Original author: 0xKyle
Translated by | Odaily Planet Daily
Translator | Azuma
Editor's note: This article is a market forecast and response plan for 2025 by renowned analyst and trader 0xKyle.
In the following text, 0xKyle analyzes multiple potential scenarios for Bitcoin and altcoins in 2025 and discusses why active portfolio management in the new year will outperform passive portfolio management. 0xKyle also lists the sectors and tracks he is optimistic about at the end of the text, which may help with the new year's layout.
The following is the original content by 0xKyle, translated by Odaily Planet Daily.
GM.
Predicting the future is difficult, but as traders and investors, we should have a plan. Like all other plans, this one will change as the underlying scenarios change — the market is constantly evolving. This plan is based solely on my predictions for the market's development over the next year; it provides insights into my thoughts for 2025, but should not be interpreted as financial advice.
Let me first review my 2024 plan (Odaily Note: Since this part mainly involves Kyle's personal operation review, this article chooses to pass).
Let’s get straight to the point. As usual, I will first discuss macro expectations/scenario assumptions, then shift to thematic narratives.
"2024 – ??" The new cycle has begun. I personally believe this cycle started at the end of 2023, but if we analyze this cycle more strictly, the process so far is:
→ On January 10, Bitcoin ETF launches;
→ BTC hits a new high, briefly triggering altcoin season;
→ Entering a period of volatility in Q2 and Q3, BTC hovers between $50,000 and $60,000;
→ After the election day, BTC hits a new high, rising all the way to $100,000;
→ Temporarily unable to effectively break through the $100,000 barrier, currently hovering above $90,000.
It is worth noting that altcoin seasons often begin at the peak of Bitcoin, the first time during BTC's attempt to break through $69,000 but failing to do so effectively; the second time was during BTC's attempt to hit $100,000.
The next round of altcoin cycles is likely to begin after BTC stabilizes above $100,000. I cannot predict the future, though I hope this will happen in Q1 2025, but based on facts, we may also see a replay of the Q2 and Q3 volatility of 2024 in the coming months — I must be prepared for this. Therefore, here are all the scenario assumptions I have drawn.
If that's the case, the rise will be the only theme in 2025, and we will enter another altcoin season. Due to Bitcoin's continued rise, all coins will perform well, and we will repeat the scenario of the last two months of 2024, with the entire market 'rising rising rising.'
Probability: 30% – 40%;
Corresponding strategy: Buy during the current 'panic', get into strong altcoins.
This will replay the plot of 2024; in the coming months, we will see altcoins remain volatile, but Bitcoin will be more bullish (because only Bitcoin is rising). Some altcoin sectors will also perform well.
Probability: 50% – 60%;
Corresponding strategy: Still take advantage of the current 'panic' to buy, but need to get into specific altcoins, focusing on avoiding highly focused areas and searching for the next potential rising narrative.
This means that the current moment is the peak for altcoins, although Bitcoin will continue to perform well.
Probability: 20% – 30%;
Corresponding strategy: Sell all altcoins. While we may have to endure some pullbacks, if altcoins do not rise, we may have to sell everything.
Probability: 10% – 20%.
I believe a few things will happen. I believe the next new high for BTC will not take as long as in 2024 because the macro tailwinds are indeed present. In a cycle where the regulatory environment is hell, the ETF has launched, but TradFi still needs to work hard to sell the story of BTC to customers, as the whole world does not believe in the significance of Bitcoin.
With Trump about to take office, discussions about Bitcoin's Strategic Reserve (SBR) are heating up. Market sentiment has changed, and I won’t speculate on the likelihood of establishing a strategic Bitcoin reserve system — I have no experience in the intertwining of politics and finance.
What I care about is the narrative — the fact is that this new regime about to take office has brought a lot of new attention to digital assets, making it easier to persuade people to buy Bitcoin since even the president of the world's largest country is frequently discussing it.
The change in this macro backdrop is very important. Therefore, I believe Bitcoin will continue to maintain tailwinds in 2025, while altcoins will be a similar but different story.
Total 3 (Odaily Note: Total value of altcoins excluding BTC and ETH) reached the 2021 high in Q1 2024, and then reached the cycle high in Q4 20424. Honestly, there isn't much difference between my scenario assumptions one and two.
The key lies in positioning and timing. I am optimistic about 2025, but I do not know how long it will take for the market to arrive — although I do believe that a bull market will come faster than in 2024, in the absence of catalysts, altcoins will still bleed heavily.
Whether it's Bitcoin or other coins, as long as the cycle hasn't peaked, my plan is to always maintain a net long position. I don't think 2025 will replicate the scene of the summer of 2024, but I believe we will encounter a period similar to now — the market is just relatively quiet, but prices are still well maintained.
The on-chain world is completely different; when the tide goes out, the on-chain market can easily experience -70% volatility. Therefore, for the on-chain market, my goal is always to sell during high attention peaks and reinvest into leading altcoins (top 20), and then slowly start further deployment.
I don't think altcoins will peak here because I don't believe Bitcoin will continue to rise while altcoins die, nor do I think Bitcoin will reach a cyclical top at this position.
So my conclusion is: BTC will continue to rise, and the increase will exceed that of 2024; for altcoins, my theme remains aggressive, but we need to know when to switch to defense, though the inclination to defend will be lower than in 2024.
Predictions about cycle tops need to be constantly self-corrected. While I don't think we are close to a cycle top, it must be reassessed weekly. The cycle top is not necessarily an 'event,' but more like a spectrum that gradually approaches over time.
With the new president taking office, everyone will pay attention to his actions. Although Bitcoin is expected to experience regulatory tailwinds, if the president completely forgets about it, that would be quite a bearish event. The risks that may arise in my view include: SBR being forgotten; or more likely, SBR will not happen but will be advanced in some other way.
For the latter scenario (changing the SBR plan), this may initially seem bearish but eventually bullish, as long as the plan itself supports Bitcoin.
In summary: The emergence of bullish signals indicates that the bull market continues; the emergence of bearish signals means that the plan must be reassessed — the bull market may continue, but the odds will decrease.
In 2024, we witnessed crazy macro conditions over the summer, the stock market hit historical highs, but the cryptocurrency market saw more declines than gains, due to continuous selling pressure from major suppliers like Mt.Gox, the German government, Grayscale GBTC, etc.
Supply risk can never be eliminated. There will always be entities holding large amounts of Bitcoin — the UK government, the darknet Silk Road, FTX's holdings, or any other entities. This is something you must keep an eye on, but in my view, if all goes well, these events could be good buying opportunities.
I believe that smaller rate cuts are still rate cuts. While this is 'less bullish,' the fact is that as long as interest rates continue to decline, liquidity will improve.
Once again, the emergence of bullish signals means that the bull market will continue. Unless interest rates are raised or not cut, the macroeconomy should be favorable to digital assets.
Now we come to the part everyone has been waiting for. But before listing specific themes and tokens, I want to emphasize again the idea I just mentioned, 'be aggressive, but know when to switch to defense' — in this investment cycle, active portfolio management will outperform passive portfolio management.
The era of 'buy and hold forever' is long gone. Even though Solana rose 10 times in 2023, its overall performance in 2024 is almost on par with Bitcoin; so-called leaders like TAO did not benefit from the AI boom we saw in recent months; and for meme tokens, even dogs no longer wear hats (WIF), Chill guy is no longer chill, and hippos (MOODENG) seem to be at the end of their rope…
Nothing on this list can get you to 'buy and hold.'
Besides that, I also like to think about a question — who are the marginal buyers? In this market, there are essentially three main marginal buyers — institutions (traditional financial players), funds (liquid funds / cryptocurrency native funds), and gamblers (contract traders, on-chain players, etc.).
A good narrative must be bought by at least one party. Let’s get straight to the point.
Yes, AI will still be a hot topic. As mentioned earlier, we have already experienced several waves of AI, but if you’ve seen my paper on AI tokens (link here), I believe the next wave is coming.
Macroeconomic level: Hype > Fundamentals > Utility;
Micro level: Reply guy > Infrastructure > Applications/Avatars.
Buying and holding will not yield good results. GOAT was the beginning of it all, but it has dropped 60% from its peak and may continue to perform poorly.
Top choices: AI centered around application technology, Swarms, games, and consumers.
Top choices in my view include ALCH (game development), Griffain (helping to control wallet agents), Digimon, ai16z (the king of all AI), and many others that I may have missed.
This needs no further explanation. DeFi will continue to be a great narrative, however, investing in DeFi is very difficult as very few tokens benefit from it. Even if they do benefit, they may not rise (just look at the LST track).
To be honest, in terms of risk-reward, this wouldn't be my first choice, but I believe this will be a narrative that continues to grow into 2025.
Top choices: AAVE / ENA / Morpho / Euler / USUAL;
Secondary choices: Stablecoins / Payment-related tokens.
I may face a lot of hatred for saying this, but I believe Layer 1 trading opportunities are back. The performance of HYPE is undoubtedly outstanding, but SUI was actually not favored by many when it was around $1, yet it rose to $2 and is now at $4. I think the market has been consistently missing out on Layer 1 trades — it's one of the overlooked areas, but it holds great opportunities (HYPE has already multiplied by 10 as proof).
Top choices: SUI/HYPE;
Secondary choices: Abstract.
I don't know how much I like Monad and Berachain. However, I am very optimistic about Abstract; I think it could be a blockbuster.
I also really like this theme. I've been buying some game projects recently, and I think the NFT token space is also worth paying attention to. PENGU has been slowly recovering, Azuki will have ANIME, Doodles is also going to issue tokens… I don't believe NFTs will warm up, but I think their tokens will.
Game tokens are also interesting; Off-The-Grid has shown us the possibility of creating an interesting game. Given that this sector is so underrated, I think we should dig deep to find those genuinely interesting games that are about to launch tokens.
Top choices: PENGU / ANIME (Azuki) / Spellborne / Treeverse;
Secondary choices: PRIME / Off-The-Grid (if issued) / Overworld.
The following are all on my watchlist; I’m not particularly fond of them, but they are interesting.
Data tokens: Kaito / Arkm;
Meme tokens: I only like PEPE; the others… look outdated;
DePIN: PEAQ / HNT;
Ordinals;
Old altcoins: XRP;
Old DeFi: CRV / CVX.
This really is just for fun, just some things that I think sound a bit unbelievable but not impossible.
DePIN is implemented seriously by a serious company, possibly through acquisition;
Binance loses market share as a top exchange, not to Hyperliquid, but to Bybit/OKX;
With new advancements in VR technology, metaverse tokens are gaining new life;
ICOs are becoming popular again;
Ethereum's 'on-chain season' will not happen;
SUI price reaches double digits (at least $10);
Ethereum's staking rewards are approved to be included in ETFs, leading to more staking reward products for other tokens, as well as yield aggregators like we saw in 2021;
A leading artist using NFTs and tokens to track and reward his/her fan base;
Bitcoin reaches $200,000;
More Layer 1s have seen their CEOs/founders leave after seeing Aptos;
Base loses in the on-chain race, another Layer 1 takes its place. Solana maintains its position.
The above content roughly summarizes my expectations for 2025. I expect the real situation to differ significantly from my predictions, just like the plans I made for 2024.
The best advice and insight is actually 'stay flexible, enjoy the journey.' The market will continue to change, but that’s just part of the game of life.
"No one can execute the same trade twice. Because trades are different, and so are people."
Good luck, and we’ll meet on the other side. If you make life-changing profits in the process, remember to use it to change your life.
