Article reprinted from: Odaily Planet Daily
Original author: 0xKyle
Compiled by Odaily Planet Daily
Translator: Azuma
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.
The following is the original content from 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 plan will also change with the underlying scenarios — the market is constantly evolving. This plan is based solely on my predictions for the market's development over the next year, providing insight 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 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 hypotheses, and then turn to thematic narratives.
Scenario Hypotheses
The new cycle of '2024 - ??' has already begun. I personally believe this cycle started at the end of 2023, but if we strictly sort out this cycle, the progress so far has been:
→ January 10: Bitcoin ETF launched;
→ BTC hits a new high, briefly triggering an altcoin season;
→ Immediately entering a volatile period in Q2 and Q3, with BTC hovering between $50,000 and $60,000;
→ After the election day, BTC hits a new high, rising all the way to $100,000;
→ Has not been able to effectively break through the $100,000 barrier so far, currently hovering above $90,000.
It is worth noting that altcoin seasons often start at Bitcoin's peak positions; the first time was during BTC's attempt to hit $69,000 but failed to break through 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, although I hope this will happen in the first quarter of 2025, based on the facts, we may also see a replay of the volatile market in Q2 and Q3 of 2024 in the coming months — I must be prepared for this. Therefore, here are all the scenario hypotheses I have drawn.
Hypothetical scenario one: Bitcoin and altcoins rise together
In that case, the rise will be the only theme of 2025, and we will enter another altcoin season. Due to Bitcoin's continued rise, all coins will perform well, and we will repeat the market conditions of the last two months of 2024, with the whole market 'rising rising rising'.
Probability: 30% - 40%;
Corresponding strategy: take advantage of the current 'panic' to buy, getting into strong altcoins.
Hypothetical scenario two: Bitcoin rises, other coins rise less
This will replay the plot of 2024, in the coming months we will see altcoins remain volatile, but Bitcoin more bullish (as only Bitcoin rises). Some altcoin segments will also perform well.
Probability: 50% - 60%;
Corresponding strategy: still buy during the current 'panic', but need to get into specific altcoin sectors, focusing on avoiding highly watched areas and looking for the next narrative that might rise.
Hypothetical scenario three: Bitcoin rises, altcoins fall
This means that the current moment is the top for altcoins, even though Bitcoin will continue to perform well.
Probability: 20% - 30%;
Corresponding strategy: sell all altcoins. While we may have to endure some retracement, if altcoins do not rise, we may have to sell all.
Hypothetical scenario four: Bitcoin falls, altcoins fall
Probability: 10% - 20%.
I believe a few things will happen. I believe BTC's next new high won't take as long as in 2024 because the macro tailwinds are genuinely in place. During a cycle where the regulatory environment is hellish, ETFs have been launched, but TradFi still needs to work hard to sell the story about BTC to customers, as the whole world does not believe in Bitcoin's significance.
Now that Trump is about to take office, discussions about Bitcoin strategic reserves (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 coming in 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 largest country is frequently discussing it.
This change in macro background is very important. Therefore, I believe Bitcoin will continue to maintain tailwinds in 2025, while altcoins are a similar but different story.
Total3 (Odaily Note: Total value of altcoins excluding BTC and ETH) reached the peak of 2021 in Q1 2024 and then hit a cycle peak in Q4 20424. Honestly, my scenario hypothesis one and scenario hypothesis two are not much different.
The key is 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 rising market will come faster than in 2024, altcoins will still bleed heavily in the absence of catalysts.
Whether it is Bitcoin or other coins, as long as the cycle has not peaked, my plan is to always maintain a net long position. I do not believe 2025 will replicate the situation of summer 2024, but I think 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 see -70% fluctuations. Therefore, for the on-chain market, my goal is always to sell during periods of high attention and reinvest in top altcoins (top 20), and then gradually start deploying further.
I do not believe altcoins will peak here because I do not think 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 is still offensive, but need to know when to switch to defense, but the defensive inclination will be lower than in 2024.
Risks
Risks of cyclical peaks
Predictions about the cycle top need constant self-correction. Although I do not think we are close to the cycle top, we must reassess every week. The cycle top is not necessarily an 'event', but more like a spectrum that gradually approaches over time.
SBR redemption risks
With the new president in office, everyone will be paying attention to his actions. Although Bitcoin is expected to face regulatory tailwinds, it would be quite bearish if the president completely forgets about it. Risks that I see possibly arising include: SBR being forgotten; or more likely, SBR will not happen but will be advanced in some other way.
For the latter case (changing the SBR plan), this may initially be a bearish event but ultimately bullish as long as the plan itself supports Bitcoin.
In summary: the appearance of bullish signals means the bull market continues; the appearance of bearish signals means that the plan must be re-evaluated — the bull market may continue, but the chances will decrease.
Supply risks
In 2024, we witnessed crazy macro conditions in the summer, with the stock market reaching all-time highs, but the cryptocurrency market fell more than it rose, due to the 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, 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 will 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 decrease, liquidity will improve.
Once again, the appearance of bullish signals means that 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 have arrived at the moment everyone has been waiting for. But before listing specific themes and tokens, I want to reiterate the idea I just mentioned — 'offensive, but know when to shift 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 increased 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, now dogs don't wear hats (WIF), Chill guys are no longer chill, and hippos (MOODENG) seem to be on their last legs...
Nothing on this list likely allows you to 'buy and hold'.
Besides, I also like to ponder the 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 of these parties. 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.
Macro level: hype > fundamentals > utility;
Micro level: Reply guy > infrastructure > application/avatar.
Buying and holding will not yield good results. GOAT is the beginning of it all, but it has fallen 60% from its peak and may continue to perform poorly.
Top picks: AI centered on application technology, Swarms, gaming, and consumers.
Top picks in my view include ALCH (game development), Griffain (helping control wallets), Digimon, ai16z (the king of all AI), and I think there are many more I might have missed.
Theme two: DeFi
This does not need much explanation. DeFi will continue to be a great narrative; however, 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-reward, this would not be my first choice, but I think this will be a narrative that continues to grow into 2025.
Top picks: AAVE / ENA / Morpho / Euler / USUAL;
Secondary picks: stablecoins/payment-related tokens.
Theme three: Layer 1
I might receive hatred for saying this, but I believe trading opportunities in Layer 1 have returned. HYPE is undoubtedly performing excellently, but SUI was actually overlooked when it was around $1, yet it rose to $2 and now to $4. I think the market has been missing Layer 1 trading — it is one of the areas that no one is paying attention to, but it holds huge opportunities (HYPE has already increased tenfold as proof).
Top picks: SUI/HYPE;
Secondary picks: Abstract.
I do not know how much I like Monad and Berachain. However, I am very excited about Abstract; I think it may be a blockbuster.
Theme four: NFT tokens and gaming tokens
I also really like this theme. I have been buying some gaming projects recently, and I think the NFT token space is also worth paying attention to. PENGU has been slowly recovering, Azuki will have ANIME, and Doodles is also about to issue tokens... I do not think NFTs will warm up, but I think their tokens will.
Gaming tokens are also interesting; Off-The-Grid has shown us the possibility of creating an interesting game. Given how overlooked this sector is, I think we should dig deeper to find those truly interesting games that are about to launch tokens.
Top picks: PENGU / ANIME (Azuki) / Spellborne / Treeverse;
Secondary picks: PRIME / Off-The-Grid (if tokens are issued) / Overworld.
Theme five: Other narratives
The following are all on my watch list; I am not particularly fond of them, but they are interesting.
Data tokens: Kaito / Arkm;
meem token: I only like PEPE, the others... seem outdated;
DePIN: PEAQ / HNT;
Ordinals;
Old altcoin: XRP;
Old DeFi: CRV / CVX.
2025 Predictions
This is really just for fun, just some things I think sound a bit unbelievable but not impossible.
DePIN is implemented seriously by a serious company, possibly through an acquisition;
Binance loses market share as a top exchange, not to Hyperliquid, but to Bybit/OKX;
With new advancements in VR technology, metaverse tokens come to life;
ICOs become popular again;
Ethereum 'on-chain season' will not happen;
SUI prices reach double digits (at least $10);
Ethereum's staking rewards are approved to be included in ETFs, giving rise to more yield products for staking 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 fanbase;
Bitcoin reaches $200,000;
More Layer 1s see CEOs/founders leave after witnessing Aptos;
Base loses in the on-chain competition, replaced by another Layer 1. Solana maintains its position.
Conclusion
The above content roughly summarizes my expectations for 2025. I expect the reality will differ greatly from my predictions, just like my plans for 2024.
The best advice and insight is actually to 'stay flexible and enjoy the journey'. The market will continue to change, but that is just part of the game of life.
‘No one can execute the same transaction twice. Because the trades are different, so are the people.’
Good luck, we will meet on the other side. If you make life-changing profits in the process, remember to use it to change your life.
