A new beginning is coming in 2025.
Author: Delphi Digital
Compiled by: Deep Tide TechFlow
In 2024, the cryptocurrency market is at a critical moment: despite Bitcoin (BTC) performing strongly, the overall market has been weak until regulatory changes at the end of the year brought new hope.
The story of cryptocurrency is being rebuilt, and 2025 will usher in a new beginning that may unify the market. Here are the future directions.
This report provides an annual review of the market, revisiting our previous predictions and highlighting our views on developments for the coming year.
Read the full article “2025 Market Outlook”.
Cycle Strategy on Track
At the end of 2022, we analyzed the reasons why the bottom of the bear market may have already passed.
Fifteen months ago, we began to express our confidence in this bull market cycle firmly. Last year's report predicted that BTC would reach a new high in the fourth quarter of 2024.
At the macroeconomic level, the actual situation aligns with our expectations.
Currently, we understand that Bitcoin halving is not the main driver of the crypto market cycle; rather, liquidity cycles play a key role.
At the end of last year, we pointed out favorable conditions for BTC to ensure a strong performance in the first quarter—one of which was the surge in global liquidity we observed in the fourth quarter of 2023.
We also warned that the market might face a higher risk of correction from the end of the first quarter of 2024 to the beginning of the second quarter.
The reason is that we observed signs of weakening liquidity momentum from the two major central banks globally.
BTC has risen over 130% so far this year—achieved without much support from the Federal Reserve.
In fact, the liquidity from the Federal Reserve has been steadily declining over the past 9-10 months.
Return of Optimism
2024 is an unusual year for the crypto market. On one hand, most major coins have returned to historical highs, and the altcoin market as a whole has performed well.
But on crypto Twitter, many have been arguing for most of the year. While crypto Twitter often shows signs of being overly sensitive, the negative sentiment in 2024 starkly contrasts with the positive price trends.
What is the reason for this contrast? First is Bitcoin's dominance: BTC's price has risen 130% so far this year, reaching its highest dominance in three years.
Another reason for the negative sentiment is the divergence in market performance: some coins have risen, some have slightly increased, but most have fallen or remained unchanged.
Despite Bitcoin rising over 100%, there are still some coins that have achieved significant success in an overall declining market, showing the disparity in market performance.
The classic "path to altcoin season" that many expected has not materialized.
Missing Components
As we have mentioned in many reports over the past year, the cryptocurrency market is facing a significant supply-demand imbalance.
In short, the demand for cryptocurrencies has not kept pace with the overall supply of cryptocurrencies. But why?
Excessive Token Supply
Aggregators list over 10,000 tokens, compared to about 1,500 in 2017, a tenfold increase.
Applications like pump.fun have made token creation simple: since January 2024, over 4 million tokens have been issued, with Solana's Raydium issuing over 50,000 tokens.
Continuation of Memes, Shift to Fundamentals… or Both?
2024 witnessed the rise of investment strategies combining major coins with Memecoins. We explored these market dynamics in detail in our reports "The Dog Days of Summer" and "Attention Is All You Need."
Will these market trends continue, ushering in another Memecoin-dominated year? Or has the crypto market shifted back to fundamentals?
The reality is more complex, influenced by speculative booms and evolving market trends.
Solana's Accelerated Development
In the previous cycle, $SOL rose from $1 to $260 in just one year, thanks to "Alt L1 trading" and its "Sam coin" status.
Although the ecosystem is still in its early stages, it attracted teams like Jito, Drift, and Helium, which ultimately became the foundation of the Solana network.
However, Solana was overly focused on rapid growth. By 2022, this phoenix fell due to FTX fraud, the bear market, and questions about chain stability.
From peak to trough, SOL experienced a 96% drop.
On Christmas 2022, 'Bonk' airdropped half of its tokens to the Solana community. At that time, SOL was trading at $11, and market sentiment was low.
However, $BONK brought hope. Days later, SOL bottomed at $8, ending a difficult year.
From the ashes, Solana began to be reborn in 2023. The core teams that faced the challenges of 2022 doubled down on their efforts.
@DriftProtocol, @jito_sol, and @TensorFdn focused on serving loyal users. Solana gradually recovered, driven by steady innovation.
Looking ahead to 2025, several questions remain unresolved:
Has SOL's repricing been completed?
Will Memecoins lose their popularity?
Can Base capture market share?
Will Ethereum launch a counterattack?
While these concerns are valid, they overlook the core issues. Solana's story for 2025 is based on two core beliefs that will determine its future development:
Solana's data indicates that SOLETH is being repriced. Underlying activity shows strong fundamentals, suggesting there is still room for growth relative to ETH.
Leadership and Culture: Solana's continuous innovation and thriving ecosystem give it a unique leadership position in the crypto space.
We view 2024 as a turning point for the industry.
While we cannot predict exactly what 2025 will hold, our analysts are already planning for potential opportunities and risks.
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