range of investment opportunities. Since late summer, Bitcoin ETFs have accounted for approximately 5% of the average daily trading volume of spot Bitcoin. %-10%.
The main drivers of Bitcoin volatility compression include: a steady flow of demand from institutional adoption, price inertia from a larger market cap, systematic portfolio rebalancing flows from asset allocators, and sophisticated strategies from hedge funds that dampen extreme volatility. and the overall increase in maturity of the asset class.
Furthermore, the options market plays an important role in this trend. Historically, the options market has been shown to reduce the volatility of the underlying asset in the medium to long term through the combined effects of hedging activities and enhanced liquidity.
Professional investors may take advantage of the newly created market to amplify Bitcoin’s inherent volatility. Through strategic trading techniques, they have the potential to exacerbate volatility in the short term.
We believe that continued regulatory progress around Bitcoin will accelerate its position as a mature asset class. As volatility continues to compress in the future, we expect Bitcoin to further consolidate its position as "digital gold" and potentially reach below Volatility levels for tech stocks.
The decline in Bitcoin volatility could improve its risk-adjusted performance. Over the past year, Bitcoin’s high returns have been accompanied by high volatility, which has had a negative impact on metrics such as the Sharpe ratio. Since 2017, Bitcoin’s absolute The return is about 7,000% and the Sharpe ratio is 1.108. In comparison, Tesla's return over the same period was about 2,000% and the Sharpe ratio was 1.101, while Nvidia's return was 5,600% and the Sharpe ratio was 1.996.
Declining Bitcoin volatility has a double-edged effect: as the asset matures, its stability metrics and institutional suitability improve, while also weakening the asymmetric return potential that the asset class has historically enjoyed.
Volatility forecasts for Bitcoin and selected stocks
The chart shows the 30-day rolling volatility of four assets: BTC (Bitcoin), Meta, Tesla, and Nvidia. To reduce noise, Gaussian smoothing is used with a sigma value of 30. The shaded area indicates the rolling volatility of Bitcoin and Select Confidence intervals for stock averages. Different quantiles are used for different assets for consistency: Bitcoin’s confidence intervals are based on the 80% quantile, while the traditional financial stock portfolio uses the 95% quantile. The higher predictability of is attributed to the dispersion effect.
5. Financial giants will launch institutional-grade Rollups on Ethereum
Institutions are entering the crypto industry at an unprecedented rate. Stripe completed its largest acquisition ever by acquiring blockchain payment company Bridge; BlackRock quickly replaced Grayscale as the largest crypto fund by assets under management (AUM). 13 of the major global financial institutions have begun researching the tokenization market, which is expected to reach $16 trillion by 2030. Bitcoin ETF adoption is at a record pace, and Swift has also launched tokenized fund settlement. pilot projects, and other important developments in the industry are numerous.
We believe that the conditions are ripe for institutional participation, and their next logical step is to further deepen their integration with the Ethereum blockchain through a complete Rollup implementation.
Ethereum offers undisputed high uptime, security, impartiality, and decentralization, and remains the platform of choice for institutional on-chain use cases such as stablecoins or tokenization. For example, BlackRock launched its Bitcoin tokenization fund BUIDL, while Visa announced its tokenized asset platform VTAP and plans to launch a pilot project in 2025.
From a technical perspective, the implementation of EIP4844 has been widely successful, reducing the cost of Rollup transactions to less than 1 cent and increasing the average daily Rollup transaction volume to 30 million. Base, Arbitrum, and Optimism are the largest investors in the industry since the beginning of the year. The Rollup with the most inflows has seen a TVL (total locked value) increase of more than 60%. In addition, there will be major cross-chain interoperability improvements in the future, which will enable these institutions to frictionlessly access Ethereum, the most capital-intensive blockchain. Smart contract ecosystem.
In addition to market expansion, efficiency improvements, and overall first-mover advantage, institutions can also enter a whole new revenue stream through Sequencing (including MEV and transaction fees). Based on the existing Rollup benchmark, Sequencer annual revenue can reach up to $80 million.
Proprietary Rollups also provide institutions with full control over latencies, consensus rules, token standards, and execution environments, while supporting built-in compliance features such as mandatory KYC or AML checks, blacklist capabilities, and automated regulatory reporting at the protocol level.
Additionally, ETF tokenization and payment-related opportunities can further supplement Sequencer’s revenue streams. Cross-border payments, cost savings, short settlement windows, built-in FX capabilities through DeFi integration, B2B payments, programmable payment plans, and real-time funding Management operations all provide strong support for Rollup. Equity and ETF packaging can also help institutions enter emerging markets, as 90% of the world's population has not yet accessed brokerage services. Institutions such as BUIDL, which recently entered DeFi through Elixir's deUSD protocol Funds show that this trend is already very obvious.
Finally, history shows that attempts at private blockchains have failed to take off, and Rollups on Ethereum are the natural evolutionary path. This model creates a vertically integrated stack where institutions control both the infrastructure layer and the The financial product layer running on it. Its advantages are self-evident: 2025 will be the first year of institutional Rollup.
RWA Tokenization by Industry (Excluding Stablecoins)
Revenue and on-chain profits of top Rollups (last year)
On-chain profit measures the profitability of a Rollup by comparing gas fee revenue to data and proof submission costs on Ethereum. Increased profitability comes from high block space demand (supporting premium pricing) or from operators increasing base fee multiples.
Institutional adoption of cryptocurrencies
Current conditions are highly favorable for institutional players to take the next step and further deepen their blockchain integration by fully deploying Rollups on Ethereum.
6. ETH collateralized ETFs will drive market-cap-adjusted inflows beyond BTC
While Bitcoin ETFs set records with $32 billion in net inflows and IBITs approaching $50 billion in AUM in just 225 trading days, we expect the post-election environment to drive structural flows to ETH ETFs. Despite the relatively poor performance since the launch of the ETF, fundamentals show that ETH is showing increasingly attractive risk-return characteristics amid the surge in institutional participation. November has become a turning point for capital inflows into ETH ETFs, with the first ETF inflows in 2019 being the largest since its launch in July. For the first time since 2011, the cryptocurrency has achieved net inflows, with a single-day inflow of $332.9 million, surpassing Bitcoin's $320 million. In addition, recent capital inflows have caught up with Bitcoin after adjusting for market value.
We believe that ETH’s relative underperformance since its ETF approval primarily reflects institutions’ initial appetite for Bitcoin’s maturing narrative and higher awareness, while also being impacted by regulatory headwinds surrounding ETH ETF collateral yields. Regulatory uncertainty and the opportunity cost of not being able to receive staking rewards have greatly limited the inflow of institutional funds. However, this gap lays the foundation for the potential for a strong rebound after the bottleneck is removed. We expect that under the new Trump administration, Under the government, ETH staking ETFs will be approved quickly, unlocking a 3%-4% yield. This feature caters to the needs of institutional allocators and is particularly attractive in a falling interest rate environment. We predict that staking returns will be significant. This is bullish for Ethereum and has become the main catalyst for continued inflows into the ETH ETF. In addition, strategic acquisitions of staking service providers such as Bitwise further indicate that these players are actively preparing for this outcome.
In addition to the ETH collateralized ETF, we expect to see more cryptocurrency ETFs approved in 2025, including SOL and XRP, which could spark a broader discussion on the classification of L1 as a commodity. However, ETH’s unique position as a regulated, Yield-generating assets with proven institutional adoption — are likely to remain unchallenged. Compared to Bitcoin, ETH is currently in the early stages of its institutional adoption lifecycle. Amid the rotation between crypto assets, ETH’s supply dynamics strongly indicate its potential for future value appreciation. Over the past 12 months, over 70% of ETH’s supply has remained untouched, while staking participation has hit an all-time high.
In short, we predict that the new wave of institutional crypto allocations after the election will be mainly driven by returns, and capital flows will reverse. The favorable intersection of regulatory support, return potential, and supply dynamics will make ETH ETFs in the In 2025, market-cap-adjusted capital inflows surpass BTC.
ETH ETF performance since launch
ETH ETF cumulative net inflow and daily fund flow
Market-Market-Adjusted Fund Flows for ETH and BTC ETFs
7. Bitcoin dominance will peak by the end of the year
Bitcoin’s market dominance is expected to peak in this cycle at the 2025 turning point, marking an important change in the structure of the crypto market. While Bitcoin’s absolute value will continue to grow, its dominance will decline in the final stages of the bull market. Because capital will turn to invest in other crypto assets (i.e. Altcoins). This pattern coincides with the market cycle driven by Bitcoin halving: Bitcoin's dominance usually surges in the early stages, but as the bull market enters the final stage, Altcoins begin to take over. dominant position, and its proportion has declined accordingly.
Ethereum (ETH) and Solana (SOL) are the key assets expected to outperform Bitcoin in trading pairs against BTC during this period. Unlike most altcoins, although the USD valuation of many altcoins is relatively stable, their The ratio to Bitcoin approaches zero over time. ETH and SOL behave like oscillators, remaining resilient in their relative strength to Bitcoin. This resilience reflects their relative strength to Bitcoin in a broader context. Its growing importance within the crypto ecosystem offers investors a more diversified growth trajectory than Bitcoin.
The expected decline in BTC dominance is consistent with historical trends and broader macroeconomic dynamics, including liquidity cycles, halving progress, and the typically slowing market sentiment after halvings and elections. The investment attractiveness of assets has increased, and the trend of capital shifting to Altcoins will amplify their excess returns. This structural shift highlights the role of Altcoins in the late cycle, and their relative returns are expected to exceed Bitcoin.
Although Bitcoin will continue to maintain strong returns, the majority of gains in the late bull market are expected to come from altcoins. This situation reflects a maturing market structure where capital prefers high-risk opportunities when market sentiment is high. As dominance declines, Altcoins will take up a larger market share, prompting investors to reevaluate their portfolio strategies in the final phase of the bull market. After this phase ends, Bitcoin’s dominance is expected to rise again, laying the foundation for the next market cycle. Base.
Bitcoin Dominance Trends
Ethereum (ETH) and Solana (SOL) vs. Bitcoin (BTC) Cyclical Fluctuations
8. ETH’s monetary policy anchor accelerates its monetization process
Despite strong support for changes to ETH monetary policy, the issuance rate of Ethereum staking rewards will not change in 2025, nor will there be a consensus to include changes in the hard fork expected in 2026. During 2024, several Ethereum Researchers questioned the sustainability of the staking economy and proposed adopting a new issuance curve, setting an upper limit on the staking ratio or adopting a mechanism to stabilize it near the target value. These proposals are aimed at addressing the risks that may arise from excessively high staking ratios. , including unnecessary inflation and pressure on the network. In extreme cases, ETH may be replaced by a single dominant liquidity staking token (LST), which would have an unacceptable impact on Ethereum.
We believe that it is critical for ETH to maintain its role as a trusted neutral currency in global settlements, and therefore we are concerned about the high pledge ratio. However, in order to achieve the monetization goal, there are also objections that any issuance adjustment may weaken its Perception as “sound money” (especially in contrast to Bitcoin’s fixed monetary policy).
Although ETH’s issuance policy has changed several times, the most notable example being the introduction of staking, the rise of competitors such as Celestia and Solana in 2024 makes it even more important to maintain ETH’s monetary properties. Although competitors can quickly optimize specific areas, Getting their new currency accepted as money is much more difficult.
Due to the importance of this decision and the disagreement on how to monetize, it is expected that the Ethereum community will find it difficult to reach a consensus on changing the issuance policy by the end of 2025. In addition, we believe that even if the ETH staking ETF is approved, its staking ratio will not be We expect the staking ratio to increase at a similar rate to last year (+18%), reaching about 33% in 2025. The relatively low staking ratio and the number of validators after the implementation of EIP-7251 will reach a level that most PoS chains have shown. Consolidation will further reduce the urgency for policy change.
We believe that the consolidation of ETH’s monetary policy in 2025 will have a positive impact on its valuation while differentiating it from other platforms. However, we do not rule out the possibility of future adjustments after a broader social consensus is reached, thus defining the staking economy. "Final form".
Example: Proposed changes to the issuance curve and issuance yield
The issuance yield is lower than the staking yield because it does not include transaction fees and MEV
ETH total supply and pledge ratio changes
Comparison of staking ratios of major PoS networks
9. Altcoin season will peak in the first half of 2025, with total market value expected to increase fivefold
Altcoin season is upon us as the crypto market enters a critical phase in 2025. Historically, this transition usually occurs in the late stages of a Bitcoin-led bear market, when Altcoins continue to underperform (dark grey area in the chart). However, the upcoming The coming market rotation will drive capital (primarily from Bitcoin) into Altcoins, marking the beginning of a decisive and significant Altcoin season.
The most explosive altcoin seasons usually coincide with the final sprint of the Bitcoin bull run, usually occurring when Bitcoin reaches the peak of the cycle. This cycle seems to be no exception. Bitcoin's market capitalization is expected to approach $4 trillion, and its dominance will increase with it. The current trend suggests that the first half of 2025 will usher in the strongest and most significant Altcoin season of this cycle, driven by capital rotation and high risk appetite, with Bitcoin near its peak. This momentum will be particularly obvious during consolidation.
Using the market capitalization targets of Bitcoin and Ethereum as a benchmark, we can clearly see the potential performance scale of Altcoins. Assuming that the total crypto market capitalization reaches approximately $15 trillion in this cycle, Bitcoin is expected to have a market capitalization of $4 trillion and Ethereum is expected to have a market capitalization of $15 trillion. 1 to 1.5 trillion US dollars, which will leave about 10 trillion US dollars for Altcoin allocation. The current TOTAL3 (i.e. the total market value of Altcoins excluding Bitcoin and Ethereum) is only 1 trillion US dollars, which means that as As the cycle matures, the Altcoin market as a whole may have up to 10 times growth potential.
The peak market cap of Bitcoin, the expansion of Ethereum, and the expectation of capital flows to Altcoins together form the basis for a deep Altcoin season in the first half of 2025. This period will provide significant excess return opportunities, and some assets are expected to achieve exponential growth. As market dominance shifts, active deployment and diversified allocation of Altcoins will be key to capturing the full potential of this high-growth phase.
Altcoin Seasonal Index: Points to Significant Increase in Recent Altcoin Returns
Altcoin Season Index: measures whether the top 50 crypto assets (excluding stablecoins) outperform Bitcoin over a set period of time. When the index value is above 75, it indicates that the Altcoin season has begun; when it is below 25, it indicates that Bitcoin has Dominance.
TOTAL3: The total crypto market value after excluding Bitcoin and Ethereum, which is basically the market value of all Altcoins.
Bitcoin, Ethereum and Altcoin Market Cap Forecast: Pointing to Multiple Growth in the Future
10. Solana solidifies its position as the top general-purpose smart contract platform
In 2024, Solana will become a strong competitor to Ethereum in terms of real economic value (REV: transaction fees + MEV tips) and recognition from founders, investors, and users. We expect Solana to continue to grow as fundamental improvements continue to be made. Will continue to gain an advantage in the highly competitive environment in 2025.
With a fast iteration cycle, a strong core developer team, and consistency in value proposition and optimization strategy, Solana is currently in an ideal position to enhance its network effect. However, next year it will face competition from Ethereum and other existing platforms such as Aptos, Sui) and emerging platforms such as Monad and MegaETH. High throughput and low fees may no longer be significant differentiators, so while “increasing bandwidth and reducing latency”, it is necessary to improve the fundamentals. Achieve key improvements.
The most anticipated upgrade in 2025 is the maturity of Firedancer, which will make Solana a more robust multi-client network. Firedancer's codebase will be independent of Agave, significantly reducing the risk of chain client failures, and validators can easily switch clients. Firedancer is already running in non-voting mode on the mainnet, allowing the team to collect data and test new features and optimizations.
Other foundational improvements will focus on several key areas:
• State growth mitigation: Addressing state growth by increasing the use of state compression techniques.
• Handling of state contention: Improve state contention issues by adopting a central transaction scheduler globally.
• Development of zk-rollups: More zk-rollups are expected to emerge, relying on the recently introduced dedicated system calls.
• Token economics improvements: by redistributing priority fees to stakers (SIMD-0123) and continuing discussions on reducing issuance.
• Enhanced Scalability: Improved scalability through advances in asynchronous execution technology and hardware capabilities.
• Enhanced anti-censorship capabilities: Enhanced anti-censorship capabilities by implementing a multi-parallel leader mechanism.
• Lightweight full-node client development: Continue to advance the Mithril project and reduce hardware requirements.
While we don’t expect all of these improvements to be realized by 2025, this partial shift from “iterating quickly, breaking things, and then building things up” to more focus on strategic, foundational improvements by independent teams makes us optimistic about Solana’s sustainable success as a top general-purpose smart contract platform. This success will be reflected in Solana continuing to be the platform of choice for DeFi and DePIN founders and becoming more attractive to institutional-grade tokenized asset issuers, which is critical to realizing the potential of a global, permissionless, and efficient state machine. important.
Solana and Ethereum Monthly AEV
11. The wealth effect will drive NFT momentum at the end of this cycle
In recent years, the NFT market has experienced a deep correction, with market expectations falling short of reality. We expect this trend to reverse later in this cycle, driven primarily by industry-wide wealth effects and capital rotation. The performance of collectibles may still remain sluggish, but we believe that top collectibles (such as CryptoPunks or Fidenzas) have established themselves as social identifiers in the crypto space and high-end digital artworks, especially generative artworks. In this new era, generative art has gained an ideal platform for expression, proving the value of durable, irreplaceable, and ownable digital content through verifiable scarcity and on-chain provenance.
Projects such as Pudgy Penguins have received more attention recently. The project is the second largest NFT project by market value, boosted by the expected launch of its PENGU ecological token. In the current trend of cryptocurrency culture, there is a clear preference for Due to the trend of MemeCoin, the memeability of PENGU may be beyond the market's expectations. In addition, as the most successful consumer brand in the crypto space, the Abstract chain launched by its parent company may further accelerate its momentum.
The increase in trading volume in November and the recent performance of collectibles seem to indicate early signs of this trend. Magic Eden has become the first major NFT platform to complete a valuation event, and OpenSea may be brewing a similar event. These events may Improve the stickiness and liquidity of the NFT market. Driven by these catalysts, we expect the value of related NFT collectibles to appreciate significantly. As in the previous cycle, we have observed that NFTs usually lag before the market boom reaches its peak, so late The wealth effect could once again trigger a new wave of demand for highly scarce collectibles.
We predict that early Artblocks collectibles will be natural beneficiaries of this momentum. These collectibles combine historically significant on-chain generative art, endorsement by renowned artists, proven collector demand, and true scarcity. , these collectibles have maintained a fairly high price floor during the bear market and are expected to benefit in the next stage of market maturity, especially those works that represent key moments in digital art history.
This trend is likely to be further enhanced in future cycles with the rise of a younger generation that is more familiar with digital technology.
Historical performance of CryptoPunks (in ETH and USD)
Fidenzas historical performance (in ETH and USD)
