Yield-bearing stablecoins may rise, and "US-native" cryptocurrencies will benefit from policy dividends.
Author: Poopman
Compiled by: Luffy, Foresight News
I am a crypto enthusiast who was fortunate enough to profit from Memecoin investments, and now I am exploring viable investment opportunities for 2025 so that I can explain to my father that I am involved in a serious and legitimate industry. You won't find any statistics or charts in this article, just intuition and brainstorming.
Therefore, this article only reflects my personal insights into the market and does not represent the views of the team I am part of. I will mention the following in the article:
- The cryptocurrency market in 2024
- The development direction after the Memecoin wave
- The areas I will focus on if the crypto market continues to decline in 2025
2024, the year of Bitcoin and Solana
2024 was a brutal year for crypto investors, unless you were a staunch Bitcoin maximalist and hodler. Venture capital firms, liquidity, long-term holders (diamond hands), and true believers all suffered heavy losses, and the future of cryptocurrencies looked even bleaker as AI exploded.
Bitcoin reached $100,000, a Bitcoin ETF was approved, and Bitcoin's market dominance reached 60%, with traditional finance adopting it at an accelerating pace. 2024 was undoubtedly the year of Bitcoin.
Solana was another protagonist. At its peak, the daily trading volume of the SOL token reached $36 billion, accounting for about 10% of the Nasdaq's daily trading volume, a huge figure for the crypto space. Memecoins and AI concept coins fueled this boom.
Hyperliquid was a dark horse in this market. They made a bold move by rejecting venture capital funding, and their user adoption after the token airdrop proved that the market has a strong demand for perpetual trading without KYC and platforms with ample liquidity.
Some old-school cryptocurrencies like XRP and ADA seem to have gained the favor of Uber drivers and the US government.
Apart from that, I can't think of any price rally in this market that lasted more than two weeks.
2025, from casino-style speculation to new DeFi and US-native cryptocurrencies
After the Trump-related crypto hype subsided, I noticed that the profits in the market did not flow back into AI tokens. So I converted all my assets, except for a portion of my SOL position, into stablecoins (which may have been foolish).
It is becoming increasingly evident that after a few months of intense PVP, people are exhausted by the "meaningless products" of Memecoins and AI concepts.
The entire AI cryptocurrency sector is collapsing rapidly, with most tokens plummeting 70% to 80% from their peaks. The Libra incident has actually sealed the fate of this concept.
In short, Pump.fun is on its way down.
The issuance and graduation of new Memecoins on Pump.fun is declining sharply
So, where did the capital in the Memecoin space flow to?
In the absence of foreseeable catalysts in the Memecoin space, the wealth effect is fading, forming a vicious cycle that is driving investors away from this "casino".
Meanwhile, in the current cryptocurrency market:
- The crypto space lacks groundbreaking innovations
- Existing Altcoins remain stagnant, and Ethereum is also in trouble
- Fundamentals have suddenly become irrelevant
- Old-school Memecoins have perished
- The survival rate of newly listed tokens is low, with only a few lasting more than two weeks.
This sounds very bad, doesn't it?
In this case, I believe investors' strategies will tend to be more "risk-averse", which is why I believe that in 2025, most of the capital will flow into stablecoins backed by fiat currencies. And some investors hope to utilize their assets to generate some passive income from stablecoins.
Therefore, yield-bearing stablecoins like USDe or USDS will be very attractive to them.
Stablecoins are the new oil.
Stablecoin market segmentation, source: https://app.rwa.xyz/stablecoins
While the AI and Memecoin markets have both suffered heavy blows, the total value locked (TVL) of stablecoins has continued to grow steadily, increasing by 3% per month, and at the time of writing, the total TVL has exceeded $220 billion.
Investors seeking asset safety will choose fiat-backed stablecoins. USDT and USDC occupy 90% of the market share, and their dominance is almost unshakable due to their widespread adoption across different exchanges and payment platforms.
Investors seeking to generate yield from stablecoins will choose decentralized yield-bearing stablecoins. Examples include USDe, USDS, DAI, USD0, etc. So far, this segment only accounts for around 10% of the market, but it has actually had a very impressive year, with the total TVL growing by over 70%.
Okay, I won't ramble on anymore. The current stablecoin market landscape is:
- 90% fiat-backed stablecoins
- 10% yield-bearing stablecoins
I believe the new (yield-bearing) stablecoins still have room for growth, for the following reasons:
- Yield-generating "low-volatility options" are always attractive to crypto investors.
- There may be innovations in new stability mechanisms and strategies to improve capital efficiency and generate higher yields.
- Stablecoins have found a product-market fit (PMF) in the crypto space, serving as both a currency and an investment tool.
This is the basis for my crypto investment plan for 2025.
If the market continues to decline in 2025, how will I invest in cryptocurrencies?
If 2025 still lacks innovation or a new narrative, I believe the market will have two development directions:
- New DeFi innovations driven by the growing stablecoin market
- Crypto-friendly policies that promote the development of "US-native" cryptocurrencies
Stablecoins and new DeFi innovations
In the next 3 to 6 months, there will be more and more stablecoins launched as USD-based tokenization strategies, aiming to generate competitive yields through different types of collateral or strategies.
Given the composability and "price stability" of stablecoins, they can easily collaborate with various DeFi protocols and generate synergies with each other.
Examples of existing DeFi integrations with stablecoins include:
- Products related to interest rate swaps, such as Pendle and Spectra, have excellent designs that allow users to speculate on asset yields, effectively creating new markets for yield-bearing assets (including stablecoins).
- Money markets like Morpho and Fluid have achieved leveraged yield farming, bringing significant economic activity to stablecoins.
- Decentralized exchanges like Curve have also provided a good venue to bootstrap liquidity for stablecoin trading pairs, etc.
Among all these innovations, the ones I like the most are those that have created new asset classes. For example, Pendle's YT-USDe, which builds on the concept of yield "Lego" to create a new market that can provide additional yield for stablecoin-loving investors.
In addition to yield optimization, I also hope to see some innovations in the design of collateralized debt positions, especially those that can escape over-collateralization and minimize liquidation risk, which can revitalize decentralized stablecoins.
After all, I look forward to seeing more innovations in the growing stablecoin market, as this is an area where more and more capital will flow.
Crypto-friendly policies that drive the development of domestic cryptocurrencies in the US
Recently, Trump announced an attempt to advance a cryptocurrency strategic reserve program, which includes a "domestic" basket of cryptocurrencies such as Solana (SOL), Ripple (XRP), etc.
Trump announced his executive order on digital assets directing the President's Working Group to advance a cryptocurrency strategic reserve program that includes XRP, SOL and ADA
While the approval of a cryptocurrency reserve remains uncertain, Trump's influence on the cryptocurrency market cannot be ignored.
Some examples of Trump's support for cryptocurrencies include:
- Firing the former SEC chairman Gary Gensler on his first day in office
- Retaining all the bitcoins seized by the US, to establish a "national bitcoin strategic reserve" (e.g., the bitcoins seized from the Silk Road)
- Launching a WiFi DeFi fund, issuing a Trump Memecoin, very much in line with the native characteristics of cryptocurrencies.
- The SEC withdrawing charges against exchanges and cryptocurrency projects, such as Coinbase, Uniswap, Kraken, etc.
Furthermore, the Trump team is likely to support the domestic cryptocurrency industry. Therefore, we can expect more favorable regulatory policies for US-based cryptocurrency portfolios or groups.
This is not investment advice, but given Trump's influence, I will closely monitor these tokens.
Summary
As mentioned earlier, this is just a piece based on personal brainstorming and intuition, and the views expressed in it are not supported by any statistical data, so please do not treat it as insider investment information.
Nevertheless, I have prepared a summary of the core points for readers who do not wish to read the lengthy text:
- Given the lack of innovation in cryptocurrencies and the overall lack of vitality in the market, if the market remains "bearish" by 2025, I expect the demand for stablecoins to increase.
- Assuming investors want to generate yield from their stablecoins, I estimate that yield-generating stablecoin products will grow significantly in the long run, potentially accounting for 20% to 30% of the total stablecoin market (similar to the Ethereum beacon chain staking derivative token stETH).
- This growing stablecoin market will attract more developers and builders, potentially giving rise to new decentralized finance primitives originating from this ecosystem.
- Trump's pro-cryptocurrency policies are beneficial for the market in the long run. Furthermore, his policies may favor the development of domestic US cryptocurrencies.
Therefore, it is particularly meaningful to pay attention to some US-based cryptocurrencies, as certain "news" related to them could potentially cause their prices to skyrocket.
