Author: Stacy Muur, Web3 Researcher; Translator: Jinse Finance xiaozou
I have been closely following the research reports published by some of the smartest Web3 teams. Their articles provide food for thought, present different perspectives, and help you become more confident in the views you identify with.
Research articles contain professional opinions that can help you better understand different people's perspectives on the Web3 field. Now let's take a look at the summary of Delphi team's "Crypto Market Outlook for 2025".
1. Long Live Bitcoin
Not long ago, many people thought a Bitcoin price of $100,000 was just a daydream.
Now, this sentiment has undergone a huge change. Bitcoin's market cap is around $2 trillion, which is truly astonishing. If Bitcoin were a publicly traded company, it would become the 6th most valuable company in the world.
Bitcoin has attracted tremendous attention, but it still has considerable room for growth.
Bitcoin's market cap is only 11% of the total market cap of the seven largest U.S. tech giants (Apple, Nvidia, Microsoft, Amazon, Google, META, Tesla).
It is less than 3% of the total U.S. stock market value, about 1.5% of the global stock market value.
Its entire market cap is only 5% of the total outstanding U.S. public debt, less than 0.7% of the global debt (public debt + private debt).
The size of the U.S. money market funds is three times the market cap of Bitcoin.
Bitcoin's market cap is only about 15% of the total global foreign exchange reserve assets. Assuming that if global central banks reallocate 5% of their gold reserves to Bitcoin, it will add over $150 billion in purchasing power - three times the total net inflow into IBIT this year.
Household net worth has reached an all-time high, exceeding $160 trillion, more than $40 trillion higher than the pre-pandemic peak. This growth has been driven primarily by rising home prices and a booming stock market, which is 80 times higher than Bitcoin's current market cap.
In a world where the Fed and other central banks cause their currencies to depreciate 5-7% per year, investors need to target 10-15% annual returns to offset the resulting future purchasing power loss.
So you understand:
At a 5% depreciation rate per year, the real value of the currency will halve in 14 years.
At a 7% depreciation rate per year, the real value of the currency will halve in 10 years.
This is why Bitcoin and other high-growth industries are receiving so much attention and traction.
2. The Altcoin Illusion
While Bitcoin has set new all-time highs time and again this year, for most Altcoins, 2024 was not a very successful year.
ETH did not reach its all-time high.
SOL set a new all-time high, but it was only a few dollars higher than the previous peak, which is somewhat insignificant compared to the growth in market cap and network activity.
ARB had a strong start to the year but began to underperform towards the end of the year.
There are many more examples like this. You just need to look at the data of 90% of the Altcoins in your investment portfolio to see it clearly.
What are the specific reasons?
The first reason is Bitcoin's dominance. With the flow of ETFs and the push from Trump's support, Bitcoin had an extraordinary year, causing its price to rise over 130% so far this year and boosting its dominance to a three-year high.
The second reason is market fragmentation.
Market fragmentation is a new phenomenon in the crypto market this year. Previous market cycles tended to trade in sync. When BTC went up 1%, ETH would typically go up 2%, and Altcoins would go up 3%, with a predictable pattern. However, this cycle is different.
There is a small portion of cryptocurrencies that have performed exceptionally well, but there is also a large swath of red.
The rising tide of Bitcoin did not lift all boats, and the classic "Path to Altseason" that many had hoped for did not materialize.
Finally, an equally important reason is MEME coins (and the recent AI Agents).
Cryptocurrencies have been oscillating between "pure Ponzi schemes" and "technology that promises to change the world". In 2024, the former dominated the narrative.
The MEME coin super-cycle amplified the notion that cryptocurrencies are just a massive Ponzi scheme. People began to question whether fundamentals really matter, and whether cryptocurrencies are just "casinos on Mars" - these concerns are reasonable.
On this point, I'd like to say a bit more.
When MEME coins are labeled as the best performers of the year, only the largest MEME coins are considered - those that have already created significant market cap and built a community. People often overlook the fact that 95% of the MEME coins issued have failed to hold their value, but people are "willing to believe".
With this belief, many who previously invested in Altcoins have turned to MEME coins - some have succeeded, but most have failed. As a result, capital inflows have been mainly concentrated between Bitcoin (institutional capital) and MEME coins (high-risk), pushing most Altcoins aside.
Delphi believes that 2025 will see a shift towards "world-changing" technologies.
Personally, I'm not too optimistic. In 2024, there emerged many KOLs who are primarily focused on MEME coins. For example, I created a Telegram folder with some genuinely valuable channels, and it's very difficult to find one that is not centered on "ape calls". This is the attention game, and the widely discussed narratives will significantly impact market trends.
3. What's Next?
(1) Stablecoin Growth and Credit Expansion
A major obstacle facing the market is token oversupply. The market is facing a flood of new assets from private placements and public token issuances. For example, over 4 million tokens were issued on Solana's pump.fun in 2024 alone. At the same time, the total crypto market cap has only grown 3 times since the last cycle, compared to 18 times in 2017 and 10 times in 2020.
The missing elements - stablecoin growth and credit expansion - are starting to reappear. Lower interest rates and more friendly regulation are expected to stimulate speculative behavior, resolving these imbalances. As stablecoins regain traction, their role in trading and collateral will be crucial to the market's recovery.
(2) Institutional Capital Inflow
Until last year, institutional capital was still very hesitant to participate in cryptocurrencies due to regulatory uncertainty. However, this is starting to change as the U.S. Securities and Exchange Commission, though reluctantly, approved a spot Bitcoin ETF, paving the way for future institutional investment.
These institutional investors will seek investment opportunities they are familiar with. While some investors may venture into MEME coins, they are more likely to be interested in assets in areas like ETH/SOL, DeFi, or infrastructure.
Delphi expects that the coming year will be similar to the previous few cycles, with a "broad-based rally". This time, projects based on fundamental principles or core objectives will regain attention. This may include assets like OG DeFi, which have a good historical track record and have been battle-tested. They may also be infrastructure assets, similar to the L1 trades we've observed before. Others may include RWAs (real-world assets) or emerging areas like AI or DePIN.
Not every cryptocurrency will see triple-digit gains like before, and Meme coins will continue to exist. This may signal a new beginning and a broad crypto rally.
Note: Generally, most institutional traders heavily rely on options hedging. Therefore, if a "broad-based rally" occurs, the assets most likely to attract investor interest will be those with options, primarily tradable on Deribit or Aevo.
(3) Solana's Dominance
Solana has demonstrated the resilience of the blockchain ecosystem. After a 96% plunge during the FTX collapse, Solana saw a remarkable rebound in 2024.
Key highlights include:
Developer Momentum: Solana's hackathons and airdrops (like the Jito airdrop) have reignited developer and user engagement, creating a virtuous cycle of innovation and adoption.
Market Dominance: Solana has led the trends of 2024, from Meme coins to AI applications. Notably, its real economic value (REV) - a measure of transaction fees and MEV - exceeds Ethereum's by over 200%.
Future Outlook: Solana is poised to challenge Ethereum's dominance in scalability and user experience. Its seamless user experience and centralized ecosystem provide more significant advantages compared to decentralized L2 solutions.
4. Final Thoughts
For many, the current market situation may evoke memories of 2017-2018, when Bitcoin reached a peak of $20,000 before the new year and then began to decline shortly after. However, in my view, comparing the crypto market of 2018 to that of 2025 is irrelevant. These are two entirely different environments.
The crucial point to recognize is that the broader crypto market extends far beyond the timelines of CT and X. The perspectives of those outside these platforms on the market are vastly different.
In 2025, I expect the crypto market to be divided into two main verticals:
Web3 Natives: Those deeply embedded in the crypto market, with a nuanced understanding of Bitcoin's unique features, and willing to engage in high-risk trades, including Meme coins, AI agents, and presales - elements reminiscent of the Wild West.
Mainstream Investors: Institutional and retail investors often adhere to more basic investment and trading strategies, viewing cryptocurrencies as an alternative to the stock market.
Which vertical will be marginalized? It will likely be the early-stage DeFi, RWA, and DePIN protocols that cannot ensure leadership in their niche or at least on-chain. But this is just my view.
