Author: 0xkyle
Translation: Deep Tide TechFlow
Good morning! Predicting the future has never been an easy task, but as traders and investors, we need a clear plan. Like all plans, this one will adjust with changes in the market environment—after all, the market is a constantly evolving ecosystem. This memo is just based on my current perspective, some preliminary thoughts on 2025, for reference only, and definitely does not constitute investment advice.
Before discussing 2025, let me first review the plans of 2024. If you're not interested, you can skip ahead.
To be honest, there were quite a few issues in my 2024 plan. Let's take a look at them one by one:
The impact of Bitcoin halving is underestimated.
At that time, many debated whether Bitcoin halving was 'a bearish outcome of bullish expectations' or would become 'bullish expectations' as in history. It turned out that this halving did not cause much of a stir, but it became the starting point of the bull market.
Misjudgment of rate cuts as bearish
This judgment is clearly incorrect. However, before the rate cuts, I publicly adjusted my views. The initial assumption was: 'Inflation stays high, and rate cuts may only occur after significant deterioration in economic data, becoming a passive response.'
It turns out that the Fed's actions broke this assumption. For most of 2024, the correct strategy was to trust the Fed's statements.
Failure in scenario planning execution
My core plan for 2024 is: 'Reduce risk through partial liquidation ahead of rate cuts, buy back after the price drops, while keeping some positions unchanged.'
But in reality, I didn't execute this plan at all, haha.
The market trends in 2024 completely exceeded expectations—from the initial sell-off after the ETF launch, to the rebound in Q1, followed by weakness in the summer, and finally, the favorable impact of rate cuts on the stock market, which threw the crypto market into chaos. Bitcoin's price hovered between $50,000 and $60,000 until the election at the end of the year, which finally brought the true explosion.
Looking back, my biggest mistake was not realizing that 2024 was the year traditional financial institutions gradually accepted Bitcoin. This should have been the main theme of 2024—traditional finance slowly but surely entering the Bitcoin space.
Judgment about narratives:
Beneficiaries of ETFs: COIN (stocks) / BTC / ETH
I mentioned some tokens, like STX and TRAC, but they performed poorly. COIN, however, performed exceptionally well; when I wrote my article, COIN's price was around $120.
Additionally, niche narratives like BRC-20 and LST may not have lasted long, but they performed well in Q1 2024.
The success of SOL
At that time, SOL's price was $60! This might be one of my most successful trades. I wrote this article when the price was only $20 and predicted, 'SOL will reach triple digits in the next cycle.' It turned out this prediction was entirely correct.
Regulatory alignment with the product market
Although I captured the regulatory narrative, I picked the wrong tokens. The idea at the time was to choose projects that had passed the DeFi regulatory threshold but had not yet fully proven market demand. However, I chose MMX and dYdX, which was clearly the wrong decision.
Missteps in decentralized AI
I was very optimistic about decentralized AI, but at the peak in Q1 2024, I realized that the actual developed products were far from my expectations. Projects like Render and Akash lack practical application scenarios, more like 'air coins.'
The success of GameFi v2
In Q1 2024, assets related to GameFi performed exceptionally well, with BEAM's price rising significantly, and many GameFi projects also experienced a surge. However, only those who sold at the peak could profit.
Other potential narratives
DePIN / RWAs
DeSci
Meme (BONK / DOGE / PEPE / HPOS10INU)
RUNE / CACAO
GambleFi
Airdrops (LayerZero / Starknet / ZKSync)
Among these narratives, there seems to be nothing particularly outstanding aside from Meme—Meme performed exceptionally well in Q1 2024, with Bonk's price nearly tripling since I mentioned it. DePIN also had its shining moments, with projects like Geodenet and Helium; however, I did not pay much attention to them. A few months ago, decentralized science (deSci) began to emerge, with BIO tokens even launching on Binance. However, to be honest, I'm not particularly optimistic about this field.
Cycle peak
At the end of the article, I wrote: 'There is one thing I haven't discussed, which is how I think this cycle will end—recently, I've been increasingly considering a point made by GCR, that 'the pico-top of the last cycle was the entry of funds, while the pico-top of the next cycle will be when countries begin to purchase.'
Looking back now, with the perspective of hindsight—I find this viewpoint very persuasive and plan to incorporate it into my 2025 investment plan. This is definitely one of the items on my 'main signals for this cycle' list. The logic here is very clear and reasonable.
2025 Plan
Now that the review of 2024 is over, let's get straight to the point. As always, I'll start analyzing from the macro and scenario planning, then discuss specific investment narratives.
Scenario planning
The 2024-?? cycle has already started. I personally believe it began at the end of 2023, but that's just a matter of detail. So far, the market has moved as follows: On January 10, Bitcoin ETF was launched → hitting an all-time high, driving the altcoin season, followed by choppy conditions in Q2 and Q3 2024, with Bitcoin price fluctuating between $50,000 and $60,000. By election day, Bitcoin broke its historical high, soaring to $100,000 but failing to break through further, currently oscillating around $90,000.
It is worth noting that altcoin season or the so-called 'good times' often accompanies Bitcoin reaching a peak. The first time was when Bitcoin surged to $69,000 but failed to break through; the second time was when it surged to $100,000.
The next altcoin cycle may begin after Bitcoin successfully breaks through $100,000. While I hope this happens in Q1 2025, it could also resemble the choppy market conditions of Q2/Q3 2024. This is something I need to prepare for mentally in advance. Therefore, I have planned the following possible market scenarios:
Here is a diagram illustrating my views:
Scenario 1: Bitcoin and altcoins rise together. If 2025 turns out to be a one-sided bullish market, with Bitcoin continuing to rise and altcoins performing well, we might see a comprehensive upward trend similar to the past two months.
Probability: 30%-40%
Action Plan: Buy quality altcoins on dips and seize the opportunity to position.
Scenario 2: Bitcoin rises, but altcoins have limited gains. This is similar to the market of 2024, where the market may still experience volatility in the coming months, but overall is more optimistic than in 2024 (because Bitcoin continues to rise). Certain sectors will perform well.
Probability: 50%-60%
Action Plan: Buy selected altcoins on dips, avoid overheated sectors, and look for the next potential direction.
Scenario 3: Bitcoin rises while altcoins fall. If this is the peak for altcoins, Bitcoin may continue to rise strongly while altcoins perform weakly.
Probability: 20%-30%
Action Plan: Decisively liquidate altcoins; while there may be some pullback, if altcoins lack upward momentum, timely stop-loss is necessary.
Scenario 4: Both Bitcoin and altcoins fall. If the market peaks, all assets will enter a downward cycle.
Probability: 10%-20%
I believe the time for Bitcoin to break new highs won't be as long as in 2024, because the current macro environment has provided favorable support for Bitcoin. During the 'summer slump' of 2024, despite the recent launch of ETFs, traditional financial institutions were still trying to convey the value story of Bitcoin to their clients. However, at that time, there was no global consensus on the importance of Bitcoin.
Now, with Trump in office, discussions about the 'Strategic Bitcoin Reserve (SBR)' are heating up, and this narrative has undergone significant changes.
While I won’t speculate on the likelihood of SBR being established, it’s undeniable that this new political environment has brought more attention to the digital asset space. Especially when the president of the world's largest economy frequently talks about Bitcoin, people are more easily persuaded to buy it.
Recognizing the significance of this regime change is crucial. Therefore, I believe BTC will continue to thrive in 2025, while for altcoins, it's a similar yet different story.
From the performance of the total market cap of altcoins (Total3), it reached the historical high of 2021 in Q1 2024 and set a new cycle high in Q4. The overall trend is similar to historical cycles. Frankly, there's not much difference between my scenario 1 and scenario 2.
The key lies in how to grasp positions and timing. I am optimistic about 2025 but cannot predict how long it will all take. Although I believe that a one-sided upward trend will come faster than in 2024, in the absence of catalysts, altcoins may still experience significant declines.
My strategy is: as long as the cycle has not peaked, maintain a net long position, whether in Bitcoin or other assets. I don't believe 2025 will replay the 'summer slump' of 2024, but a similar period of volatility may occur—market sentiment may be low, but prices can still remain relatively stable.
For on-chain assets, their volatility is greater, potentially experiencing declines of up to 70% in market adjustments. Therefore, my goal is to sell when on-chain assets are at their peak heat, revert to large-cap altcoins (top 20 by market cap), and then gradually reposition.
I don't think altcoins have reached their peak here, as I can't imagine Bitcoin (BTC) continuing to rise amid weak performance from altcoins. Also, I don't believe Bitcoin will peak at this current stage.
Conclusion:
Bitcoin will continue to rise, and its gains are expected to surpass those of 2024.
As for altcoins—an offensive stance should be maintained, but one should know when to switch to a defensive posture. However, compared to 2024, the defensive intensity can be appropriately reduced.
Risk
Cycle peak
Cycle peaks are typically a self-fulfilling phenomenon. While I believe we are still far from the peak, this needs to be reassessed weekly. Cycle peaks are not necessarily a specific 'event,' but rather a state that gradually approaches over time.
Risks of the Strategic Bitcoin Reserve (SBR)
After the new president takes office, everyone is paying attention to his policy direction. Despite the favorable factors for Bitcoin, if the president completely ignores Bitcoin, it will be a rather unfavorable signal.
I believe the risks mainly lie in two aspects: either the SBR plan is shelved, or the SBR is not implemented but some sort of alternative is introduced. If it's the latter, while it may bring some bearish sentiment initially, as long as it benefits Bitcoin, it will eventually turn into a bullish situation.
Supply risk
In the summer of 2024, global stock markets hit new highs repeatedly, but the crypto market faced tremendous selling pressure, mainly from the supply side, such as Mt. Gox, Germany, Grayscale GBTC, etc.
Supply risk always exists; there will always be institutions or individuals holding large amounts of Bitcoin in the market, such as the UK government, Silk Road liquidation assets, FTX distribution, etc. While these events may exert short-term pressure, if all goes well, they could also present good opportunities to buy on dips.
Macroeconomic risks
I believe that even if the rate cuts are modest, as long as interest rates continue to decline, market liquidity will improve, which is still a positive signal.
If the signals lean bearish (inflation rises again, the Federal Reserve has to raise rates), it could negatively impact digital assets.
Themes and tokens
Now we enter the part everyone is looking forward to. But before we dive into the discussion, I want to emphasize again: 'Be aggressive, but know when to turn defensive.' In this cycle, active investment management will far outweigh passive management.
The previous strategy of 'buy and hold long-term' is no longer applicable. For example, while Solana increased tenfold in 2023, its performance throughout 2024 was almost on par with Bitcoin. Similarly, top tokens like TAO did not benefit from the recent AI boom. Meanwhile, Meme has lost its past luster, such as 'Dogecoin is no longer popular,' 'Calm Guy is no longer calm,' and 'Dwarf Hippo seems to have lost its glory.'
It is foreseeable that in this cycle, there are almost no assets suitable for 'buy and hold long-term'.
Additionally, I like to think: who are the marginal buyers in the market? Currently, there are mainly three types of marginal buyers in the market: institutional investors (traditional financial institutions), funds (liquidity funds / crypto-native funds), and speculators (perpetual contract traders, on-chain players, etc.).
A successful investment narrative needs to attract the attention of at least one type of buyer. Based on this, let’s start analyzing:
AI Themes
AI remains an important investment theme. But as mentioned earlier, we have already experienced several rounds of speculation. If you have read my views on AI tokens, you will know that I believe the next wave is about to arrive.
Macroeconomic trends: from 'speculation' to 'fundamentals' and then to 'actual utility'.
Microeconomic trends: from 'social buzz' to 'fundamentals-driven' and then to 'practical applications and virtual representations'.
However, 'buy and hold long-term' is not a good strategy. For instance, as a starting point, Goat has already fallen 60% from its peak and may continue to perform poorly.
Recommended tokens: application technology / clusters / games / consumer-oriented AI
For instance, ALCH (game development), Griffain (agents that help manage wallets), Digimon, Ai16z (leaders in the AI field). Of course, there are many tokens that might have been overlooked, but these are my top picks.
DeFi
DeFi (Decentralized Finance) remains an important investment theme, but it is challenging to invest in. The number of tokens that can genuinely benefit from it is very few, even if these tokens have potential, their prices may not significantly rise (e.g., performance in the LST-related field).
From a risk and return perspective, DeFi is not my first choice, but I believe this field will continue to develop in 2025.
Recommended tokens: AAVE, ENA, Morpho, Euler, USUAL
Secondary tokens: stablecoins, payment-related tokens
Layer 1 blockchain (L1) transactions
Although it may provoke controversy, I believe L1 transactions will once again become the focus of the market in the future. The speculative potential in the L1 space is evident. Take Sui as an example, the increase from $1 to $4 indicates that market interest in L1 is on the rise.
L1 transactions are currently undervalued by the market but have great potential, just like Hype has already increased tenfold.
Recommended tokens: SUI, Hype
Secondary tokens: Abstract
I am not very enthusiastic about Monad and Berachain, but I am very much looking forward to Abstract—I think it could become a breakout project.
NFT tokens and gaming tokens (new round)
I also have high hopes for this field. Recently, I invested in some gaming projects and believe that the NFT token sector is worth paying attention to. For instance, Pengu's price is gradually recovering, Azuki has launched $ANIME, and Doodles also have their own characteristics. While I don't believe NFTs themselves will make a comeback, their related tokens may encounter new opportunities.
Gaming tokens are also worth paying attention to. Off-The-Grid has proven that developing a fun game is possible. Given that this field is currently undervalued, I think delving into those quality gaming projects that are about to issue tokens is a good strategy.
Recommended tokens: Pengu, Anime (Azuki), Spellborne, Treeverse
Secondary tokens: Prime, Off the Grid (if tokens are issued), Overworld
Other narratives
Here are some narratives I'm watching. While I'm not particularly optimistic, they still hold some attraction:
Data tokens: Kaito, Arkm
Meme: Currently, the only one I'm interested in is PEPE; most others have already faded.
Decentralized Internet of Things (DePIN): PEAQ, HNT
Ordinals
Classic altcoins (Dino Alts): XRP, etc.
Old DeFi projects: CRV, CVX
2025 Predictions
Here are some bold predictions I have for 2025. These ideas might sound a bit incredible, but they are not entirely impossible:
DePIN (Decentralized Internet of Things) has been officially implemented by a large company through acquisitions and other means.
Binance's market share in the exchange market has declined but has been surpassed by Bybit or OKX rather than Hyperliquid.
With advances in VR technology, metaverse tokens are experiencing a renaissance.
ICOs (Initial Coin Offerings) are regaining popularity.
The prosperous season on the ETH chain has not yet arrived.
Sui's price breaks into double digits (at least $10).
ETH staking rewards approved through ETFs, leading to more staking tokens and yield aggregation products, similar to the situation in 2021.
A well-known artist interacts with fans using NFTs and tokens for rewards.
Bitcoin's price reaches $200,000.
More CEOs or founders of L1 projects choose to resign under the influence of Aptos.
Base loses in on-chain competition, replaced by another L1 project, while Solana maintains its lead.
Summary thoughts
Thank you for sticking with me this far! This is my investment plan for 2025. I expect these plans may adjust with changes in the market, just like the 2024 plan.
The most important advice here is: stay flexible and go with the flow like water. Enjoy this journey; market changes are inevitable, but that is precisely what makes investing so fascinating. As the saying goes:
‘No one can step into the same river twice because the river changes, and so do people.’
Good luck and safe travels! If you gain life-changing returns during this journey, don't forget to use those gains to truly change your life.
