In 2024, cryptocurrencies are at a crossroads: the strong rise of Bitcoin stands in stark contrast to the overall market's weakness, and only the regulatory shift at the end of the year has brightened the outlook.
The crypto narrative is being readjusted, and 2025 will usher in a brand new beginning. This article aims to briefly review the market situation this year.
Many crypto enthusiasts believe that with the launch of spot ETF products, the crypto market will rebound to historical highs. But the reality is not entirely so, at least not as many expected.
In the first quarter of this year, Bitcoin surged over 50% to reach $73,000 with the launch of ETFs. Billions flowed directly in, and the market no longer had any concerns about institutional demand. For about 7 months, Bitcoin primarily fluctuated between $60,000 and $70,000.
Unfortunately, most tokens are struggling except for a few standout performers. The initial 'failure' (or lack of liquidity) of spot ETH liquidity after its mid-year launch exacerbated these dilemmas. Most of the story in 2024 revolves around gloomy market sentiment and infighting.
However, the crypto industry finally saw the dawn after the presidential election in November. The changes in market sentiment and risk appetite over the past few weeks also reflect this.
Cyclical strategies are getting back on track
At the end of 2022, Delphi Digital outlined reasons for the bear market bottoming out, expressing faith in the upcoming bull market cycle over 15 months ago. In last year's report, it predicted that Bitcoin would break new highs in the fourth quarter of 2024.
On the macro front, reality has largely met expectations. So far, Bitcoin halving has not been the main catalyst for the crypto market cycle, but rather the liquidity cycle.
At the end of last year, Delphi Digital listed favorable conditions for Bitcoin to achieve strong performance in the first quarter, one of which was a surge in global liquidity. It also warned that the risk of a market pullback was high from the end of the first quarter to the beginning of the second quarter due to signs of weakening liquidity momentum.
So far this year, Bitcoin has risen over 130%, and this was achieved without much support from the Federal Reserve. In fact, liquidity from the Fed has been steadily declining over the past 9-10 months.
Optimism returns
2024 is a strange year for the crypto market. On one hand, most mainstream currencies have recovered to historical highs, while the broader altcoin market has also shown signs of recovery.
However, the crypto community (such as Twitter) has been embroiled in infighting for most of this year. The low sentiment in 2024 contrasts sharply with the positive price trends.
The causes of poor market sentiment stem first from Bitcoin's dominance. Bitcoin has soared 130% year-to-date, reaching a three-year high in dominance.
The second factor is decentralization: some tokens are rising in price, some are rising slightly, but most tokens are either falling or consolidating.
The classic 'path to altcoin season' that many have taken for granted has not materialized.
Supply and demand imbalance
As mentioned in many reports over the past year, the crypto market is facing a significant supply and demand imbalance. In short, the demand for cryptocurrencies has not kept pace with the overall supply of cryptocurrencies. The reasons are as follows.
Too many tokens
Aggregators have launched over 10,000 tokens, compared to about 1,500 in 2017, a tenfold increase.
Applications like pump.fun have made token creation easy: since January 2024, over 4 million tokens have been issued, and more than 50 million tokens have entered Solana's Raydium.
Continuation of Memecoins
2024 has given rise to the Major-Memecoin barbell investment portfolio.
Will these market dynamics remain unchanged, with memecoins dominating for another year? Or will the crypto market return to fundamentals?
The reality is more complicated, influenced by speculative enthusiasm and ever-changing market trends.
Solana accelerates development
In the last cycle, SOL rose from $1 to $260 within a year. Although the ecosystem is still in its nascent stages, it has attracted teams such as Jito, Drift, and Helium. All of these teams will become foundational parts of the network.
Solana eventually rose too high. Following the FTX collapse, the bear market, and doubts about chain stability, SOL fell by 96%.
On Christmas 2022, Bonk airdropped 50% of its supply to the Solana community. SOL was trading at $11, and the outlook was not optimistic. A few days later, SOL dropped to a low of $8, ending a brutal year.
Solana was reborn in 2023. The core team focused on serving its loyal user base with Drift Protocol, Jito, and Tensor Foundation, steadily innovating to drive recovery.
As we enter 2025, some questions still remain:
Has the rise of SOL come to an end?
Will memecoins disappear?
Can Base capture market share?
Will Ethereum make a comeback?
While these concerns are valid, they miss the point. Solana's performance in 2025 will be based on two core beliefs:
Solana's data indicates that SOL/ETH is being repriced. Lower-level activities show strong fundamentals, suggesting greater upside compared to ETH.
Leadership and culture: Solana's relentless innovation and thriving ecosystem give it a unique advantage in the cryptocurrency space.
2024 can be seen as a turning point for the industry, but no one knows exactly how 2025 will unfold.