01 Introduction: The year 2024, which belongs to the crypto world, is a "rational frenzy".
It is neither as absurd and chaotic as 2017, nor as crazy as Zootopia in 2021. If you have to use one word to summarize 2024, except for "rational frenzy", the others seem to be a little bit off. But at the end of 2024, using only one word to describe the crypto world this year is obviously not enough.
It's like you've just watched a long-awaited new movie that got a perfect score. You can't just describe it with the word "good". You want to share everything from the producer to the actors, from the character relationships to the plot settings, from the main plot twists to the subplot reversals, and even the behind-the-scenes and publicity with the people around you without leaving out any details.
The crypto world in 2024 is so exciting. Bitcoin, the protagonist of crypto, leverages the mainstream financial market with ETFs, the public chain competition between Ethereum and Solanan becomes more and more intense, the already active Meme grows rapidly with the support of Pump.fun, and the witch cleansing activities, FIT21 Act (21st Century Financial Innovation and Technology Act), CZ case and other cases are stumbling forward, adding some bright spots to the ups and downs of the crypto world.
02 About "rational fanaticism": fanaticism breeds prosperity, and rationality activates value.
The crypto world in 2024 is frenetic:
● The price of Bitcoin has soared from $40,000 at the beginning of the year to break through the historic mark of $100,000;
● The number of cryptocurrency holders worldwide reached 562 million, a growth rate of 33.8%, accounting for 6.8% of the world’s population;
● In terms of financing, the total financing amount of cryptocurrency startups has increased for two consecutive quarters, reaching US$2.4 billion in the first three months of 2024, and financing in the first quarter of 2024 increased by 40.3% year-on-year.
The crypto world in 2024 is also rational:
● Technological innovation and application expansion lead the hot narrative of the year. The Crypto+AI field has achieved breakthroughs. The total market value of the encrypted AI asset sector has exceeded US$70 billion this year, and the number of related projects has exceeded 600; the market value of the RWA field has increased to US$13.5 billion, and applications have expanded to private credit, commodities and other fields;
● Even after going through a significant correction phase, the market still maintains strong vitality. At the beginning of the second quarter of 2024, the total market value of the crypto market fell to US$2.43 trillion, a decrease of 14.4%, but the average daily trading volume of the market can still be stable at a high of US$90.8 billion;
● The global regulatory environment has improved significantly. The approval of Bitcoin and Ethereum ETFs is like a trigger. Regulators in various countries have increased their attention to the encryption market and promoted the improvement of relevant policies.
Under the fermentation of "rational enthusiasm", the crypto world today presents a trend of high market activity, accelerated technological innovation, clear investment structure and gradually improved regulatory environment. The vision of fairness and freedom described by Satoshi Nakamoto in the white paper 16 years ago is now flourishing in the crypto world.
Next, this article will take you through 6 keywords to review the crypto world in 2024, deeply explore the innovations and thinking contained in the "rational frenzy", and provide some value predictions for 2025.
Keyword 1 #digitalgold
In 2024, Bitcoin's breakthrough is not only reflected in price, but also in technology, market and regulation. The interaction between price and the latter three factors makes Bitcoin more important as "digital gold".
In terms of price, after experiencing a series of leading market trends such as the Spring Festival market and ETF approval, Bitcoin entered a period of volatility. It was not until the final stage of the US election that it was able to release the pressure and successfully broke through the 100,000 US dollar mark in the early morning of December 17.
From 2010 to the present, the price of Bitcoin has shown a significant upward trend as a whole, and the benefits brought by price increases continue to reflect the entire crypto world. Citibank analysts predict that cryptocurrencies will achieve strong growth in 2025, driven by factors such as Trump’s policies, increased ETF inflows, and stablecoin innovation. Bitcoin’s breakout above $100,000 may be just the beginning.
In terms of technology, the challenges that the Bitcoin network cannot avoid are its scalability and transaction throughput. In 2024, influenced by the popularity of inscriptions, people began to explore more feasible Bitcoin network expansion solutions other than the Lightning Network. As a result, the Bitcoin L2 track became popular, and related technical solutions such as state channels, side chains, and Rollups were favored by a large number of investment banks.
By the beginning of 2024, a total of more than 100 Bitcoin L2 projects had been launched.
However, such temporary prosperity is not real prosperity.
Bitcoin L2 avoids shortcomings such as transaction throughput restrictions, high fees, and lack of Turing completeness through an independent execution environment. It relies on a bridge mechanism to build asset links with L1 to achieve rapid transaction verification and packaging, thereby increasing the transaction throughput of the entire Bitcoin network. However, most Bitcoin L2 projects have not really solved the pain points of the main network.
Most of them use Ethereum's "EVM-like architecture + cross-chain bridge" approach to achieve capacity expansion, and face many problems. After a wave of enthusiasm, the overall survival rate of Bitcoin L2 projects is less than 20%.
01 Technical Challenges
● Complex channel management and suboptimal routing algorithms lead to poor transaction success rate and efficiency;
● Technical problems such as data availability and state synchronization delays affect user experience and system fluency;
● Different solutions differ in technical standards, protocols and architectures, and the interoperability of assets and data between different networks is poor.
02 Economy and Cost
● Bitcoin block space is scarce, and the cost of publishing data is expensive. In a low-cost environment of 10 sat/VB, Rollups costs $460,000 per month; in a high-cost environment of 50 sat/VB, the monthly cost may exceed $2.3 million;
● Lack of sustainable profit model.
From a long-term perspective, research on the value of the Bitcoin network remains necessary and important.
In 2025, the technology will become more mature, which will lead to a major breakthrough in Bitcoin L2. At the same time, after the pledge narrative solves core issues such as security and liquidity, the long-awaited activity of the Bitcoin ecosystem is also expected to be activated on a large scale.
In the market, on January 11, the US SEC approved 11 spot Bitcoin ETFs, with a trading volume of $4.6 billion on the first day of listing. According to Bitcoin.com statistics, as of December 24, the holdings of US spot Bitcoin ETFs have exceeded 1.13 million BTC, which shows the ability of digital gold to attract money.
The approval of the Bitcoin spot ETF provides investors, especially investment institutions, with a legal way to invest in cryptocurrencies. Cryptocurrencies have a low correlation with traditional financial assets, and adding them to investment portfolios can diversify risks to a certain extent. Traditional financial institutions have entered the market, and a large amount of funds have begun to flow into the crypto market, accelerating the institutional-led investment landscape and indirectly promoting the improvement of relevant policies and regulations.
The direction of regulation is mainly affected by Trump's return to the White House, and the US cryptocurrency policy has changed from cautious to relaxed. In 2025, although the positive direction of cryptocurrency regulation is already set in stone, we cannot be too idealistic about the elimination of resistance. If cryptocurrency wants to achieve widespread application, there is still a long way to go for regulatory adjustment and implementation.
The much-anticipated Bitcoin strategic reserve plan is unlikely to be implemented. There are two main reasons:
● The total debt of the U.S. federal government exceeds 36 trillion U.S. dollars. Establishing a strategic reserve of Bitcoin requires a large amount of capital investment. A reserve of at least 1 million Bitcoins poses a significant risk to economic growth. This is essentially in conflict with Trump’s strategy of developing the U.S. mainland.
● The US dollar is a credit currency, and its value is maintained by the credit support of the US government. Although the status of the US dollar in the global economy has declined in recent years, it still maintains a certain status and strong dominance. The price of Bitcoin is highly unstable and lacks unified supervision. The most important point is that the decentralized nature of cryptocurrency fundamentally challenges traditional currencies such as the US dollar.
Therefore, no matter how much Trump says, he cannot easily overturn the table of the US dollar system.
It would be better for them to think from the perspective of themselves as holders of a large number of cryptocurrencies, and advocate the inclusion of Bitcoin and other cryptocurrencies in the national strategic reserves to raise the value of cryptocurrencies, attract more ordinary investors into the market, and further push up the prices of cryptocurrencies in order to achieve the goal of profiteering for the interest groups.
Investors are reminded that it is the complex financial instruments and fraudulent interest rate methods that have driven the irrational prosperity of the crypto market.
Keyword 2 #Broken·Narrative
The crypto world of 2024 is at a critical turning point. The era of prosperity supported by moving narratives alone is fading away. After the emergence of Bitcoin, the narrative of a decentralized electronic cash system opened the prelude to the crypto world.
In the following years, 1CO, 1EO, DeFi, NFT, Metaverse, L2, Web3, etc. appeared one after another. Many projects used the guise of innovation and high returns to attract funds, but the business model behind them was actually empty. Once liquidity dried up, they collapsed and investors lost all their money.
The crypto market guided by narratives is like a puppet being manipulated by a baton, swinging violently between illusory prosperity and cruel collapse, causing investors to gradually lose themselves in the ups and downs. The foundation of the entire crypto world's pursuit of decentralization is crumbling under excessive profit-seeking hype.
In 2024, participants who have experienced multiple rounds of bull and bear baptisms have become more mature and calm. The "story first, implementation later" model has been abandoned by the market. People are more concerned about the real fundamentals rather than immersing themselves in narratives. The rise of modular blockchains, re-mortgage protocols, AI, and DePin has become the key engine driving the development of the crypto world this year.
Efficiency Innovation--Modular Blockchain
In 2024, modular blockchain technology has received widespread attention. Its flexibility and scalability provide a solid foundation for building the next generation of decentralized applications. This concept, which was proposed in 2018, was first implemented on Ethereum. This year, breakthroughs and innovative practices have been achieved in multiple fields such as RWA and AI.
The current mainstream blockchain networks are generally single blockchains, which usually independently undertake the functions of each layer of the network. Modular blockchains decompose functions into specialized components, such as the execution layer, consensus layer, data availability layer, etc. Each layer focuses on solving specific functions, thereby improving the overall performance and scalability of the blockchain network.
This layered architecture enables blockchain networks to improve performance while maintaining decentralization and security, becoming an important tool for solving the impossible triangle. For example, when building financial applications, modules optimized for high-frequency trading can be used to improve transaction processing speed and throughput to meet the needs of large-scale, high-concurrency applications.
Therefore, in 2025, if innovative applications in the crypto world want to make breakthroughs, the following three points are critical: performance, scenario-based, and elastic. Not being constrained by infrastructure is the real innovation and the key to the crypto market's integration into the mainstream.
Income appreciation--re-pledge agreement
The birth of the re-pledge agreement has injected new vitality into the crypto market in 2024 and unlocked the multiple values of assets.
Under the traditional Ethereum PoS mechanism, the assets pledged by users are basically "dormant" during the lock-up period, resulting in a single income. With the help of the re-staking platform, the validator can point the beacon chain withdrawal voucher to its smart contract and re-invest the pledged ETH into the oracle, middleware or even other public chains.
For example, the EigenLayer project pioneered the use of staked assets by Ethereum validators, breaking the previous static model of “once pledged, for life”.
On the one hand, the re-staking agreement brings richer returns to investors. In addition to the 3% income from Ethereum's native staking, the additional income after re-staking can reach 5%-10% depending on different projects, achieving a superposition of income.
On the other hand, for projects such as Rollup applications that are connected, there is no need to build a complex verification system from scratch. With the help of Ethereum's powerful trust network, they can improve their own security at a lower cost, attract more users and capital inflows, and create more value possibilities.
Reality empowerment--DePIN
As a bridge connecting the physical world and blockchain, DePIN has been regarded as an important trend, especially in the field of Web3.
Since 2024, the number and types of DePIN projects have increased significantly, and new-generation lightweight DePIN projects have emerged frequently. Wearable devices such as AI, bracelets, and watches that collect health data have been added, as well as a large number of portable lightweight physical DePIN devices. . In the classic Depin market, innovative applications have been realized in multiple fields such as computing, storage, network distribution, and artificial intelligence, and are spreading to various industries at an unprecedented speed, broadening the boundaries of encryption applications.
Among them, in the field of distributed storage, Filecoin has achieved breakthroughs in many aspects.
First, more than 4,700 independent contracts have been deployed on FVM, facilitating more than 3 million transactions. The average net deposit of DeFi activities on FVM exceeds 30 million FIL, and the average net borrowing is 26 million FIL.
Secondly, there are more and more Layer2 solutions based on Filecoin, such as Basin, A kave, Storacha, etc. These Layer2s achieve horizontal and vertical expansion through secure and customizable subnets, unlocking many application scenarios including managing data-intensive workloads, supporting AI and unstructured data, supporting games and privacy-preserving applications, creating more opportunities for paid transactions, and returning data storage to its "distributed" essence.
Third, Filecoin positions itself as a key player in the growing decentralized artificial intelligence space.
Filecoin’s decentralized storage and computing capabilities provide strong support for AI model training, data storage, and sharing, and promote data-driven research and experiments. Researchers in the AI field can more easily access and analyze large-scale data sets, thereby accelerating the development of new algorithms and models.
In addition, Filecoin supports decentralized computing, which can distribute the training of AI models on multiple nodes, improve training speed and model performance, and reduce training costs and time.
From the perspective of investors, the past speculative tactics of following narratives and chasing rising and falling prices have become obsolete. In-depth analysis based on fundamentals is the correct and long-term investment strategy.
In the crypto world of broken narratives, investors need to have a comprehensive understanding of everything from macro industry trends to micro project competitiveness, filter out market noise, and use rational judgment and a long-term perspective to capture steady value-added opportunities in the crypto track that is moving from virtual to real.
Value Activation--RWA
In 2024, the asset tokenization trend led by RWA is accelerating.
At present, countries and regions including the United States, Europe, Singapore, Switzerland and Hong Kong have begun to explore different forms of asset value innovation based on RWA technology.
Among them, Project Guardian, led by the Monetary Authority of Singapore, focuses on creating an industry framework for asset tokenization, formulating policy guidelines and standards, and developing a strong and sustainable digital asset ecosystem with practical applications. It has also attracted traditional financial institutions such as the German Central Bank and ANZ Bank to join in exploring ways to enhance the liquidity and efficiency of financial markets through RWA.
Hong Kong also officially launched the "Ensemble" sandbox program on August 28, with the aim of promoting interbank settlement through experimental tokenized currencies, focusing on tokenized asset transactions, and studying and testing asset tokenization use cases, such as green bonds, electric vehicle charging stations, and treasury management.
In addition, JPMorgan Chase issues and manages tokenized assets through the Onyx platform; Societe Generale issues tokenized securities on Ethereum.
With the establishment of relevant regulatory policies in various countries, the entry of traditional financial institutions, and breakthroughs in encryption technology, the four major RWA sectors of stablecoins, government bonds, private credit and commodities have all achieved certain results.
● Stablecoin: Europe passed the MiCA Act, which clarified the issuance requirements and compliance standards for stablecoins; the US Stablecoin Act further standardized reserve disclosure and transparency; Hong Kong launched a stablecoin sandbox program.
● Treasury bonds: USYC has a market value of US$1 billion, accounting for more than 40% of the market share; MakerDAO also announced that it will invest US$1 billion to tokenize U.S. Treasury bonds.
● Private credit: According to RWA.xyz data, the total value of active loans in the RWA private credit market has reached US$9.53 billion, with a total loan value of US$16.2 billion and an average annualized interest rate of approximately 9.91%.
● Commodities: The total market value of the gold token market reached US$1.05 billion, and the total number of gold token holders exceeded 58,610.
In 2025, relying on the following characteristics of RWA, it can bring accelerated changes to the traditional financial system:
● Activate diversified investment strategies: RWA allows partial ownership of assets and taps into new sources of income, lowering the threshold for investment and providing opportunities for small investors to enter;
● Improve asset liquidity: RWA utilizes the decentralized nature of the blockchain to simplify the transaction process and can promote the rapid completion of asset transactions in a more transparent, secure and compliant manner.
● Reduce transaction and credit risks: RWA uses distributed ledgers and automated smart contracts to ensure that assets can circulate autonomously while reducing the risk of fraud. Investors can also avoid uncontrollable risks of assets by tracing detailed information on basic assets.
In addition to understanding the development process of RWA in 2024, its liquidity issue needs to be considered. Since the asset itself has a relatively clear value, the price fluctuation of RWA will be relatively small, and it is difficult to form a large-scale transaction volume in the secondary market.
Therefore, how to create an RWA use case that provides liquidity becomes the key to further development.
Here are a few directions for reference, and we welcome your discussion.
● RWA asset portfolio, which packages different types of tokenized assets according to a certain risk-return ratio, is similar to the high-quality real estate portfolio in first-tier cities.
● RWA income is stratified, and RWA assets with relatively stable income but higher overall value are divided into different levels of assets (such as A, B, and C). Among them, Class A assets enjoy priority in income distribution and have relatively low risks, while Class C assets have high risks but high potential returns.
Keyword 3 #0805
On August 5, 2024, Black Monday broke out, the global financial market experienced a collapse, and the crypto world was wailing.
Bitcoin once fell to $49,000, with a daily price drop of more than 15%. Ethereum fell below the key support level of $2,100, with a daily drop of more than 26%. Altcoins were even more miserable. The total network liquidation amounted to $788 million in 24 hours. The lending liquidation volume on DeFi exceeded $320 million, setting a new high for the year at that time.
There are four main reasons for this Black Monday:
1. The non-farm payrolls data released by the United States on August 2 was significantly lower than expected, and the employment data for May and June were revised downward. The unemployment rate in July rose to over 4.2%, triggering the SUM rule, and the alarm bell for the risk of economic recession was sounded. Most investors' confidence in future economic growth was frustrated, and risky assets were sold off.
2. The Bank of Japan has undergone major policy changes and has begun to adopt aggressive interest rate hikes and quantitative tightening policies. The short-term negative interest rate has been raised to 0.25%, and the monthly asset purchase scale has been reduced, resulting in a rapid appreciation of the yen and a large amount of funds flowing back to yen assets. Affected by this yen arbitrage transaction, the U.S. stock market has suffered a shock, and the crypto market has also been swept up by this torrent of capital reflux, and the currency price has been under pressure to fall. 3. After the blockchain created a new block on August 1, the difficulty of Bitcoin mining soared by more than 10%, and continued to increase, causing the cost of miners to rise. Many miners can only sell Bitcoin in order to survive. In addition, there are reports that the U.S. government may sell the 2 billion Bitcoins seized, causing a large number of investors to panic and sell their assets.
4. The frequent actions of the U.S. Securities and Exchange Commission (SEC) have put all parties in the industry under tremendous pressure. When the platform is hit, investors' panic about regulatory uncertainty spreads, and they begin to redeem assets in large quantities, market liquidity tightens, and currency prices fall.
Among them, the liquidation of ETH by market maker Jump Crypto was one of the main reasons for Ethereum's fall to a low of 2100. According to on-chain data, the cumulative value of ETH sold by Jump Crypto exceeded US$370 million, and the main reason behind this was likely to be evasion due to the impact of the US$4.47 billion settlement in the Terra case.
However, the impact of the 8.5 crash was not all bad. The macroeconomic undercurrents encountered internal and external troubles in the crypto market, and the crypto industry ushered in a cruel but necessary reshuffle in this crash.
Many inferior projects have withdrawn from the market due to lack of practical application value or the purpose of making money. When the tide recedes, the naked swimmers are exposed. However, high-quality projects with real technical strength and committed to solving practical problems have gradually emerged. With solid technical foundation, they have won the trust of users and investors. Not only has the number of users increased against the trend, but the price of project tokens has also doubled when the market recovers.
In 2025, more and more resources will be gathered towards these high-quality projects, driving the crypto market from wild growth to intensive cultivation, laying a solid foundation for long-term and healthy ecological development.
Keyword 4#PeriodicLaw
The Bitcoin halving cycle has always been the “wealth code” in the minds of investors.
● The first halving: The price of Bitcoin soared to as high as $1,100, an increase of nearly 100 times, ushering in the first bull market of Bitcoin.
● The second halving: The price of Bitcoin soared from US$650 and broke through the US$20,000 mark at the end of 2017.
● The third halving: The price of Bitcoin was more than US$8,600 on the day of the halving, and reached a historical peak of US$69,000 in November 2021.
In 2024, Bitcoin ushered in its fourth halving, but the impact of cyclical laws showed signs of weakening and the attention it received was slightly cold.
From a supply perspective, it is not difficult to understand. During the first halving, the reduction in Bitcoin production accounted for 15% of the circulation at the time. As the circulation increased, the impact of the next halving dropped to one-third of the original. By the time of the last halving in 2140, the impact will be minimal.
From the perspective of market feedback, affected by factors such as maturity, macroeconomics, and mining ecology, investor sentiment as a whole has become more cautious.
Part.1
Market maturity: The rise of many powerful public chains such as Solana and BNB Chain, various innovative encryption projects and diversified financial products have enriched investors' choices, and funds are no longer concentrated in Bitcoin as in the past.
A large amount of funds have been diverted to emerging projects and other mainstream currencies, which makes the supply shock brought about by Bitcoin halving far less effective than before in leveraging the overall market supply and demand balance, and the momentum for price increases has been greatly weakened.
Part.2
Macroeconomics: The global economic recovery is weak, US economic data is volatile, and although inflation has declined, it is still at a high level. The Federal Reserve has entered a wait-and-see period after its hawkish rate hike, and interest rates remain at a high level, causing funds to flow back to traditional financial markets and reducing the attractiveness of risky assets.
On June 12, news that the Federal Reserve expected only one rate cut in 2024 caused Bitcoin’s market dominance to fall 5.3% in a week (it has remained between 44% and 53% over the past year).
Part.3
Miner ecology: Bitcoin rewards have been halved. With unstable transaction fee income and rising mining difficulty, many miners are in a profit dilemma. Many small mining farms have shut down and left the market, further affecting the supply and price stability of Bitcoin.
In addition, excessive expectations in the crypto market have also overdrawn the positive effects of Bitcoin halving to a certain extent.
Since the past few halving cycles have formed a fixed mindset for investors, the price of Bitcoin started to rise early before the halving in 2024, digesting the halving expectations in advance. The significant positive news of the approval of the Bitcoin ETF has attracted a large amount of funds to flow in in advance, and the price of Bitcoin has soared from around US$41,000 at the beginning of the year to more than US$63,000 before the halving. By the time of the halving, the market benefits have been exhausted.
Without new driving force, it will be difficult for prices to break through again.
But the Bitcoin cycle is no longer overheated, which may actually mean that it has entered a new stage of development.
Affected by this factor, practitioners in the crypto industry, whether miners, developers or trading platforms, need to actively adjust their operating strategies to adapt to the new situation of declining Bitcoin dominance and market diversification. This has then promoted the survival demands of the entire crypto market industry chain to actively innovate and seek change.
In 2025, the crypto market will inevitably focus more on developing integration with traditional finance to tap new business growth points. Bitcoin will also enter the critical cycle node of 400 to 480 days. Whether Bitcoin can reach a new high by then is still worth paying attention to.
Keyword 5 #watershed
In 2024, many major changes took place in the crypto market, marking several important turning points in the history of the crypto world.
1. (21st Century Financial Innovation and Technology Act) A watershed moment in the US crypto market’s compliance journey
On May 22, the U.S. House of Representatives passed the 21st Century Financial Innovation and Technology Act (FIT21) by a vote of 279 to 136. The bill establishes a regulatory framework for digital assets, and once implemented, it is likely to become a milestone bill in the crypto world.
From the several core points of the bill, we can get a glimpse of the industry's ideal new encryption situation.
1. Defined as a commodity: The bill proposes to determine whether cryptocurrencies are sufficiently decentralized through conditions such as investment contracts, usage scenarios, degree of decentralization, and technical characteristics, thereby determining whether digital assets can be classified as commodities.
2. Clarified the division of regulatory responsibilities: The bill clearly divides the payment scope of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).
3. Investor protection: The bill requires project developers to fully disclose key information such as project operating status and ownership structure.
4. Clean up the trading environment: Exchanges, brokers, etc. should publicly disclose trading data in real time, strictly manage user funds, and adopt measures such as isolated storage.
The key breakthrough of this bill is that it standardizes the regulatory framework for digital assets and provides guidance for their compliance. The crypto world is expected to bid farewell to the high pressure of SEC enforcement supervision and officially usher in a new development situation.
2. Hong Kong’s new encryption policy exploration: a watershed moment in the global encryption landscape
In addition, Hong Kong, located in the Asian market, also ushered in its own new wave of encryption in 2024.
● At the end of April, Hong Kong took the lead in approving Bitcoin and Ethereum spot ETFs. This was the first time that such products were launched in the Asian market, marking Hong Kong as the highland of crypto regulation in Asia. In addition, it will continue to lead the innovation of cryptocurrency policies in the last few months of 2024, injecting surging momentum into the crypto ecology in the Asia-Pacific region.
● On July 18, the Hong Kong Monetary Authority announced the first batch of companies participating in the "sandbox", including JD CoinChain Technology, in order to adapt to the future stablecoin regulatory system in advance and accumulate valuable experience for industry compliance practices.
● On December 6, Hong Kong announced the Stablecoin Bill to fill the regulatory gap and build a comprehensive regulatory framework for stablecoins anchored to fiat currencies.
Comparing the development ecology and current status of the encryption markets in Hong Kong and the United States, Hong Kong is expected to change the United States' position as a global encryption center.
In terms of regulation, Hong Kong is in the process of building a regulatory framework related to cryptocurrencies, adhering to the principle of creating development space for compliant virtual asset activities; the United States' cryptocurrency regulation is relatively decentralized and complex, wavering between strict risk control and encouragement of innovation, and cross-departmental supervision, which to a certain extent inhibits the scale and coordinated development of the crypto market. Many pending potential benefits have not yet formed actual effects, which is not conducive to the stable development and predictability of the crypto world.
In terms of market activity, although the overall trading volume of the Hong Kong market is not as high as that of the United States, the overall development speed is relatively rapid. The Bitcoin and Ethereum ETFs launched in Hong Kong rely on professional fund management to track the price trend of the underlying assets, with relatively mild fluctuations, strict regulatory protection, and guaranteed asset security.
In terms of future prospects, Hong Kong, with its unique geographical advantages, can easily radiate to major global economies, attract capital, technology and talent from Europe, the United States, Asia and even around the world, expand the depth and breadth of applications such as crypto asset securitization and cross-border payments, and achieve optimal allocation of resources; the United States will continue to lead the forefront of crypto innovation with its profound technical foundation and huge market capacity. Only by implementing clear regulatory policies can it continue to consolidate its position as a global crypto center.
3. Exploration of listing coins on centralized exchanges: a watershed in value issuance
On May 20, Binance took the lead in adjusting its coin listing strategy and released a public recruitment plan for coin listing projects, directly addressing the market drawbacks brought about by the mainstream market gameplay of low circulation and high FDV. This is undoubtedly a key watershed in the transformation of cryptocurrency exchanges from price issuance to value issuance.
According to Coingecko data, among the top 300 cryptocurrencies in the market, 21.3% have low circulation. Many new projects choose to enter the market with very few tokens in circulation, while carrying extremely high fully diluted valuations (FDV). Behind this gameplay is the interest-driven intention of the project party to try to create scarcity.
In the early stage, investors were attracted to rush to buy the tokens, and the price of the tokens was quickly driven up, using a small amount of circulating chips to leverage huge market value growth. Some project teams and early investors held a large number of unlocked tokens, waiting for the right time to unlock and cash them out. However, this planted many hidden dangers in the subsequent market, and ordinary investors often became the receivers without knowing it.
For the project itself, excessive pursuit of low circulation and high FDV is like drinking poison to quench thirst. Once the market trust collapses, it is extremely difficult to repair. A healthy project requires a stable flow of funds, a solid foundation of trust, and continuous product innovation. This is also complementary to the development of the regulatory environment.
Keyword 6 #Perspective
Let me first tell you a real situation. Argentina has long been mired in high inflation, with an unbalanced economic structure and a high fiscal deficit. Its legal currency, the peso, has become one of the fastest depreciating currencies in the world. In 2024, Argentina's inflation rate continued to soar to 200%, and the purchasing power of the peso shrank sharply. In this predicament, people are looking for ways to preserve their assets. Mainstream cryptocurrencies such as Bitcoin and Ethereum have become popular among the public because of their relative scarcity and independence from Argentina's poor economic system.
According to data from local trading platforms, in the first half of 2024, Argentines' purchases of Bitcoin increased by nearly 150% year-on-year. It is hard to imagine that a country's legal currency system is facing collapse, and crypto assets have taken up the banner of responding to inflation and currency depreciation.
This gives us a new perspective on the ups and downs of the crypto world.
“The rise in asset prices is actually the depreciation of fiat currency.”
When people realize that fiat currency is depreciating and the money in their hands is becoming less and less valuable, they will start to seek other assets that can preserve or even increase value to store wealth. Therefore, when the purchasing power of fiat currency declines, more funds will flow into the cryptocurrency field, pushing up its price. From this logic, the rise in cryptocurrency prices may just reflect the transfer of people's trust in fiat currency and the increased demand for new ways of storing value in the context of the depreciation of fiat currency.
In the world of crypto, the truth behind price fluctuations is often more complicated than what meets the eye.
Meme Supercycle
In 2024, we are experiencing a meme super cycle.
From Doge to Shiba, from Moo to PUNT, their extremely high return on investment has won the favor of the market. Although there are still various so-called zoo meme coins and celebrity meme coins aimed at making quick money, the mainstream culture and consensus effect behind them are also being accepted and adopted by more and more mainstream people.
What is the logic behind the Meme super cycle?
First, just like the principle that if a village wants to be rich, it must first build roads. If the crypto world wants to obtain more funds and integrate into more application scenarios, it must first attract enough users. The role of Meme is to help decentralized products quickly enter the market.
For example,
● Topicality drives the market: Meme quickly sparks a lot of discussion on social media and other channels due to its unique, interesting and easy-to-spread concept, which can quickly gain high exposure for product selling points or stories.
● Get the first chance by being innovative with concepts: Meme can quickly carry new trends and hot spots in the crypto world, bring products to market as soon as possible, and seize the opportunity, rather than missing the best time window after lengthy preparations.
● Low threshold to expand the audience: With relatively simple and easy-to-understand settings, many non-professional ordinary investors and users can easily participate. Especially when the target is an emerging field, it can effectively reduce the user's cognitive cost.
● Active ecology stabilizes popularity: Meme has created a unique community active ecology, which can encourage users to participate in various aspects of product marketing, feedback, etc., and use the power of users to help products take root and expand in the market faster.
The most important point is that Meme has a lot of experience in the topic of wealth creation, and coupled with the general Fomo sentiment in the market, it is bound to attract enough people's attention.
Second, value coins are not worthy of their name. There are many projects in the crypto market that are built with innovative concepts but have no actual application scenarios or weak user demand. These projects generally rely on incentive mechanisms and have problems such as unfairness and insider trading. The so-called solution to demand is just a gimmick to cut leeks, and the exaggerated wealth effect cannot withstand any scrutiny.
Just like the Argentine people who are looking for ways to preserve their assets by investing in cryptocurrencies, investors in the crypto world may still define value projects as projects that can make people money, but the three fairnesses must be achieved both openly and secretly. However, this often takes a long time to eliminate and adjust, and only after the great waves can the real value coins emerge.
Therefore, instead of being obsessed with so-called value coins and touting the application scenario ecosystem, it is more direct to use Meme. And value coins that do not make money are just like the peso that people have abandoned.
Third, PUMP.FUN has effectively solved the Meme distribution problem. According to Dune data, PUMP.FUN has deployed nearly 5 million Memecoins since its launch, with 300,000 active users per day and 170,000 new addresses per day.
The explosion of Crypto+AI
Crypto+AI is the key solution for the advanced development of the crypto market.
From the perspective of market performance, according to the data from the Dexu AI platform, in December 2024 alone, the AIagent sector rose by more than 72.2% in 30 days, of which AI16Z rose by 295% and PHALA rose by 209%. In addition, the total market value of AI projects exceeded US$23 billion, ranking fifth in the crypto world (the top four are public chains, CEX, Meme and DeFi).
From the perspective of technical adaptability, the three elements of AI development include data, algorithms and computing power. With the continuous development of AI big models, the AI competition is intensifying, and the requirements for computing power of big models are increasing day by day.
According to estimates provided by OpenAI, the computing power required to train large models will double every 3.5 months. As the actual application scenarios become more and more extensive, the demand for computing power in AI development will further increase. In the crypto world, with the rise of decentralized computing power, especially those based on DePIN, it is easier to deal with this problem. Relying on idle resource contributions and token incentive mechanisms, it provides low-cost computing power required for AI development.
AI's intelligent algorithms and efficient computing power can also solve difficult problems such as risk assessment and market analysis in Crypto transactions, and improve transaction efficiency and security.
AI Agent can monitor market trends in real time, make independent decisions on buying and selling opportunities based on preset investment strategies, and flexibly allocate funds among various crypto assets, stocks, and funds. This greatly expands the use scenarios and value-added space of assets, allowing investors' assets to be operated intelligently and efficiently.
In addition, the most critical perspective is that AI agents are the best carriers of cryptocurrency incentive models.
As one of the important factors for the stable, healthy and sustainable development of the blockchain system, the incentive model plays an indispensable role from technical maintenance to ecological construction. To achieve the vision of widespread application, lowering the operating threshold is a key point that must be solved for ordinary users.
As AI agents become increasingly mature, their highly automated execution, such as interaction capabilities, data processing capabilities, learning optimization capabilities, intelligent anti-fraud capabilities, and customization capabilities, can serve as an important means of developing the crypto world, especially maintaining the on-chain ecosystem.
On the user side, the introduction of AI technology can lower the operational threshold for user-specific behavioral responses in the application scenarios of the cryptocurrency incentive model. On the task publishing side, the intelligent agent can quickly confirm the conditions that meet the incentive conditions and issue corresponding cryptocurrency rewards according to the established rules. The efficiency of its automated execution far exceeds that of manual operation, which can ensure the smooth and rapid progress of the incentive process, and through learning, adaptively adjust the parameters of the incentive model and the application of rules to ensure the long-term fairness and rationality of the crypto world ecosystem.
Conclusion:
In 2024, the crypto world has come to an end. Perhaps "rational enthusiasm" cannot replace your summary of this year's crypto journey. But in this year, every event or node we have experienced will become a key factor in the final form of the crypto world.
In 2025, the pace of technological innovation will not stop, and the regulatory framework and standards will become clearer. With the support of norms, innovation, and integration, the boundaries of the crypto world will continue to expand in 2025, creating more unique and valuable business scenarios.
Finally, I wish everyone will be rich or wealthy in 2025.