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 sluggish 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 directions for future development.
This report provides an annual review of the market, revisiting our previous predictions and highlighting our views on developments for the coming year.
Read more (2025 Market Outlook).
Cyclical strategies are proceeding as planned
At the end of 2022, we analyzed the reasons why the bear market bottom 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 new highs in the fourth quarter of 2024.
On a 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, but rather liquidity cycles play a crucial role.
At the end of last year, we pointed out conditions favorable for BTC to ensure a strong first-quarter performance—one of which was the global liquidity surge we saw in the fourth quarter of 2023.
We also warned that from the end of the first quarter of 2024 to the beginning of the second quarter, the market might face a higher risk of correction.
The reason is that we have observed signs of weakening liquidity momentum from the world's two major central banks.
BTC has risen over 130% so far this year—achieved without much support from the Federal Reserve.
In fact, the Federal Reserve's liquidity 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 cryptocurrencies have returned to historical highs, and the altcoin market overall has performed excellently.
But on crypto Twitter, many were embroiled in debate for much of the year. While crypto Twitter often shows signs of nervousness, the negative sentiment of 2024 contrasts sharply with positive price trends.
What is the reason for this contrast? First is Bitcoin's dominance: BTC's price has risen by 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 cryptocurrencies are rising, some are slightly up, but most are falling or remaining unchanged.
Despite Bitcoin rising over 100%, some cryptocurrencies have achieved remarkable success in an overall declining market, demonstrating market performance disparity.
The classic 'road to altcoin season' that many were hoping for has not materialized.
Missing components
As we have mentioned in many of our reports over the past year, the cryptocurrency market faces a significant supply-demand imbalance.
In short, cryptocurrency demand has not kept pace with the overall cryptocurrency supply. But why?
Excessive token supply
Aggregators listed over 10,000 tokens, compared to about 1,500 in 2017, a tenfold increase.
Apps like pump.fun have made token creation easy: since January 2024, over 4 million tokens have been issued, with Solana's Raydium issuing over 50,000 tokens.
Continuation of Memes, a shift to fundamentals... or a combination of both?
2024 witnessed the rise of a combination investment strategy between major cryptocurrencies and Memecoins. We explored these market dynamics in-depth 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, returning to fundamentals?
The reality is more complex, influenced by both speculation frenzies and evolving market trends.
Solana accelerates 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 of development, it has attracted teams like Jito, Drift, and Helium, which ultimately became the foundation of the Solana network.
However, Solana has been overly focused on rapid growth. By 2022, this phoenix had fallen due to FTX fraud, the bear market, and doubts about chain stability.
From peak to trough, SOL experienced a 96% decline.
On Christmas 2022, ‘Bonk’ airdropped half of its tokens to the Solana community. At the time, SOL was trading at $11, and market sentiment was low.
However, $BONK brought hope. A few days later, SOL bottomed out at $8, ending a tough year.
From the ashes, Solana began to revive in 2023. The core team, having experienced the challenges of 2022, doubled down on their efforts.
@DriftProtocol, @jito_sol, and @TensorFdn focus on serving loyal users. Solana gradually recovers under the drive of steady innovation.
Looking ahead to 2025, there are still some unresolved issues:
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 2025 story is based on two core beliefs that will determine its future trajectory:
Solana's data indicates that SOLETH is being repriced. Underlying activity shows strong fundamentals, suggesting there is still upward potential relative to ETH.
Leadership and culture: Solana's continuous innovation and thriving ecosystem give it a unique leadership position in the crypto space.
We see 2024 as a turning point for the industry.
While we cannot predict exactly what 2025 will look like, our analysts are already planning for potential opportunities and risks.
