2024 Crypto Market Review and 2025 Outlook

2024 is an important year in the history of cryptocurrency. Centered around two core topics: ETFs and the U.S. elections, with Bitcoin as the main driving force, the crypto industry has made breakthroughs. Publicly listed companies, traditional financial institutions, and even national governments have entered this field, significantly increasing the level of mainstream acceptance and recognition. The regulatory environment has also become clearer and more lenient with the new government taking office. The collision of mainstream, path differentiation, and regulatory evolution have become the main themes of the industry this year.

2024 Review: Bitcoin Hits New Highs, Ethereum Faces Challenges, MEME Craze Continues

Looking at the industry's development this year, Bitcoin is undoubtedly at its core. ETFs and national reserves have propelled Bitcoin to break through $100,000, officially declaring that it has transcended the connotation of cryptocurrencies, becoming a globally recognized inflation-resistant asset and a means of value storage. Bitcoin is gradually advancing from digital gold to a super-sovereign currency, marking a phased victory in this financial experiment that began with Satoshi Nakamoto. On the other hand, the Bitcoin ecosystem has expanded this year. Although the trends of inscriptions, runes, and other hotspots have fluctuated, a diverse Bitcoin ecosystem has begun to take shape, with applications in BTCFi, NFTs, gaming, and social continuously developing. The total locked value in Bitcoin DeFi surged from $300 million at the beginning of the year to $6.755 billion, growing more than 20 times over the year. Among them, Babylon has become the largest protocol on the Bitcoin chain, with its locked value reaching $5.564 billion as of December 20, accounting for 82.37% of the total. The broader BTCFi performance is even more remarkable, with a surge in Bitcoin spot ETF shares and a rush of companies entering the NASDAQ 100, all reflecting Bitcoin's tremendous success in the traditional financial sector.

In contrast, Ethereum has had a tough year. It has performed poorly compared to other assets, with a decline in value capture and user activity, and its narrative power is not as strong as before. The "value theory" has put Ethereum through a lot of pain. Although the slogan for the revival of DeFi is loud, actual investment is clearly insufficient, apart from the TVL growth brought by re-staking. However, the emergence of the dark horse in derivatives, Hyperliquid, at the end of the year has not only impacted centralized exchanges but also brought new opportunities for DeFi. On the other hand, post-Dencun upgrade, competition among Ethereum Layer 2 solutions has intensified, continuously eating into the mainnet's share, which has sparked widespread discussion in the market about Ethereum's mechanisms. Doubts are rising, and even the rapid growth of Base has led the market to speculate that Ethereum's future may be closely related to Coinbase.

The strong rise of Solana stands in stark contrast to Ethereum. In terms of TVL, Ethereum's market share in public chains has dropped from 58.38% at the beginning of the year to 55.59%, while Solana has surged from almost zero at the start of the year to 6.9% by the end of the year, becoming the second largest public chain after Ethereum. The price of SOL has created a growth miracle, skyrocketing from $6 two years ago to $200 now, with over 100% growth this year alone. Solana, with its advantages of low cost and high efficiency, targets core liquidity positioning and has become the undisputed MEME king, attracting a large number of retail investors, relying on Degen culture. This year, Solana's daily trading fees have frequently exceeded those of Ethereum, and the growth of new developers has also surpassed Ethereum, showing a clear trend of catching up.

TON and SUI have also stood out this year. Telegram has driven the booming development of the blockchain gaming sector, opening up a new entry point for Web3 traffic and bringing strong stimulation to the market. TON has finally ushered in explosive growth. Currently, the cumulative on-chain users of TON have exceeded 38 million, and the cumulative transaction volume has surpassed 2.1 billion USD. SUI has attracted attention with its price performance, and the Move language public chain is making rapid progress, with hardware development, diverse protocols, and airdrop traffic generation working together, showing promising prospects. Meanwhile, the public chain Aptos has had relatively weak price performance, but it is more favored by traditional capital. This year, it successfully established cooperation with multiple financial institutions, and its compliant positioning may bring opportunities in the new RWA and BTCFI cycles.

From an application perspective, MEME is the main driving force in the market this year. The rise of MEME marks a shift in the market landscape, with VC tokens falling out of favor and excess liquidity flowing into areas with stronger fairness and speculation. The connotation of MEME is also constantly expanding, evolving from a mere speculation target to a representative of cultural finance, with "everything can be MEME" happening in reality. Although MEME accounts for less than 3% of the top 300 cryptocurrencies by market capitalization ( excluding stablecoins ), its trading volume continues to account for 6-7% of the total, recently reaching as high as 11%, making it a major track with concentrated liquidity. According to data, MEME has captured 30.67% of investor attention this year, ranking first among all tracks.

Against this backdrop, the infrastructure surrounding MEME continues to improve. The fair launch platform Pump.fun has emerged, reshaping the MEME landscape and becoming one of the most profitable and successful applications this year. In November, Pump.fun became "the first Solana protocol in history to exceed $100 million in monthly revenue." As of December 22, Pump.fun's cumulative revenue exceeded $320 million, with a total of approximately 4.93 million tokens deployed.

However, just because the platform makes money does not mean that users do. Given the extremely low success rate and the increasingly evident institutional trend in MEME, users still find it difficult to avoid losses. Therefore, adding fundamentals to MEME has become a new development model for the project, and many relatively long-cycle projects like Desci and AIMEME have adopted this model. However, as it stands, short-term speculation remains mainstream, and "quick in and out" is still the key to profit.

Affected by the US election, the prediction market application Polymarket has emerged strongly. In October alone, the Polymarket website received 35 million visits, double that of mainstream betting sites, and the monthly trading volume surged from $40 million in April to $2.5 billion. A broad user base and genuine demand signify clear value applications, and Vitalik Buterin has praised it highly. Unfortunately, the large-scale conversion of crypto users has not yet been achieved. However, the new integrated model of media and betting is undoubtedly starting to take shape.

At the end of the year, AI applications have transitioned from technological breakthroughs to practical implementation, showing a fierce competitive landscape. After a year of accumulation in the Web3 field, AI has once again become a hot topic. MEME has taken the lead in sparking interest, and Truth Terminal has introduced several hundred-fold coins, igniting a wave of AI Agent applications. Currently, mainstream institutions are generally optimistic about AI Agents, believing that they are likely to become the second phenomenon-level track after DeFi. Although the infrastructure in this field is not yet complete, and applications are mostly concentrated on the surface in MEME, Bots, etc., with limited deep integration of AI and blockchain, emerging fields often contain opportunities, and the prospects for cyber speculation are worth looking forward to.

On the other hand, PayFi, which connects traditional finance with Web3, has become the core driving force of this bull market. Stablecoins and RWA are typical representatives of this trend. Stablecoins have seen rapid growth in the crypto market this year and are starting to secure a place in the global payments and remittances market. Regions such as Africa, Latin America, and Eastern Europe are beginning to bypass traditional banking systems and directly use stablecoins for transaction settlements, with a year-on-year growth of over 40%. Currently, the circulating value of stablecoins exceeds $210 billion, far higher than the several billion dollars in 2020. More than 20 million addresses are conducting stablecoin transactions on public blockchains monthly, and in just the first half of 2024, the settlement value of stablecoins exceeded $2.6 trillion. In terms of new products, Ethena is the standout stablecoin project this year, further sparking a trend for interest-bearing stablecoins and is also a major source of revenue for AAVE this year. RWA has been completely ignited after mainstream institutions entered the market, expanding from less than $2 billion three years ago to $14 billion this year, covering multiple fields such as lending, real estate, stablecoins, and bonds.

In fact, the development of PayFi is in line with market trends. As internal market growth encounters bottlenecks, the mainstream institutional market has become a new incremental space, leading PayFi to enter a critical development phase at this stage. It is worth noting that due to the integration with traditional financial systems, this field is also the most favored Web3 track by government agencies. For instance, Hong Kong has listed stablecoins and RWA as key areas for development next year.

However, under the dual pressures of macro tightening and the industry's downturn over the past two years, the crypto field has also undergone severe tests. Innovative applications find it difficult to break through, internal disputes have intensified, and continuous restructuring and mergers have weakened liquidity, leading to a differentiation in the crypto industry, forming a pattern dominated by Bitcoin, which siphons off other currencies. The altcoin market has been in a slump for most of this year, and the assertion that "this bull market has no altcoins" was once validated, until it bottomed out under the attention from Wall Street at the end of the year, marking the beginning of the altcoin season. From the current perspective, this trend of differentiation may continue to intensify in the short term.

2025 Outlook: New Cycle, New Applications, New Directions

Looking ahead to 2025, as the new government opens a new era of encryption, well-capitalized institutions are gearing up. Currently, more than 15 institutions have released market forecasts for next year.

In terms of price, all institutions are optimistic about Bitcoin, with the high point range predicted by most institutions being $150,000 to $200,000. Some institutions have even given optimistic expectations of $500,000 or higher. As for other cryptocurrencies, ETH is expected to be around $6,000 to $7,000, Solana between $500 to $750, and SUI may rise to $10. The total market capitalization of encryption is expected to reach $7.5 to $8 trillion, and the total market capitalization of altcoins may increase fivefold.

These optimistic expectations are based on the following points: the US economy is expected to achieve a soft landing, the macro environment is improving; crypto regulation is expected to loosen; more countries and companies may incorporate Bitcoin into their reserves; ETF inflows are expected to increase.

In terms of specific sectors, stablecoins, tokenized assets, and AI are the areas of greatest interest to institutions. It is expected that the settlement volume of stablecoins will increase significantly, potentially reaching $300-450 billion. In terms of tokenized assets, as the costs of blockchain infrastructure decrease, the tokenization of non-traditional assets will become a new source of revenue, with the value of tokenized securities potentially exceeding $50 billion. Regarding AI, institutions generally view the combination of AI and encryption positively, anticipating that AI agents will play an important role in areas such as DeFi and MEME, with the market value of related tokens likely to increase significantly.

In other aspects, institutions have different focuses in their predictions. Some institutions believe that the revival of DeFi will become the main theme in 2025; some expect a wave of integration in application chains and L2 tracks; others predict that ZK technology will be widely adopted, the DEPIN industry will achieve significant growth, and the NFT market may become active again.

Investor Strategy Recommendations

Based on the above analysis, the recommendations for investors are as follows:

1. The price of mainstream coins is expected to rise significantly, especially with a series of favorable policies coming in Q1 2025.

2. The differentiation of the crypto market will continue, and projects with strong compliance are more likely to attract funding.

3. Established public chains still hold an advantage, but the impact of new public chains cannot be ignored. Ethereum's value capture and narrative will continue to ferment, and the technological upgrades are worth paying attention to. Solana still has growth momentum, but its excessive reliance on MEME poses risks. New public chains like Monad and Berachain are worth watching.

4. The application layer will become a key focus for future development, with promising prospects for consumer-level applications. Application chains and chain abstractions may become the main construction methods for DAPPs.

5. The revival of DeFi has become a consensus, and AAVE remains the focus. In the centralized sector, the emphasis is on payments, with Hyperliquid and Ethena worthy of attention.

6. The MEME speculative frenzy will continue in the short term, but the pace will slow down.