Original author: 0xKyle
Translation｜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 text, 0xKyle analyzes multiple potential scenarios for Bitcoin and altcoins in 2025, discussing why active portfolio management will outperform passive portfolio management in the new year, and listing the areas and tracks he is optimistic about, which may assist in positioning for the new year.
The following is the original content from 0xKyle, translated by Odaily Planet Daily.
Predicting the future is difficult, but as traders and investors, we should have a plan. Like all other plans, this one will also change with the underlying scenarios—markets are constantly evolving. This plan is based solely on my predictions of market developments over the next year; it provides insights into my thoughts for 2025 but should not be interpreted as financial advice.
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 begun. Personally, I believe this cycle started at the end of 2023, but if we analyze this round of cycles more strictly, the process so far has been:
→ January 10, Bitcoin ETF launched;
→ BTC hits new highs, briefly triggering altcoin season;
→ Immediately enters a period of oscillation in Q2 and Q3, with BTC hovering between $50,000 and $60,000;
→ After election day, BTC hits new highs, rising all the way to $100,000;
→ Temporarily fails to effectively break through the $100,000 mark and currently hovers above $90,000.
It is important to note that altcoin seasons often begin at bitcoin's peak positions, the first time when BTC tried to hit $69,000 but failed to break through effectively; the second time is during BTC's attempt to hit $100,000.
The next round of altcoin cycles is likely to start after BTC stabilizes above $100,000. I cannot predict the future, although I hope this will happen in Q1 2025. However, based on factual considerations, we could also see a repetition of the oscillation seen in Q2 and Q3 of 2024 in the coming months—I must be prepared for this. Therefore, here are all the scenario assumptions I have drawn.
Scenario Assumption One: Bitcoin and altcoins rise together
If that's the case, the rise will be the only theme of 2025, and we will enter another round of altcoin season. With bitcoin's continued rise, all coins will perform well, and we will replicate the market movements of the last two months of 2024, with the entire market 'rising'.
Probability: 30% – 40%;
Corresponding strategy: Take advantage of the current 'panic' to buy into strong altcoins.
Scenario Assumption Two: Bitcoin rises, other coins rise less
This will replay the scenario of 2024; in the coming months, we will see altcoins remain volatile, but bitcoin will be more bullish (because only bitcoin is rising). Some altcoin sectors will also perform well.
Probability: 50% – 60%;
Corresponding strategy: Still take advantage of the current 'panic' to buy in, but it is necessary to get into specific sectors of altcoins, focusing on avoiding areas with high attention and looking for the next potential narrative.
Scenario Assumption Three: Bitcoin rises, altcoins fall
This means that right now is the peak for altcoins, even though bitcoin will continue to perform well.
Probability: 20% – 30%;
Corresponding strategy: Sell all altcoins. While we must endure some pullbacks, if altcoins do not rise, we may have to sell all of them.
Scenario Assumption Four: Bitcoin falls, altcoins fall
Probability: 10% – 20%.
I believe several things will happen. I believe the next new high for BTC will not take as long as it did in 2024, because the macro tailwinds are genuinely present. During a cycle where the regulatory environment is considered hellish, although ETFs have been launched, TradFi still needs to work hard to sell the BTC story to customers, as the world does not believe in the importance of bitcoin.
Now that Trump is about to take office, the discussion about Bitcoin strategic reserves (SBR) is 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 interplay 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. It is now easier to persuade people to buy bitcoin because even the president of the world's largest country is frequently discussing it.
The change in this macro background is very important. Therefore, I believe Bitcoin will continue to remain favorable in 2025, while altcoins tell a similar but different story.
Total3 (Odaily note: total market cap of altcoins excluding BTC and ETH) reaches a peak not seen since 2021 in Q1 2024, then hits a cycle high in Q4 2024. Honestly, my scenario assumptions one and two are not much different.
The key lies in 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 market that only rises without falling 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 remain net long. I do not think 2025 will replicate the scenes of summer 2024, but I believe we will encounter periods similar to what we see now—a market that is relatively quiet but with prices still well maintained.
The on-chain world is completely different; when the tide goes out, the on-chain market can easily experience -70% volatility. Therefore, for the on-chain market, my goal is always to sell during peak attention periods and reinvest in top altcoins (the top 20), then slowly start further deployments.
I do not believe altcoins will peak here because I do not think Bitcoin will continue to rise simultaneously with the death of altcoins, 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 aggressive, but I need to know when to switch to defense, although the defensive inclination will be lower than in 2024.
Risk
Risk of cyclical peak
Regarding predictions of the cycle peak, constant self-correction is necessary. Although I do not 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 slowly approaches over time.
SBR redemption risk
With the new president taking office, everyone will be watching his actions. Although Bitcoin is expected to see regulatory tailwinds, if the president completely forgets about it, that will be quite a bearish event. Potential risks that I see include: SBR being forgotten; or a more likely scenario is that SBR will not happen but will be advanced in some other way.
For the latter scenario (changing the SBR plan), this could initially be seen as bearish but ultimately bullish, as long as the plan itself supports Bitcoin.
In summary: The emergence of bullish signals means that the bulls continue; the emergence of bearish signals means that the plan must be re-evaluated—bull markets may continue, but the odds will decrease.
Supply Risk
In 2024, we witnessed crazy macro conditions in summer, with the stock market hitting historical highs, but the cryptocurrency market saw more drops than rises, due to the continuous selling pressure from large supply holders 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, FTX holdings, or any other entity. This is something you must keep an eye on, but in my view, if everything goes smoothly, these events will be good buying opportunities.
Macro risk
I believe that fewer rate cuts are still rate cuts. Although this is 'not so bullish,' the fact is that as long as interest rates continue to decline, liquidity will improve.
Once again, the emergence of bullish signals means that the bull market will continue. Unless interest rates rise or do not fall, the macro economy should favor digital assets.
Themes and Tokens
Now we reach the part everyone has been waiting for. But before listing specific themes and tokens, I want to reiterate the idea I just mentioned—'be aggressive, but know when to switch to defense'— that in this investment cycle, active portfolio management will outperform passive portfolio management.
The era of 'buy and hold forever' is long gone. Although it rose tenfold in 2023, Solana's overall performance in 2024 was nearly on par with Bitcoin; so-called leaders like TAO did not benefit from the AI frenzy 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...
Anything on this list is unlikely to let you 'buy and hold.'
Besides that, I also like to think about a question—who are the marginal buyers? In this market, there are basically three main marginal buyers—institutions (traditional financial players), funds (venture funds/native crypto 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 already gone through several waves of AI, but if you have seen my paper on AI tokens (link here), I believe the next wave is coming.
Macro level: Hype > Fundamentals > Utility;
Micro level: Reply guy > Infrastructure > Applications/Avatars.
Buying and holding 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 choices: AI focused on application technology, Swarms, gaming, and consumer.
Things like ALCH (game development), Griffain (helping to control wallets), Digimon, ai16z (the king of all AI) are, in my opinion, top choices, and there might be 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 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 won't be my first choice, but I believe 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: Layer 1
I may face hatred from many people for saying this, but I believe the trading opportunities for Layer 1 are back. HYPE has undoubtedly performed well, but many people were actually not optimistic when SUI was around $1, yet it skyrocketed to $2, and now it's at $4. I think the market has been consistently missing Layer 1 trades—it's one of those areas that no one is paying attention to, but it holds huge opportunities (HYPE flipping 10 times is proof).
Top choices: 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; I think it could be a bombshell.
Theme Four: NFT Tokens and Gaming 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 is slowly recovering, Azuki will have ANIME, Doodles is also going to issue tokens... I don't think NFTs will warm up, but I do think their tokens will.
Gaming tokens are also interesting; Off-The-Grid has shown us the possibility of creating interesting games. Given how overlooked this sector is, I think we should dig deep to find truly interesting games that will launch tokens.
Top choices: PENGU / ANIME (Azuki) / Spellborne / Treeverse;
Secondary choices: PRIME / Off-The-Grid (if issuing tokens) / Overworld.
Theme Five: Other Narratives
The following are on my watchlist; I don't particularly like them, but they are interesting.
Data tokens: Kaito / Arkm;
Meme coins: I only like PEPE; the others... seem outdated;
DePIN: PEAQ / HNT
Ordinals;
Old altcoin: XRP;
Old DeFi: CRV / CVX.
2025 Forecast
This is really just for fun—just some things I think sound a little unbelievable, but not impossible.
DePIN is implemented seriously by serious companies, possibly through acquisitions;
Binance loses market share as the 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 yields are approved for inclusion 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 are seeing their CEOs/founders leave after observing Aptos;
Base loses in the on-chain competition, and another Layer 1 takes its place. Solana maintains its status.
Conclusion
The above content roughly summarizes my expectations for 2025. I anticipate that the real situation will differ significantly from my predictions, just like the plans I made for 2024.
The best advice and inspiration 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 the trades are different, people's mindsets are also different.
Good luck, and we shall meet on the other side. If you gain life-changing profits during the process, remember to use them to change your life.
(The above content is excerpted and reprinted with authorization from partner PANews; original link | Source: Odaily Planet Daily)
Statement: The article only represents the author's personal views and opinions, not the views and positions of Block, and all content and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and trades, and the author and Block will not bear any responsibility for any direct or indirect losses resulting from investors' trading.
"What will next year's coin market look like? When will the altcoin season arrive? Renowned trader 0xKyle reveals the 2025 investment strategy" was first published by (Block).
