Original author: 0xKyle
Compiled by｜Odaily Planet Daily
Translator｜Azuma
Editor’s note: This article is a market prediction and response plan for 2025 by well-known analyst and trader 0xKyle.
In the following text, 0xKyle analyzes the multiple scenarios that may arise for Bitcoin and altcoins in 2025 and discusses why active portfolio management will outperform passive portfolio management in the new year. 0xKyle also lists the sectors and tracks 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 of 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 change as the underlying scenarios change - the market is constantly evolving. This plan is based solely on my predictions for the market developments over the next year, providing insight into my thoughts on 2025, but it should not be interpreted as financial advice.
Let me first review my 2024 plan (Odaily note: this part mainly consists of Kyle's personal operation review, this article chooses to pass).
Let's get straight to the point. As always, I will first discuss macro expectations/scenario assumptions, and 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 sort through this cycle more rigorously, the process so far is:
→ January 10, Bitcoin ETF launched;
→ BTC hits new highs, briefly triggering altcoin season;
→ Entering a turbulent period in Q2 and Q3, with BTC hovering between $50,000 - $60,000;
→ After election day, BTC hits new highs and rises to $100,000;
→ Has not been able to effectively break through the $100,000 mark temporarily, currently hovering above $90,000.
It is important to note that altcoin seasons often begin at Bitcoin's peak positions; the first time was during BTC's attempt to surge to $69,000 but failed to effectively break through; the second time was during BTC's attempt to surge to $100,000.
The next round of the altcoin cycle is likely to start after BTC stabilizes above $100,000. I cannot predict the future, although I hope this will happen in the first quarter of 2025. However, based on facts, it is also possible that we will see a repeat of the Q2 and Q3 fluctuations of 2024 in the coming months - I have to 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 rise will be the only theme of 2025, and we will also enter another round of altcoin season. Due to the continued rise of Bitcoin, all coins will perform well, and we will replicate the market conditions of the last two months of 2024, with the entire market 'rising, rising, rising.'
Possibility: 30% - 40%;
Corresponding strategy: Buy in during the current 'panic' and jump on strong altcoins.
Scenario assumption two: Bitcoin rises, other coins rise less.
This will replay the 2024 storyline, 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.
Possibility: 50% - 60%;
Corresponding strategy: Continue to buy in during the current 'panic', but focus on specific sectors of altcoins, emphasizing the need to avoid high-attention areas and look for the next potential rising 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.
Possibility: 20% - 30%;
Corresponding strategy: Sell all altcoins. Although we have to bear some pullback, if altcoins do not rise, we may have to sell everything.
Scenario assumption four: Bitcoin falls, altcoins fall.
Possibility: 10% - 20%.
I believe several things will happen. I believe BTC's next high will not take as long as in 2024, as the macro tailwinds are indeed present. During a cycle where the regulatory environment is hellish, ETFs have been launched, but TradFi still needs to work hard to sell the story of BTC to customers, as the world does not believe in the importance of Bitcoin.
Now that Trump is about to take office, discussions about Bitcoin Strategic Reserve (SBR) are heated. Market sentiment has changed, and I will not speculate on the likelihood of establishing a strategic Bitcoin reserve system - I have no experience in the intersection 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 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 context 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 its peak in the first quarter of 2024, then reached the cyclical peak in the fourth quarter of 20424. Honestly, my scenario assumption one and scenario assumption 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 come. Although I do believe that a rising market will come faster than in 2024, in the absence of catalysts, altcoins will still suffer substantial losses.
Whether it’s Bitcoin or other coins, as long as the cycle has not peaked, my plan is to maintain a net long position. I do not believe 2025 will replicate the scenes of summer 2024, but I do think we will encounter periods similar to now - the market is relatively quiet, but prices are still well maintained.
The on-chain world is completely different, and 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 peak attention periods and reinvest in leading altcoins (the top 20), and 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 think 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 offensive, but I need to know when to switch to defense, but the defensive inclination will be lower than in 2024.
Risk
Risks of cyclical peaks
Predictions about the cycle peak need to be constantly self-corrected. While I do not think we are close to the cycle peak, it is necessary to reassess every week. The cycle peak is not necessarily an 'event', but more like a spectrum that gradually approaches over time.
SBR realization risks
With the new president taking office, everyone will pay attention to his actions. Although Bitcoin is expected to see regulatory tailwinds, it would be quite bearish if the president completely forgets about it. The risks that may arise 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 summer, with the stock market hitting all-time highs, but the cryptocurrency market fell more often than it rose, due to selling pressure from large 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 need to keep an eye on, but to me, if everything goes smoothly, these events could be good opportunities to buy on dips.
Macro risk
I believe that fewer interest rate cuts are still cuts. Although this is 'less bullish', the fact is that as long as 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 cut, the macro economy should be favorable to digital assets.
Themes and Tokens
Now comes the part 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 switch to defense' - in this investment cycle, active portfolio management will outperform passive portfolio management.
The era of 'buy and hold forever' is gone. Although it surged 10 times 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 boom we have seen in recent months; and for meme tokens, now even dogs don't wear hats (WIF), Chill guy is no longer chill, and Hippo (MOODENG) seems to be at the end of its rope...
Nothing on this list can make you 'buy and hold.'
Besides that, I also 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/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 seen my paper on AI tokens (link here), I believe the next wave is about to come.
Macro level: Speculation > Fundamentals > Practicality;
Micro level: Reply guy > Infrastructure > Application/Avatar.
Buying and holding will not have good results. GOAT is the start 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, games, and consumers.
Tokens like ALCH (game development), Griffain (helping to control wallets), Digimon, ai16z (the king of all AI), in my view, are top choices, and there are probably many I missed.
Theme Two: DeFi
This goes without saying. DeFi will continue to be a great narrative; however, investing in DeFi is very difficult because 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 will not be my first choice, but I think this 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: Layer1
I may be hated by many for saying this, but I believe trading opportunities in Layer1 have returned. HYPE has undoubtedly performed excellently, 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 missing Layer1 trading - it is one of the areas that no one is paying attention to, but it holds huge opportunities (HYPE has already multiplied 10 times as proof).
Top choice: SUI/HYPE;
Secondary choice: Abstract.
I don't know how much I like Monad and Berachain. However, I am very much looking forward to Abstract, as I think it could be a blockbuster.
Theme Four: NFT Tokens and Game Tokens
I also really like this theme. I have recently been buying some game projects, and I think the NFT token space is also worth paying attention to. PENGU has slowly rebounded, Azuki will have ANIME, Doodles will also issue tokens... I do not 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 creating a fun game. Given how undervalued this sector is, I think we should dig deeper to find those truly interesting games that are about to launch tokens.
Top choices: PENGU / ANIME (Azuki) / Spellborne / Treeverse;
Secondary choices: PRIME / Off-The-Grid (if they issue tokens) / 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, others... seem outdated;
DePIN: PEAQ / HNT;
Ordinals;
Old altcoins: XRP;
Old DeFi: CRV / CVX.
2025 Predictions
This really is just for fun, just some things I think sound a bit incredible, but not impossible.
DePIN is implemented seriously by a serious company, possibly through acquisition;
Binance is losing market share as a top exchange, not to Hyperliquid, but to Bybit/OKX;
With new advancements in VR technology, metaverse tokens are revitalized;
ICOs are becoming popular again;
Ethereum's 'on-chain season' will not happen;
SUI price reaches double digits (at least $10);
Ethereum's staking yields are approved to be included in ETFs, leading to more 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 Layer1s see their CEOs/founders leave after seeing Aptos;
Base loses in the on-chain race, another Layer1 takes 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 my plans for 2024.
The best advice and insight is actually 'stay flexible, 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 trade twice. Because trades are different, and people are different.’
Good luck, and I hope to see you on the other side. If you make life-changing profits in the process, remember to use it to change your life.
