Author: 0xKyle
Translation: Azuma, Odaily Planet Daily
Editor's note: This article is a market forecast and response plan for 2025 by well-known analyst and trader 0xKyle.
In the following text, 0xKyle analyzes multiple scenarios that may occur for Bitcoin and altcoins in 2025 and discusses why active portfolio management will outperform passive portfolio management in the new year. 0xKyle also lists sectors and tracks that he is optimistic about at the end of the article, which may help with the layout for the new year.
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 development over the next year, providing insights into my thinking for 2025, but should not be interpreted as financial advice.
Let me first review my plan for 2024 (Note: This section mainly focuses on Kyle's personal operations, so this article chooses to pass).
Let's get straight to the point. As usual, I will first discuss macro expectations / scenario assumptions, then turn to thematic narratives.
Scenario assumptions
The new cycle of '2024 - ??' has already begun. I personally believe this cycle started at the end of 2023, but if we look at this cycle more strictly, the process so far has been:
→ January 10: Bitcoin ETF launched;
→ BTC hits a new high, briefly triggering altcoin season;
→ Then enters the Q2 and Q3 volatility period, with BTC hovering between $50,000 and $60,000;
→ After election day, BTC hits a new high, rising to $100,000;
→ Has not been able to effectively break through the $100,000 mark and has been hovering above $90,000.
It is important to note that altcoin season often starts at the peak position of Bitcoin, the first time was in the process of BTC pushing towards $69,000 but failing to effectively break through; the second time was in the process of BTC pushing towards $100,000.
The next round of the altcoin cycle 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 could 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.
Assumed scenario one: Bitcoin and altcoins rise together
In that case, the rise will be the only theme in 2025, and we will enter another round of altcoin season. With Bitcoin's continued rise, all tokens will perform well, and we will repeat the market action of the last two months of 2024, with the entire market going 'up, up, up'.
Probability: 30% - 40%;
Corresponding strategy: Buy during the current 'panic', get into strong altcoins.
Assumed scenario two: Bitcoin rises, other coins rise less
This will replay the story of 2024, in the coming months we will see altcoins remain volatile, but Bitcoin will be more bullish (as only Bitcoin rises). Some altcoin sectors will also perform well.
Probability: 50% - 60%;
Corresponding strategy: Still buy during the current 'panic', but need to get into specific sectors of altcoins, focusing on avoiding areas with high attention and looking for the next potential rising narrative.
Assumed scenario three: Bitcoin rises, altcoins fall
This means that now is the top for altcoins, even though Bitcoin will continue to perform well.
Probability: 20% - 30%;
Corresponding strategy: Sell all altcoins. Although we have to endure some drawdowns, if altcoins do not rise, we may have to sell everything.
Assumed scenario four: Bitcoin falls, altcoins fall
Probability: 10% - 20%.
I believe several things will happen. I believe the next new high for BTC won't take as long as it did in 2024, due to the real macro tailwinds in the background. During this hellish cycle of regulatory environment, ETFs have been launched, but TradFi still needs to work hard to sell the story of BTC to customers, as the world still does not believe in the importance of Bitcoin.
Now that Trump is about to take office, discussions about the strategic Bitcoin reserve (SBR) are heating up. Market sentiment has changed, and I won't speculate on the possibility of establishing a strategic Bitcoin reserve system — I have no experience with the intertwining of politics and finance.
What I care about is the narrative — the fact is, this new regime about to take office has brought a lot of new attention to digital assets, and it is now much easier to persuade people to buy Bitcoin, as 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 ride the tailwinds in 2025, while altcoins are a similar but different story.
Total3 (note: the total value of altcoins excluding BTC and ETH) reached a peak in Q1 2024, then reached a cyclical peak in Q4 2024. Honestly, there isn’t much difference between my scenario assumption one and scenario assumption two.
The key lies in positioning and timing. I am 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 market will come sooner than in 2024, altcoins will still bleed significantly without catalysts.
Whether it is Bitcoin or other coins, as long as the cycle has not peaked, my plan is to always maintain a net bullish position. I do not believe that 2025 will replicate the scenes of the summer of 2024, but I believe we will encounter periods similar to now — the market will just be relatively quiet, but prices will still be well maintained.
The on-chain world is completely different. When the tide goes out, the on-chain market can easily see -70% volatility. Therefore, for the on-chain market, my goal is always to sell during high attention peaks and reinvest into top altcoins (top 20), then slowly begin further deployment.
I do not believe altcoins will peak here, as I do not think 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 increase will exceed that of 2024; for altcoins, my theme remains aggressive, but I need to know when to switch to defense, although the defensive tendency will be lower than in 2024.
Risk
Cyclical peak risk
Predictions about cycle tops require constant self-correction. Although I don't think we are close to a cycle top, it must be reassessed weekly. A cycle top is not necessarily an 'event', but more like a spectrum that gradually approaches over time.
SBR liquidation risk
With the new president taking office, everyone will be focused on his actions. Although Bitcoin is expected to experience regulatory tailwinds, it would be quite bearish if the president completely forgets about it. 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 conclusion: 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 odds decrease.
Supply risk
In 2024, we witnessed crazy macro conditions in the summer, with the stock market hitting record highs, but the cryptocurrency market fell more than it rose, 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 someone holding a large amount of Bitcoin — the UK government, the Silk Road on the dark web, FTX holdings, or any other entity. This is something you must keep an eye on, but in my view, if all goes well, these events could present good buying opportunities on dips.
Macro risk
I believe that fewer 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 interest rates are raised or not lowered, the macro economy should be favorable for digital assets.
Themes and tokens
Now we come to the part everyone has been waiting for. But before listing specific themes and tokens, I want to reiterate the idea I just mentioned — 'aggressive, but know when to switch to defense' — in this investment cycle, active portfolio management will outperform passive portfolio management.
'Buy and hold forever' is a thing of the past. Despite a tenfold increase in 2023, Solana's overall performance in 2024 was almost on par with Bitcoin; so-called leaders like TAO did not benefit from the AI craze we have seen in recent months; and for meme tokens, dogs are no longer wearing hats (WIF), Chill guy is no longer chill, and Hippo (MOODENG) seems to have reached the end of its rope...
Nothing on this list is likely to make you 'buy and hold'.
In addition, I like to ponder one question — who are the marginal buyers? In this market, there are basically three main marginal buyers — institutions (traditional financial players), funds (liquid funds / crypto-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.
Theme one: AI
Yes, AI will still be a hot topic. As mentioned earlier, we have gone through 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.
Macro level: hype > fundamentals > utility;
Micro level: Reply guy > infrastructure > applications / avatars.
'Buy and hold' will not yield good results. GOAT was the beginning of it all, but it has fallen 60% from its peak and may continue to perform poorly.
Top choice: AI focused on application technology, Swarms, gaming, and consumers.
Options like ALCH (game development), Griffain (helping to control wallets), Digimon, ai16z (the king of all AI) are, in my opinion, top choices, and there may be many more that I missed.
Theme two: DeFi
This doesn't need much explanation. DeFi will continue to be a great narrative, however, investing in DeFi is very difficult, as very few tokens actually benefit from it. Even if they do benefit, they may not rise (look at the LST track).
To be honest, in terms of risk-reward, this wouldn't be my first choice, but I believe it will be a narrative that continues to grow until 2025.
Top choices: AAVE / ENA / Morpho / Euler / USUAL;
Secondary choices: stablecoins / payment-related tokens.
Theme three: Layer 1
I may face a lot of hatred for saying this, but I believe that trading opportunities in Layer 1 are back. HYPE is undoubtedly performing excellently, but SUI was actually looked down upon by many when it was around $1, but it has now risen to $2, and then to $4. I believe the market has been missing Layer 1 trades — it is one of the areas that no one is paying attention to, but it harbors huge opportunities (HYPE has already risen tenfold as proof).
Top choices: SUI/HYPE;
Secondary choices: Abstract.
I don't know how much I like Monad and Berachain. However, I am very much looking forward to Abstract; I think it could be a bombshell.
Theme four: NFT tokens and game tokens
I also really like this theme. I have recently been buying some gaming projects, and I think the NFT token space is also worth paying attention to. PENGU has slowly rebounded, Azuki will have ANIME, and Doodles will also issue a token... I don't think NFTs will warm up, but I believe their tokens will.
Game tokens are also interesting; Off-The-Grid has shown us the possibility of creating a fun game. Given how undervalued this sector is, I believe we should dig deep to find those genuinely interesting games with upcoming tokens.
Top choices: PENGU / ANIME (Azuki) / Spellborne / Treeverse;
Secondary choices: PRIME / Off-The-Grid (if they issue a token) / Overworld.
Theme five: Other narratives
The following are all on my watch list; I don't particularly like them, but they are interesting.
Data tokens: Kaito / Arkm;
meme tokens: I only like PEPE, the others... seem outdated;
DePIN: PEAQ / HNT;
Ordinals;
Old altcoins: XRP;
Old DeFi: CRV / CVX.
Predictions for 2025
This is really just for fun, just some things 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 advances 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 staking rewards are approved to be included in ETFs, leading to more staking yield products for other tokens, 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 1s see their CEO/founder leave after seeing Aptos;
Base loses in the on-chain race, another Layer 1 takes its place. Solana maintains its position.
Conclusion
The above content roughly summarizes my expectations for 2025. I expect the real situation will differ significantly from my predictions, just as it did with my plans 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 the trades are different, and so are the people.'
Good luck, and we will meet on the other side. If you make life-changing profits in the process, remember to use them to change your life.
