Original author: 0xKyle
Compiled by Odaily Planet Daily (@OdailyChina)
Translator｜Azuma (@azuma_eth)
Editor’s note: This article is a market forecast and response plan for 2025 by well-known analyst and trader 0xKyle.
In the following article, 0xKyle analyzes and hypothesizes multiple possible scenarios for Bitcoin and altcoins in 2025, and discusses why active portfolio management will outperform passive portfolio management in the new year. 0xKyle also lists his favorite sectors and tracks at the end of the article, which may be helpful for the layout of the new year.
Below is the original content from 0xKyle, compiled 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 also change as the underlying scenarios change — the market is constantly evolving. This plan is based solely on my predictions for market developments 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: Given that this part mainly consists of Kyle's personal operation review, this article chooses to pass directly).
Let's get straight to the point. As usual, I will first discuss macro expectations/scenario assumptions, and then turn to thematic narratives.
Scenario assumptions
The new cycle of ‘2024 - ??’ has begun. I personally believe this cycle began 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 sets a new high, briefly triggering altcoin season;
→ Subsequently enters a period of turbulence in Q2 and Q3, with BTC hovering between $50,000 and $60,000;
→ After election day, BTC sets a new high and rises to $100,000;
→ Has not effectively broken through the $100,000 mark yet, currently hovering above $90,000.
It is worth noting that altcoin season often begins at the peak of Bitcoin, the first time was during BTC's attempt to break through $69,000 but failed; the second time was during BTC's attempt to reach $100,000.
The next round of altcoin cycles is likely to begin after BTC stabilizes above $100,000. I cannot predict the future, although I hope this will happen in the first quarter of 2025, but based on facts, we may also see a repeat of the Q2 and Q3 turbulence of 2024 in the coming months — I must be prepared for that. Therefore, here are all the scenario assumptions I have drawn.
Scenario assumption one: Bitcoin and altcoins rise together
In that case, the only theme for 2025 will be rising, and we will enter another round of altcoin season. Due to Bitcoin's continued rise, all coins will perform well, and we will repeat the market trend of the last two months of 2024, with the whole market ‘rising and rising.’
Probability: 30% - 40%;
Corresponding strategy: take advantage of the current ‘panic’ to buy and enter strong altcoins.
Scenario assumption two: Bitcoin rises, other currencies rise less
This will replay the 2024 scenario, in the coming months, we will see altcoins in turbulence, but Bitcoin will be more bullish (because only Bitcoin rises). Some altcoin sectors will also perform well.
Probability: 50% - 60%;
Corresponding strategy: still take advantage of the current 'panic' to buy, but need to enter specific sectors of altcoins, focusing on avoiding areas with high attention and searching for the next potential narrative.
Scenario assumption three: Bitcoin rises, altcoins fall
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. Although we have to endure some pullback, if altcoins do not rise, we may have to sell everything.
Scenario assumption four: Bitcoin falls, altcoins fall
Probability: 10% - 20%.
I believe several things will happen. I believe BTC's next new high will not take as long as it did in 2024 because the macro tailwinds are indeed present. During a cycle where the regulatory environment is hellish, although ETFs have been launched, TradFi still needs to work hard to sell the story of BTC to customers because the world does not believe in the importance of Bitcoin.
Now that Trump is about to take office, discussions about Bitcoin Strategic Reserve (SBR) have become heated. Market sentiment has changed, and I will not speculate on the possibility of establishing a strategic Bitcoin reserve system — I have no experience with the intersection 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, and it is now easier to persuade people to buy Bitcoin because even the president of the world's number one country frequently discusses it.
This change in the macro backdrop is very important. Therefore, I believe Bitcoin will continue to have tailwinds in 2025, while altcoins tell a similar but different story.
Total3 (Odaily Note: the total value of altcoins excluding BTC and ETH) reached a peak in Q1 2024, then reached a cyclical peak in Q4 20424. Honestly, my scenario assumption one and scenario assumption two are not much different.
The key is positioning and timing. I'm optimistic about 2025, but I don't know how long it will take for the market to arrive — although I do believe that a rising-only market will come faster than in 2024, but in the absence of catalysts, altcoins will still suffer.
Whether it's Bitcoin or other coins, as long as the cycle hasn't peaked, my plan is to remain net long. I don't think 2025 will replicate the summer scene of 2024, but I believe we will encounter periods 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 fluctuate -70%. Therefore, for the on-chain market, my goal is always to sell at the peak of attention and reinvest in leading altcoins (top 20), and then slowly begin to further deploy.
I do not believe altcoins will peak here, because I do not believe Bitcoin will continue to rise while altcoins die, nor do I believe Bitcoin will reach a cyclical peak at this position.
So my conclusion is: BTC will continue to rise, and the rise will exceed that of 2024; for altcoins, my theme remains aggressive, but it is essential to know when to switch to defense, but the defensive inclination will be lower than in 2024.
Risk
Cyclical peak risk
Predictions about the cycle peak need to be continuously self-corrected. While I don't think we are close to the cycle peak, it must be reassessed weekly. The cycle peak is not necessarily an ‘event,’ but more like a spectrum that approaches slowly over time.
SBR cashing risk
With the new president taking office, everyone will be watching his actions. Although Bitcoin is expected to benefit from regulatory tailwinds, if the president completely forgets about it, that would be quite a bearish event. Possible risks in my view include: SBR being forgotten; or more likely, SBR not happening but being advanced in some other way.
For the latter situation (changing the SBR plan), this could be an initially bearish but ultimately bullish event, as long as the plan itself supports Bitcoin.
In summary: the emergence of bullish signals means the bull market continues; the emergence of bearish signals means plans must be reassessed — the bull market may continue, but the chances will decrease.
Supply risk
In 2024, we witnessed crazy macro conditions in the summer, the stock market hit an all-time high, but the cryptocurrency market saw more declines than rises, due to the continuous selling pressure from major suppliers like Mt.Gox, the German government, and Grayscale's GBTC.
Supply risk can never be eliminated. There will always be someone holding a large amount of Bitcoin — the UK government, the dark web Silk Road, FTX holdings, or any other entity. This is something you need to keep an eye on, but in my view, if everything goes smoothly, these events will all be good buying opportunities.
Macro risks
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 the bull market will continue. Unless there are interest rate hikes or no cuts, the macro economy should be favorable for digital assets.
Themes and tokens
Now we come to the part everyone has been looking forward to. But before listing specific themes and tokens, I want to emphasize again the idea I just mentioned — ‘aggressive, but know when to switch to defense’ — active portfolio management will outperform passive portfolio management in this investment cycle.
The era of ‘buy and hold forever’ is gone. Although it rose tenfold in 2023, Solana's overall performance in 2024 is almost on par with Bitcoin; so-called leaders like TAO did not benefit from the AI boom we have seen in recent months; and for meme tokens, dogs no longer wear hats (WIF), Chill guy is no longer chill, and the hippo (MOODENG) seems to be at the end of its strength...
Nothing on this list can make you ‘buy and hold’.
In addition, I like to think about one question — who are the marginal buyers? In this market, there are basically three main marginal buyers — institutions (traditional financial players), funds (liquid funds/native cryptocurrency 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.
Theme one: AI
Yes, AI will still be a hot topic. As mentioned earlier, we have experienced several waves of AI, but if you have read my paper on AI tokens (link here), I believe the next wave is about to come.
On the macro level: hype > fundamentals > practicality;
On the micro level: Reply guy > infrastructure > application/embodiment.
Buy and hold will not yield good results. GOAT was the start of it all, but it has fallen 60% from its peak and may continue to perform poorly.
Top choices: AI focused on application technology, swarms, gaming, and consumers.
Projects like ALCH (game development), Griffain (helping to control wallets), Digimon, ai16z (the king of all AI) are top choices in my view, and there are likely many more I've missed.
Theme two: DeFi
This also goes without saying. DeFi will continue to be a great narrative, but investing in DeFi is very difficult because very few tokens will benefit from it. Even if they do benefit, they may not rise (look at the LST track).
To be honest, in terms of risk-return, this wouldn't be my first choice, but I think it will be a narrative that continues to grow into 2025.
Top choices: AAVE / ENA / Morpho / Euler / USUAL;
Secondary choices: stablecoins/payment-related tokens.
Theme three: Layer 1
I might be hated for saying this, but I believe trading opportunities in Layer 1 have returned. HYPE is undoubtedly performing well, but SUI was actually not favored by many when it was around $1, yet it rose to $2 and now $4. I think the market has been missing Layer 1 trades — it is one of the areas that no one is paying attention to, but it holds great opportunities (HYPE has already increased tenfold as proof).
Top choices: SUI/HYPE;
Secondary choice: 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 heavyweight.
Theme four: NFT tokens and game tokens
I also like this theme. I've been buying some game projects recently, and I think the NFT token sector is worth paying attention to as well. PENGU has slowly recovered, Azuki will have ANIME, and Doodles will also issue tokens... I don't think NFTs will warm up, but I think their tokens will.
Game tokens are also interesting; Off-The-Grid has shown us the possibility of making a fun game. Given how undervalued this sector is, I think we should dig deeper to find truly interesting games that are about to launch tokens.
Top choices: PENGU / ANIME (Azuki) / Spellborne / Treeverse;
Secondary choices: PRIME / Off-The-Grid (if it launches a token) / Overworld.
Theme five: other narratives
The following are on my watchlist; I'm not particularly fond of them, but they are interesting.
Data tokens: Kaito / Arkm;
meem tokens: I only like PEPE, the others... seem outdated;
DePIN: PEAQ / HNT;
Ordinals;
Old altcoins: XRP;
Old DeFi: CRV / CVX.
2025 Predictions
This is really just for fun, just some things that I think sound a bit unbelievable but not impossible.
DePIN is implemented in a serious way 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 revived;
ICOs become 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 other token staking reward products, as well as yield aggregators like we saw in 2021;
A major artist uses NFTs and tokens to track and reward his/her fan base;
Bitcoin reaches $200,000;
More Layer 1 projects have seen their CEOs/founders leave after witnessing Aptos;
Base lost in the on-chain competition, and another Layer 1 took its place. Solana maintains its position.
Conclusion
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 to ‘stay flexible and 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, people are different.’
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.
