Original author: Delphi Digital
Original translation: TechFlow
In 2024, the cryptocurrency market was at a critical juncture: despite strong performance from Bitcoin (BTC), the overall market was weak until regulatory changes at the end of the year brought new hope.
The cryptocurrency story is being reframed, and 2025 will mark a new beginning that could unify the market. Here’s where things are headed.
This report provides an annual review of the market, revisits our previous forecasts, and highlights our views on developments over the next year.
Read the full article (Market Outlook 2025).
Cycle strategy proceeds as planned
At the end of 2022, we analyzed why the bottom of the bear market may have passed.
We began to express our conviction in this bull cycle 15 months ago. Last year’s report predicted that BTC would hit a new high in the fourth quarter of 2024.
At the macroeconomic level, the actual situation is consistent with our expectations.
Currently, we understand that Bitcoin halving is not the main driver of crypto market cycles, but liquidity cycles play a key role.
At the end of last year, we pointed to conditions favorable for BTC to ensure a strong first quarter performance - one of which was the surge in global liquidity we saw in Q4 2023.
We have also warned that the market could face a higher risk of a correction from the end of the first quarter to the beginning of the second quarter of 2024.
The reason is that we observe signs of weakening liquidity momentum from the world's two largest central banks.
BTC is up more than 130% so far this year — and it’s done so without much support from the Federal Reserve.
In fact, Fed liquidity has been steadily declining over the past 9-10 months.
Return of optimism
2024 is an unusual year for the crypto market. On the one hand, most major currencies have recovered to their all-time highs, and the altcoin market as a whole has also performed well.
But on crypto Twitter, many have spent much of the year arguing. While crypto Twitter often displays a touch of neurosis, the negative sentiment in 2024 stands in stark contrast to the positive price action.
What’s the reason for this contrast? First, Bitcoin’s dominance: BTC prices are up 130% year to date, reaching their highest dominance in three years.
Another reason for the negative sentiment is the divergence in market performance: some coins rose, some rose slightly, but most fell or remained unchanged.
Although Bitcoin is up over 100%, there are still some coins that have seen significant success in an overall declining market, showing differences in market performance.
The classic "road to cottage season" that many expected did not occur.
The missing ingredient
As we have mentioned in many of our reports over the past year, the cryptocurrency market faces a huge supply and demand imbalance.
In short, cryptocurrency demand is not keeping pace with overall cryptocurrency supply. But why?
Token supply is too high
Aggregators list more than 10,000 tokens, up 10-fold from around 1,500 in 2017.
Applications like pump.fun make token creation simple: over 4 million tokens have been issued since January 2024, with Solana’s Raydium issuing over 50,000 tokens.
A continuation of the meme, a shift back to fundamentals… or both?
2024 saw the rise of a combination of major cryptocurrencies and Memecoin. We explored these market dynamics in detail in our The Dog Days of Summer and Attention Is All You Need in-depth reports.
Will these market trends continue, ushering in another Memecoin-dominated year, or has the crypto market turned the corner and returned to fundamentals?
The reality is more complex, shaped by a combination of speculative enthusiasm and evolving market trends.
Solana Accelerates
In the last cycle, $SOL went from $1 to $260 in just one year, thanks to “Alt L1 trading” and its “Sam Coin” status.
While it’s still early days for the ecosystem, this attracted teams like Jito, Drift, and Helium, which ultimately became the foundation of the Solana network.
However, Solana pursued rapid growth too much. By 2022, the phoenix fell due to FTX fraud, the bear market, and doubts about the stability of the chain.
From peak to trough, SOL experienced a 96% decline.
On Christmas Day 2022, ‘Bonk’ airdropped half of its tokens to the Solana community. At the time, SOL was trading at $ 11 and market sentiment was low.
However, $BONK brought hope. A few days later, SOL bottomed out at $8, capping off a rough year.
From the ashes, Solana began its rebirth in 2023. The core team that had weathered the challenges of 2022 redoubled their efforts.
@DriftProtocol, @jito_sol, and @TensorFdn focus on serving loyal users. Solana recovers, driven by steady innovation.
Looking ahead to 2025, some questions remain unanswered:
Has the repricing of SOL been completed?
Will Memecoin lose its popularity?
Can Base grab market share?
Will Ethereum fight back?
While these concerns are valid, they miss the point. Solana’s 2025 story is based on two core beliefs that will shape its future:
Solana’s data suggests SOLETH is re-pricing. Underlying activity shows strong fundamentals, suggesting it still has room to rise relative to ETH.
Leadership and Culture: Solana’s continued innovation and thriving ecosystem place it in a unique leadership position in the crypto space.
We see 2024 as a turning point for the industry.
While we cannot predict exactly what 2025 will look like, our analysts are already planning for potential opportunities and risks.
