Author: Stacy Muur, Web3 researcher; Translator: Jinse Finance Xiaozou
I have been closely following research reports published by some of the smartest Web3 teams. Their articles provide food for thought and showcase different perspectives, helping you to be more confident in the viewpoints you align with.
Research articles contain expert opinions that can help you better understand different perspectives on the Web3 field. Now let's take a look at the Delphi team's '2025 Crypto Market Outlook' summary.
1. Long live Bitcoin
Not long ago, many believed that a price of $100,000 for Bitcoin was just a daydream.
Now, this sentiment has undergone a massive shift. Bitcoin's market cap is approximately $2 trillion, which is indeed astonishing. If Bitcoin were a publicly traded company, it would become the sixth most valuable company in the world.
Bitcoin has attracted significant attention, but there is still considerable room for growth.
Bitcoin's market cap is only 11% of the total market cap of the seven largest US tech giants (Apple, Nvidia, Microsoft, Amazon, Google, META, Tesla).
It is also less than 3% of the total US stock market cap, about 1.5% of the total global stock market cap.
Its entire market cap accounts for only 5% of the total US public debt, less than 0.7% of the global debt total (public debt + private debt).
The size of US money market funds is three times that of Bitcoin's market cap.
Bitcoin's market cap accounts for only about 15% of the total global foreign exchange reserves. Assuming that global central banks reallocate 5% of their gold reserves to Bitcoin, it would increase purchasing power by over $150 billion — three times the total net inflow into IBIT this year.
Household net worth has reached an all-time high of over $160 trillion, more than $40 trillion above the pre-pandemic peak. This growth is primarily driven by rising housing prices and a booming stock market, which is 80 times higher than Bitcoin's current market cap.
In a world where central banks cause their local currencies to depreciate by 5-7% annually, investors need to set their sights on a 10-15% annual return to compensate for the future loss of purchasing power.
So you understand:
Calculating with an annual depreciation rate of 5%, the actual value of currency will halve in 14 years.
Calculating with an annual depreciation rate of 7%, the actual value of currency will halve in 10 years.
This is why Bitcoin and other high-growth sectors receive so much attention and traction.
2. The Altcoin Delusion
While Bitcoin has repeatedly set historical highs this year, 2024 has not been particularly successful for most altcoins.
ETH has not reached its historical peak.
SOL set a new historical high again, but it was only a few dollars higher than the previous peak, which seems trivial compared to the growth in market cap and network activity.
ARB performed strongly at the beginning of the year but started to underperform towards the end.
There are many such examples. Just look at the data for 90% of the altcoins in your portfolio; it will be evident.
What are the specific reasons?
The first reason is Bitcoin's dominance. Driven by ETF flows and support from Trump, Bitcoin has had an extraordinary year, resulting in a price increase of over 130% year-to-date, elevating its dominance to a three-year high.
The second reason is market dispersion.
This year's market dispersion is a new phenomenon in the crypto market. In previous market cycles, there was a tendency for synchronized trading. When BTC rose by 1%, ETH typically rose by 2%, and altcoins rose by 3%, following a predictable pattern. However, this cycle has been different.
A small portion of cryptocurrencies perform exceptionally well, but there are also vast areas of red.
The continuously rising tide of Bitcoin has not benefited everyone, and the classic 'Path to Altseason' that many anticipated has not materialized.
Another equally important reason is Memecoins (and the recent AI Agents).
Cryptocurrency has been oscillating between 'pure Ponzi scheme' and 'technology that promises to change the world.' In 2024, the former dominated the discourse.
The Meme coin supercycle amplifies the concept that cryptocurrency is just a massive Ponzi scheme. People are beginning to question whether fundamentals really matter and whether cryptocurrency is just a 'casino on Mars' — these concerns are valid.
In this regard, I would like to elaborate.
When Memecoins were labeled as the best-performing of the year, only the largest Meme coins were considered — those that have already created significant market value and established communities. People often overlook the fact that 95% of the issued Memecoins have failed to retain their value, but people are 'willing to believe.'
With this belief, many who previously invested in altcoins have turned to buying Memecoins — some have succeeded, but most have failed. Therefore, capital inflow is mainly distributed between Bitcoin (institutional capital) and Memecoins (high risk), pushing most altcoins aside.
Delphi believes that 2025 will usher in a shift towards 'world-changing' technologies.
Personally, I am not very optimistic. In 2024, many KOLs will focus primarily on Memecoins. For instance, I created a Telegram folder with some truly valuable channels, and finding one that isn't centered around 'ape calls' is very difficult. This is an attention game, and widely discussed narratives will significantly affect market trends.
3. What's next?
(1) Growth of stablecoins and credit expansion
A major obstacle facing the market is the oversupply of tokens. The market is facing a large number of new assets from private placements and public token issuances. For example, over 4 million tokens were issued on Solana's pump.fun alone in 2024. Meanwhile, since the last cycle, the total market cap of cryptocurrency has only tripled, while it grew 18 times in 2017 and 10 times in 2020.
The missing elements — growth of stablecoins and credit expansion — are beginning to reemerge. Lower interest rates and more favorable regulations are expected to stimulate speculative behavior and address these imbalances. As stablecoins regain traction, their role as a basis for trading and collateral will be crucial for market recovery.
(2) Institutional capital inflow
Until last year, institutional capital was very hesitant about participating in cryptocurrency due to regulatory uncertainties. However, as the SEC was reluctantly forced to approve spot Bitcoin ETFs, this situation began to change, paving the way for future institutional investments.
These institutional investors will look for investment opportunities they are familiar with. While some investors may dabble in Memecoins, they are more likely to be interested in assets in areas like ETH/SOL, DeFi, or infrastructure.
Delphi predicts that the next year will resemble the phenomenon of a 'broad market rally' seen in previous cycles. This time, projects based on fundamental principles or core objectives will regain attention. These could include assets like OG DeFi, which have a good historical performance and have been tested in practice. They may also include infrastructure assets, similar to the L1 trading we observed before. Others could include RWAs (real-world assets) or emerging fields like AI or DePIN.
Not every cryptocurrency will rise threefold as before, and Memecoins will continue to exist. This may mark a new beginning and widespread crypto uptrend.
Note: Generally speaking, most institutional traders rely heavily on options hedging. Therefore, if there is a 'broad market rally,' the assets most likely to attract investor interest will be those that have options available, primarily traded on Deribit or Aevo.
(3) Solana's dominance
Solana exemplifies the resilience of the blockchain ecosystem. After a 96% crash during the FTX collapse, Solana experienced an astonishing rebound in 2024.
Key highlights include:
Developer momentum: Solana's hackathons and airdrops (like the Jito airdrop) have rekindled enthusiasm among developers and users, creating a positive cycle of innovation and adoption.
Market dominance: From Memecoins to AI applications, Solana dominated the trends of 2024. Notably, its Real Economic Value (REV) — a metric of transaction fees and MEV — exceeds Ethereum's by over 200%.
Future outlook: Solana is expected to challenge Ethereum's dominance in scalability and user experience. Its seamless user experience and centralized ecosystem provide significant advantages over decentralized L2 solutions.
4. Final thoughts
For many, the current market situation may remind them of 2017-2018, when Bitcoin peaked at $20,000 before the New Year and began to decline shortly after 2018 arrived. However, in my view, comparing the 2018 crypto market to the market in 2025 is irrelevant. These are two completely different environments.
It is important to recognize that the broader crypto market extends far beyond the timelines of CT and X. The views of those outside these platforms differ significantly from the market.
In 2025, I expect the crypto market to be divided into two main verticals:
Web3 Natives: Refers to traders deeply rooted in the crypto market. They have a nuanced understanding of Bitcoin's unique characteristics and are willing to engage in high-risk trading, including Memecoins, AI agents, and presales — elements reminiscent of the Wild West.
Ordinary Investors: The risk management approaches of institutional and retail investors often differ, as they tend to adhere to more fundamental investment and trading strategies — viewing cryptocurrency as an alternative to the stock market.
Which vertical field will be marginalized? It will be those early-stage DeFi, RWA, and DePIN protocols that cannot ensure leadership in niche markets or at least on-chain. This is just my opinion.
