Original title: Bitcoin Suisse OUTLOOK 2025
Original article by Dominic Weibel, Denis Oevermann, Wolfgang Vitale, Matteo Sansonetti, Bitcoin Suisse
Original translation: Wu said blockchain
Founded in 2013 and headquartered in Zug, Switzerland, Bitcoin Suisse is one of the earliest crypto financial service providers in Europe. The company offers a comprehensive range of services, including cryptocurrency trading, storage (such as providing secure wallet solutions) and custody services.
Preface
1. The macroeconomic environment will ease fundamentally and support a soft landing.
2. Bitcoin (BTC) will become a strategic reserve asset for the United States, with other sovereign nations following suit.
3. Bitcoin's price will surpass $180,000, nearing historical highs.
4. Bitcoin's volatility will be lower than that of major tech stocks, indicating its gradual maturation into an institutional-grade asset.
5. Financial giants will launch institutional-grade Rollups on Ethereum.
6. Ethereum staking ETFs will cause market-adjusted capital flows to exceed Bitcoin.
7. Bitcoin's dominance will peak before the end of the year.
8. Ethereum's monetary policy will become its anchor point, accelerating its journey towards 'currency' attributes.
9. The altcoin season will peak in the first half of 2025, with total market capitalization expected to grow fivefold.
10. Solana will consolidate its market position as a top general-purpose smart contract platform.
11. Wealth effects will drive the NFT craze in the later stages of the cycle.
The U.S. elections have triggered what may be the largest paradigm shift in the history of digital assets. This marks a dramatic change in the regulatory environment, as the world's largest economy shifts from strict, restrictive regulation to institutional embrace. This can be seen as a dramatic reversal—from the 'Choke Action 2.0' crackdown on banking services to discussions about establishing a national strategic Bitcoin reserve, signaling a fundamental adjustment by the government regarding its stance on digital assets, which goes far beyond Bitcoin ETFs or BlackRock's tentative forays into crypto assets.
Crypto Political Action Committees (Crypto PACs) have invested over $130 million in elections, achieving bipartisan victories and shaping the most crypto-friendly Congress in history. We believe that the upcoming era will resemble the 'late 90s internet boom' in the cryptocurrency space. At that time, a loose regulatory environment and friendly policy framework unleashed a wave of innovation. However, like all political commitments, words are cheap, and we will closely monitor whether the new government truly fulfills its promises.
Against the backdrop of ETF records being broken and unprecedented institutional entry, traditional financial giants are not just dabbling in the crypto space, but are fully immersed. However, the landscape of development far exceeds traditional finance, with emerging sectors such as DePIN, DeSci, and DeAI no longer just narratives but solutions addressing real challenges. Polymarket has crossed the chasm, and advancements in on-chain privacy technology and progress in institutional-level DeFi provide more exciting reasons for the next wave of crypto adoption.
Transforming the above content into more actionable substance, (2025 outlook) predictions attempt to cover the breadth of the crypto market, encompassing improved macroeconomic conditions and liquidity, which are crucial for maintaining the current crypto cycle, as well as Bitcoin's anticipated journey to reach new historical highs. Further key themes include the rise of Bitcoin as a strategic reserve asset, increased institutional adoption of Ethereum through staking mechanisms, and the revival of altcoins and NFTs.
There are many aspects worth exploring in detail. Before delving into a detailed analysis, I would like to express my deepest gratitude to Denis Oevermann, Wolfgang Vitale, and Matteo Sansonetti, whose outstanding research made this report possible.
To our esteemed readers and friends: As we conclude another extraordinary year in the cryptocurrency space, we thank you for your continued trust and attention to our research. While the holidays are a great time to rest, we also encourage you to keep an eye on market trends: all signs indicate that 2025 will be even more exciting.
— — Dominic Weibel / Research Director
Elected candidates in the U.S. supporting cryptocurrency.
1. Macroeconomic conditions will fundamentally ease, supporting a soft landing.
The U.S. yield curve has been inverted for over 24 months, becoming one of the longest periods on record. Although the spread between 2-year and 10-year Treasury yields (2y 10y) has recently normalized, the yield curve between 3-month and 10-year Treasury yields (3m 10y) remains significantly inverted, indicating that market imbalances continue. Bitcoin (BTC) has shown significant sensitivity to these changes; for example, in August 2024, when the 2y 10y curve temporarily normalized, Bitcoin briefly plummeted by $9,000 (-15%). As the short end of the yield curve gradually normalizes, volatility is expected to persist, potentially creating short-term buying opportunities. However, downside risks appear limited due to bullish market sentiment and stabilizing economic conditions, provided that major recession risks can be avoided.
Based on historical patterns and the duration of the 2y 10y inversion, the 3m 10y curve could normalize before the end of the year, with the Federal Reserve's FOMC meeting on December 18 serving as a potential catalyst. This normalization trend aligns with improving financial conditions, as indicated by the decline of the National Financial Conditions Index (NFCI), which has returned from a tight state in 2023 to 'normal' levels. The reduced use of emergency liquidity tools (such as the Bank Term Funding Program - BTFP) further indicates that conditions are easing. Meanwhile, global net liquidity shows signs of gradual improvement, which is a positive signal for market stability, although the current growth levels remain significantly below the peaks of 2021. Ongoing liquidity growth is vital for maintaining the upward momentum in the crypto market, especially as the bull market cycle unfolds in its latter half.
So far, liquidity dynamics have primarily been driven by fiscal measures, while monetary liquidity has lagged. However, post-election, a policy transformation has emerged, with macroeconomic policies shifting from demand-side stimulus to supply-side economic strategies. The new policies focus on deregulation, targeted tax cuts, and lowering corporate financing costs to promote long-term productivity and employment growth. This strategic pivot is expected to ease inflationary pressures while creating a more stable environment for economic growth. Additionally, increasing U.S. oil production to stabilize reserves and energy costs may strengthen deflationary trends and benefit energy-dependent industries, indirectly supporting broader markets. This will further facilitate easing monetary conditions and interest rates.
The evolving macroeconomic backdrop highlights the transition towards a more sustainable growth model, as supply-side measures are replacing the top-down demand-driven strategies of recent years. This strategic shift, coupled with improved liquidity and stable financial conditions, positions the crypto market favorably for sustained upward movement. Bitcoin and other major crypto assets are expected to benefit from these favorable conditions, and improvements in macro conditions may drive stronger performance, releasing significant growth opportunities within the current bull market cycle.
Global net liquidity is improving but remains significantly below the peaks of 2021.
Impact of yield differentials and normalization of the yield curve.
Global net liquidity and global M2 money supply
Global net liquidity: This refers to the total of asset purchases and balance sheet expansions by major central banks worldwide, thus serving as the main driver of liquidity available in financial markets. Contractions in global net liquidity often synchronize with downturns in financial markets, while expansions in liquidity drive trends in overall economic growth and rising asset prices.
2. Bitcoin will become a strategic reserve asset for the United States, with other sovereign countries following suit.
Bitcoin is at a critical stage of being integrated into the core of global reserve strategies. Amid increasing fiscal uncertainty, geopolitical divisions, and shifts in monetary order, we predict Bitcoin will emerge as one of the core assets of national reserves. This trend will change how nations hedge risks and achieve economic sovereignty, strengthening financial resilience through diversified public fund allocation. Record levels of gold purchases by central banks and the increasing experimental attempts of sovereign nations with Bitcoin further underscore the rising importance of reserve asset diversification.
With the impending Trump administration, we are observing a growing momentum for the U.S. to adopt Bitcoin as a strategic reserve asset. Senator Lummis proposed the (Bitcoin Act), suggesting the purchase of 1 million BTC, marking a significant milestone that could make the U.S. the largest national holder of Bitcoin, representing about 5% of the network's supply. This share, when valued in dollars, is comparable to the U.S. share of global gold reserves. The U.S. government currently holds 200,000 BTC through enforcement actions, which may serve as a starting point for a broader reserve strategy and provide precedent support for operations.
Not only is there momentum at the federal level, but state governments are also gradually catching up. For example, Florida and Pennsylvania are actively preparing to directly purchase Bitcoin for their treasury departments, while Michigan and Wisconsin have opted for a more cautious approach through Bitcoin-related ETFs and trust funds. Additionally, as indicators of adoption in both public and private sectors continue to rise, corporations are adding substantial amounts of Bitcoin to their balance sheets, further underscoring Bitcoin's increasingly important role in financial management.
From a global perspective, Bitcoin's influence as a reserve asset is increasingly evident. Our assessment shows that Bitcoin has surpassed the pound to become the fifth largest currency globally, while also ranking as the seventh largest asset in the world. These milestones are significant. From a geopolitical perspective, Bitcoin's neutral nature is increasingly favored, as evidenced by Russia and China recently recognizing Bitcoin as property.
As a hedge against potential instability of the dollar and a force supporting its dominance, Bitcoin is being viewed as a remedy for current financial challenges. Since 2000, the purchasing power of major fiat currencies has dropped by over 70%, reinforcing the demand for a 'hard monetary anchor'. Additionally, Bitcoin provides a key option to address the rising challenges of sovereign debt. The U.S. federal debt has now reached a record $36 trillion and is expected to grow to $153 trillion by 2054; Bitcoin's compound annual growth rate (CAGR) could serve as a powerful tool for governments to offset the impacts of debt growth.
Bitcoin's status as a reserve asset may not only enhance the fiscal resilience of the United States but also counteract efforts by adversarial nations to de-dollarize. Legislative interest and bipartisan support, particularly in the context of evolving monetary conditions, suggest that Bitcoin may one day stand alongside gold as one of the core pillars of strategic reserves.
The impact of Bitcoin achieving reserve asset status is difficult to quantify but could trigger profound shifts in the global monetary landscape. Just as gold prices soared in the decade following President Nixon's cancellation of the Bretton Woods system in 1971, Bitcoin may experience similar monetary repricing as it transitions from a controversial fringe asset to a reserve asset adopted by nations. The status of a reserve asset could lead to a snowball effect, with sovereign nations racing to accumulate holdings, fundamentally altering Bitcoin's market dynamics and potentially breaking traditional four-year cycle patterns in the coming years. The key variables are the timing and implementation strategy, rather than the certainty of the developmental direction.
History of global reserve assets
Bitcoin supply distribution
‘Bitcoin can help solidify the dollar's position as the global reserve currency while serving as a reserve asset to significantly reduce national debt.’
— — Senator Cynthia Lummis
3. Bitcoin's price will surpass $180,000, nearing historical highs.
As we enter 2025, we continue to observe developments in Bitcoin market dynamics, consistent with our cyclical peak predictions first published in November 2023. Based on Bitcoin Suisse's dynamic cycle risk and dynamic on-chain cycle risk models, as well as comprehensive growth forecasts, Bitcoin is expected to reach a cyclical peak valuation of $180,000 to $200,000 in 2025, creating a new historical high.
At the beginning of 2025, Bitcoin prices entered a phase of heightened risk, accompanied by higher dynamic cycle risk. However, from a cyclical perspective, the model does not indicate that this is an ideal profit-taking time. Since the beginning of this year, Bitcoin prices have consolidated in the range of $50,000 to $60,000, followed by a significant surge nearing $100,000. Meanwhile, risk indicators suggest that the current price environment is more stable compared to the beginning of the year.
Earlier this year, Bitcoin reached a nominal historical high of about $73,000 (the inflation-adjusted price remains over 5% lower than the historical high of $67,000 in 2021). While on-chain risks remain elevated, they have not reached levels warranting profit-taking. Notably, long-term holders (LTHs) have exhibited some selling pressure, but this pressure has been offset by institutional investors, particularly the demand from Bitcoin ETFs. Since their launch, these ETFs have absorbed Bitcoin at a rate several times the daily mining output.
Bitcoin currently accounts for only 0.2% of global financial assets, far below traditional asset classes like real estate, bonds, and gold. However, as institutional adoption increases—especially with significant measures possibly forthcoming from countries like the United States—Bitcoin's trajectory could undergo significant changes, disrupting traditional markets and accelerating its exponential growth. In the context of a total global asset value of $910 trillion, even if Bitcoin commands a 5% to 10% share of these assets, under unchanged conditions and ignoring the significant growth of total global assets over time, Bitcoin's price could increase 25 to 50 times, reaching $2.5 million to $5 million per coin.
Although this scenario is already quite significant, in the long-term outlook, it may just be a transitional phase. For example, Michael Saylor predicts that by 2045, the price of Bitcoin will reach about 13 million dollars per coin. In the short term, such adoption may trigger a 'super cycle', driving Bitcoin's valuation to break 300,000 dollars within this cycle, consistent with the upper limit predicted by the current trend line.
Bitcoin Suisse's dynamic cycle risk indicator and dynamic on-chain cycle risk indicator.
• Price color points:
Mapped using Bitcoin Suisse's dynamic cycle risk indicator, which assesses the relative risk level of Bitcoin price levels.
• Bottom oscillators:
Constructed based on Bitcoin's dynamic on-chain cycle risk indicator, used to analyze the relative risk levels of on-chain activity.
Bitcoin dynamic cycle risk indicator
The Bitcoin dynamic cycle risk indicator is a proprietary tool of Bitcoin Suisse used to evaluate the relative risk of Bitcoin price levels by analyzing key factors such as momentum, trend strength, and inter-cryptocurrency cycle dynamics. This indicator can be adjusted based on market conditions, maintaining a stable risk level during moderate price increases and reducing risk during price stagnation or declines.
The Bitcoin dynamic on-chain cycle risk indicator is a proprietary tool of Bitcoin Suisse used to assess the relative risk of on-chain activity by analyzing various individually optimized and adjusted on-chain risk indicators. Each indicator is designed to reflect cross-cycle dynamics, capable of independently identifying market tops and bottoms. This indicator dynamically adapts to market conditions, lowering risk during periods of weakened activity and increasing risk during periods of heightened on-chain activity.
Comparison of Bitcoin and cryptocurrency within the global financial asset market capitalization.
4. Bitcoin's volatility will fall below that of major tech stocks, marking its maturation into an institutional-grade asset.
Since its inception, one of Bitcoin's defining features has been its significant volatility. However, this volatility has been steadily declining, and we believe new investment products may further narrow its range of fluctuation. The approval of the first spot Bitcoin ETF, along with the regulatory passage of related listed options, has attracted new capital into the Bitcoin ecosystem, enhancing infrastructure and expanding the range of investment opportunities. Since the end of summer, Bitcoin ETFs have accounted for approximately 5% to 10% of daily spot Bitcoin trading volume.
The main drivers of compressing Bitcoin's volatility include: stable demand flow from institutional adoption, price inertia from larger market capitalization, systematic portfolio rebalancing flows from asset allocators, complex strategies from hedge funds that weaken extreme volatility, and the overall maturity of the asset class.
Moreover, the options market has played a significant role in this trend. Historically, the options market has proven to reduce the volatility of underlying assets in the medium to long term through a combination effect of hedging activities and increased liquidity.
Professional investors may leverage newly created markets to amplify Bitcoin's inherent volatility. They have the potential to exacerbate volatility in the short term through strategic trading techniques.
We believe that ongoing regulatory progress surrounding Bitcoin will accelerate its position among mature asset classes. With continued compression of future volatility, we expect Bitcoin to further solidify its status as 'digital gold' and potentially reach volatility levels below those of major tech stocks.
The decline in Bitcoin's volatility may enhance its risk-adjusted performance. Over the past year, Bitcoin's high returns have been accompanied by severe volatility, negatively impacting metrics such as the Sharpe ratio. Since 2017, Bitcoin's absolute return rate has been approximately 7,000%, with a Sharpe ratio of 1.108. In contrast, Tesla's return rate during the same period is about 2,000%, with a Sharpe ratio of 1.101, while Nvidia's return rate is 5,600%, with a Sharpe ratio of 1.996.
The decline in Bitcoin's volatility brings a double-edged sword effect: as the asset matures, its stability indicators and institutional applicability improve, while also weakening the historical asymmetric return potential of this asset class.
Volatility forecast for Bitcoin and selected stocks.
The chart displays the 30-day rolling volatility of four assets: BTC (Bitcoin), Meta, Tesla, and Nvidia. To reduce noise, Gaussian smoothing was applied with a sigma value of 30. The shaded areas represent the confidence intervals of the averages of Bitcoin and selected stocks. To ensure consistency, different assets used different percentiles: the confidence interval for Bitcoin is based on the 80th percentile, while the traditional financial stock collection uses the 95th percentile. The higher predictability of traditional financial stocks is attributed to diversification effects.
5. Financial giants will launch institutional-grade Rollups on Ethereum.
Institutions are entering the crypto industry at an unprecedented pace. Stripe completed the largest acquisition in history by acquiring blockchain payment company Bridge; BlackRock quickly replaced Grayscale as the largest crypto fund by assets under management (AUM). Among 22 major global financial institutions, 13 have begun researching the tokenization market, which is expected to reach $16 trillion by 2030. The adoption rate of Bitcoin ETFs is breaking records, and Swift has also launched a pilot project for tokenized fund settlements, with numerous other significant developments in the industry.
We believe that the conditions for institutional participation have matured, and their next logical step is to deepen their integration with the Ethereum blockchain through a comprehensive Rollup implementation.
Ethereum provides indisputable high uptime, security, fairness, neutrality, and decentralization, remaining the preferred platform for institutional on-chain use cases (such as stablecoins or tokenization). For example, BlackRock launched its tokenized fund BUIDL, while Visa announced its tokenized asset platform VTAP, with plans to launch a pilot project in 2025.
From a technical structure perspective, the implementation of EIP 4844 has achieved widespread success, reducing Rollup transaction costs to less than one cent, with daily Rollup transaction volume increasing to 30 million. Base, Arbitrum, and Optimism have seen the highest capital inflows in the industry since the beginning of the year, with total value locked (TVL) growing over 60%. Furthermore, significant cross-chain interoperability improvements are expected in the future, allowing these institutions to seamlessly access Ethereum’s most capital-intensive smart contract ecosystem.
In addition to market expansion, efficiency improvements, and overall first-mover advantages, institutions can also enter entirely new revenue streams through Sequencing (including MEV and transaction fees). Based on existing Rollup benchmarks, Sequencer annual revenues could reach up to $80 million.
Proprietary Rollups can also provide institutions with complete control over latency, consensus rules, token standards, and execution environments, while supporting built-in compliance features such as mandatory KYC or AML checks, blacklist functionality, and protocol-level automated regulatory reporting.
Moreover, the tokenization and payment-related opportunities associated with ETFs can further supplement the revenue streams for Sequencers. Cross-border payments, cost savings, short settlement windows, built-in foreign exchange features achieved through DeFi integration, B2B payments, programmable payment schedules, and real-time fund management operations all strongly support Rollups. The equity and ETF packaging forms can also help institutions enter emerging markets, as 90% of the global population currently lacks access to brokerage services. Recent moves by institutional funds, such as BUIDL entering DeFi through Elixir's deUSD protocol, indicate that this trend is already quite evident.
Finally, history shows that attempts at private blockchains have failed to materialize, while Rollups on Ethereum represent a natural evolutionary path. This model creates a vertically integrated stack, allowing institutions to control both the infrastructure layer and the financial products layer built on top of it. The advantages are clear: 2025 will be the year of institutional Rollups.
Tokenization of RWAs across various industries (excluding stablecoins)
Revenue and on-chain profits of top Rollups (over the past year)
On-chain profits are measured by comparing gas fee revenue to the data and proof submission costs on Ethereum, assessing the profitability of Rollups. Profitability improvements come from high block space demand (supporting premium pricing) or operators increasing the base fee multiple.
Institutional adoption of cryptocurrencies
Current conditions are very favorable for institutional participants to take the next step by fully deploying Rollups on Ethereum, further deepening their blockchain integration.
6. ETH staking ETFs will drive market-adjusted capital inflows to surpass BTC.
Despite Bitcoin ETFs achieving a record net inflow of $32 billion and IBIT nearing $50 billion AUM (assets under management) within just 225 trading days, we anticipate that the post-election environment will lead to a structural shift in capital flow towards ETH ETFs. Although its performance has been relatively poor since the ETF launch, the fundamentals indicate that ETH is showing increasingly attractive risk-return characteristics against the backdrop of surging institutional participation. November became a turning point for capital inflows into ETH ETFs, achieving net inflows for the first time since its July launch, with a single-day inflow reaching $332.9 million, surpassing Bitcoin's $320 million. Moreover, recent capital inflows have caught up with Bitcoin when adjusted for market capitalization.
We believe that ETH's underperformance relative to its ETF approval primarily reflects institutions' initial preference for Bitcoin's mature narrative and higher recognition, while also being affected by regulatory resistance around ETH ETF staking yields. Regulatory uncertainty and opportunity costs due to the inability to receive staking rewards have significantly restricted the inflow of institutional funds. However, this gap lays the groundwork for strong rebound potential after the bottleneck is released. We expect that under the new Trump administration, ETH staking ETFs will be rapidly approved, unlocking yields of 3% to 4%. This characteristic meets the demand of institutional allocators and is particularly attractive in a declining interest rate environment. We anticipate that staking yields will significantly favor Ethereum and become a major catalyst for sustained capital inflow into ETH ETFs. Moreover, strategic acquisitions by staking service providers (such as Bitwise) further indicate that these participants are actively preparing for this outcome.
In addition to ETH staking ETFs, we expect more cryptocurrency ETFs to be approved in 2025, including SOL and XRP, which may trigger broader discussions on L1 classification as commodities. However, ETH's unique position—as a regulated, yield-generating asset with proven institutional adoption rates—may remain unchallenged. Compared to Bitcoin, ETH is currently in the early stages of the institutional adoption lifecycle. With institutional funds only rotating between the two major crypto assets, ETH's supply dynamics strongly suggest its potential for future value appreciation. Over the past 12 months, more than 70% of ETH supply has remained stagnant, while staking participation has reached historic highs.
In summary, we forecast that the next wave of institutional crypto allocations following the elections will be primarily driven by returns, leading to a reversal in capital flows. Favorable intersections of regulatory tailwinds, return potential, and supply dynamics will enable ETH ETFs to surpass BTC in market-adjusted capital inflows in 2025.
Performance since the approval of ETH ETFs.
Cumulative net inflows for ETH ETFs and daily fund flows
Market-adjusted capital flows of ETH and BTC ETFs.
7. Bitcoin's dominance will peak at the end of the year.
Bitcoin's market dominance is expected to peak at a turning point in 2025, marking a significant change in the structure of the crypto market. While Bitcoin's absolute value will continue to grow, its dominance will decline in the final stages of a bull market as capital shifts towards investing in other crypto assets (i.e., Altcoins). This pattern aligns with Bitcoin halving-driven market cycles: Bitcoin's dominance typically surges in the early stages, but as the bull market enters its final phase, Altcoins begin to dominate, leading to a decline in Bitcoin's proportion.
Ethereum (ETH) and Solana (SOL) are the key assets expected to outperform Bitcoin in this phase against BTC trading pairs. Unlike most Altcoins, even as many Altcoins' dollar valuations remain relatively stable, their ratios to Bitcoin tend to approach zero over time. In contrast, ETH and SOL's performance acts as oscillators, maintaining resilience in their relative strength against Bitcoin. This resilience reflects their increasingly important role in the broader crypto ecosystem, providing investors with more diversified growth trajectories compared to Bitcoin.
The expected decline in BTC dominance aligns with historical trends and broader macroeconomic dynamics, including liquidity cycles, the halving process, and the typical moderation of market sentiment post-halving and post-election. As liquidity improves, the investment attractiveness of high-risk assets increases, amplifying the trend of capital shifting towards Altcoins. This structural shift highlights the role of Altcoins in the later stages of the cycle, with their relative returns expected to surpass Bitcoin.
Although Bitcoin will continue to deliver strong returns, the primary gains in the later stages of the bull market are expected to come from Altcoins. This scenario reflects a gradually maturing market structure where capital is more inclined towards high-risk opportunities during times of heightened market sentiment. As Bitcoin's dominance declines, Altcoins will capture a larger market share, prompting investors to reassess portfolio strategies in the final stages of the bull market. After this phase concludes, Bitcoin's dominance is expected to rebound, laying the groundwork for the next market cycle.
Trends in Bitcoin's dominance.
Comparative periodic fluctuations of Ethereum (ETH) and Solana (SOL) against Bitcoin (BTC)
8. The anchoring of ETH's monetary policy will accelerate its monetization process.
Despite strong calls for modifying ETH's monetary policy, the issuance rate of Ethereum staking rewards will not change by 2025, nor will there be consensus to incorporate the modifications into the expected hard fork in 2026. During 2024, several Ethereum researchers questioned the sustainability of staking economics and proposed adopting a new issuance curve, setting caps on staking ratios, or mechanisms to stabilize it around target values. These proposals aim to address risks that may arise from excessively high staking ratios, including unnecessary inflation and pressure on the network. In extreme cases, ETH could be replaced by a single dominant liquid staking token (LST), leading to unacceptable impacts on Ethereum.
We believe it is crucial for ETH to maintain its role as a trusted neutral currency in global settlements, thus expressing concerns about excessively high staking ratios. However, there are opposing voices advocating for monetization objectives, arguing that any issuance adjustments may undermine its recognition as 'sound money' (especially in contrast to Bitcoin's fixed monetary policy).
Despite multiple changes to ETH's issuance policy, the most significant being the introduction of staking, the rise of competitors like Celestia and Solana in 2024 makes maintaining ETH's monetary attributes even more critical. While competitors can rapidly optimize specific areas, the process of having their new tokens accepted as currencies is significantly more challenging.
Due to the importance of this decision and the divergence in how to achieve monetization, it is expected that the Ethereum community will struggle to reach a consensus on changing the issuance policy by the end of 2025. Moreover, we believe that even if ETH staking ETFs are approved, its staking ratio will not reach the levels exhibited by the majority of PoS chains. We anticipate the staking ratio will increase at a similar pace to last year (+18%), reaching about 33% by 2025. The relatively low staking ratio and the consolidation of validators after the implementation of EIP-7251 will further diminish the urgency for policy changes.
We believe that the consolidation of ETH's monetary policy in 2025 will positively impact its valuation while differentiating it from other platforms. However, we do not rule out the possibility of adjustments in the future after achieving a broader social consensus, thus defining the 'final form' of staking economics.
Example: Proposed changes to the issuance curve and issuance yield.
The issuance yield is lower than the staking yield, as it does not include transaction fees and MEV.
Changes in ETH's total supply and staking ratio
Comparison of staking ratios of major PoS networks.
9. The altcoin season will peak in the first half of 2025, with total market capitalization expected to grow fivefold.
As the crypto market enters a critical phase in 2025, the altcoin season is approaching. Historically, this transition typically occurs in the late stages of a Bitcoin-dominated bear market when Altcoins consistently lag behind (indicated by the dark gray area in the chart). However, the upcoming market rotation will drive capital (primarily from Bitcoin) towards Altcoins, marking the beginning of a decisive and significant altcoin season.
The most explosive Altcoin seasons often coincide with the final sprint of Bitcoin bull markets, typically occurring when Bitcoin reaches its cyclical peak. This cycle seems no exception. Bitcoin's market cap is expected to approach $4 trillion, with its dominance declining, creating ideal conditions for Altcoin outperformance. Current trends suggest that the first half of 2025 will witness the most robust and significant Altcoin season of this cycle, driven by capital rotation and a high-risk appetite, particularly as Bitcoin consolidates near its peak.
Using Bitcoin and Ethereum's market cap targets as benchmarks, the potential scale of Altcoin performance becomes clear. Assuming the total crypto market cap reaches approximately $15 trillion in this cycle, Bitcoin is expected to have a market cap of $4 trillion, and Ethereum is projected to be between $1 trillion to $1.5 trillion, leaving about $10 trillion of allocation space for Altcoins. Currently, TOTA L3 (the total market cap of Altcoins excluding Bitcoin and Ethereum) stands at only $1 trillion, indicating that as the cycle matures, the overall Altcoin market may have up to ten times growth potential.
The peak of Bitcoin's market capitalization, the expansion of Ethereum, and the anticipated capital flow towards Altcoins together form the basis for a deep Altcoin season in the first half of 2025. This period will provide significant opportunities for excess returns, with some assets expected to achieve exponential growth. As market dominance shifts, actively positioning and diversifying into Altcoins will be key to capturing the full potential of this high-growth phase.
Altcoin season index: Indicating a significant increase in recent Altcoin returns.
Altcoin season index: Measures whether the top 50 crypto assets (excluding stablecoins) outperform Bitcoin over a set period. When the index value exceeds 75, it indicates entry into the altcoin season; below 25 indicates Bitcoin's dominance.
TOTA L3: The total market capitalization of all Altcoins, essentially representing the market cap of all Altcoins after excluding Bitcoin and Ethereum.
Market capitalization predictions for Bitcoin, Ethereum, and Altcoin: Pointing to several times growth in the future.
10. Solana will consolidate its market position as a top general-purpose smart contract platform.
In 2024, Solana will become a strong competitor to Ethereum in terms of real economic value (REV: transaction fees + MEV tips) and recognition from founders, investors, and users. We expect that as foundational improvements continue, Solana will maintain its advantageous position in a competitive environment in 2025.
With rapid iteration cycles, a strong core developer team, and consistency in value proposition and optimization strategies, Solana is currently in an ideal position to enhance its network effects. However, next year it will face intense competition from Ethereum and other existing platforms (such as Aptos, Sui) as well as emerging platforms (such as Monad, MegaETH). High throughput and low fees may no longer serve as significant differentiators, thus requiring essential improvements at the foundational level while 'increasing bandwidth and reducing latency'.
The most anticipated upgrade in 2025 is the maturation of Firedancer, which will make Solana a more robust multi-client network. The Firedancer codebase will operate independently of Agave, significantly reducing the risk of chain client failures, allowing validators to easily switch clients without waiting for issues to be resolved. Firedancer has been operating on the mainnet in a non-voting mode, allowing the team to collect data and test new features and optimizations.
Other foundational improvements will focus on several key areas:
• Mitigation of state growth: Addressing state growth by increasing the application of state compression technology.
• Addressing state contention: Improving state contention issues through the global adoption of a central transaction scheduler.
• Development of zk-rollups: With the recent introduction of dedicated system calls, more zk-rollups are expected to emerge.
• Improvements in token economics: Reallocating priority fees to stakers (SIMD-0123) and continuing discussions on reducing issuance.
• Enhanced scalability: Improved scalability through advancements in asynchronous execution technology and hardware capabilities.
• Enhanced censorship resistance: Strengthening censorship resistance through the implementation of a multi-parallel leader mechanism.
• Development of lightweight full node clients: Continue advancing the Mithril project to reduce hardware requirements.
Although we expect not all of these improvements will be realized by 2025, the shift from 'rapid iteration and rebuilding' to a greater focus on strategic foundational improvements by independent teams gives us confidence in Solana's sustainable success as a top general-purpose smart contract platform. This success will be reflected in Solana's continued preference as the platform of choice for DeFi and DePIN founders and its increasing appeal to institutional-grade tokenized asset issuers, which is crucial for realizing the potential of a global, permissionless efficient state machine.
Monthly actual economic value of Solana and Ethereum
11. Wealth effects will drive NFT momentum in the latter stages of this cycle.
In recent years, the NFT market has experienced a deep correction, creating a gap between market expectations and reality. We expect this trend to reverse in the latter stages of this cycle, primarily driven by wealth effects and capital rotation within the industry. While the performance of most NFT collectibles may remain subdued, we believe that top collectibles (such as CryptoPunks or Fidenzas) will establish their status as social identifiers in the crypto space and as high-end digital art, particularly in generative art. Supported by blockchain, generative art has gained an ideal platform for performance, proving the value of immutable, verifiable scarcity, and on-chain provenance of digital content.
Projects represented by Pudgy Penguins have recently gained more attention, as it is the second-ranked NFT project by market cap, buoyed by the anticipation of its PENGU ecosystem token launch. In the current culture of cryptocurrency, there is a clear trend leaning towards MemeCoin, and PENGU's meme potential may surprise the market. Additionally, as the most successful consumer brand in the crypto space, the parent company's launch of the Abstract chain may further accelerate its momentum.
The increase in trading volume in November and the recent performance of collectibles seem to indicate early signals of this trend. Magic Eden has become the first major NFT platform to complete a valuation event, while OpenSea may also be brewing a similar event. These events could enhance the stickiness and liquidity of the NFT market. Driven by these catalysts, we expect the value of related NFT collectibles to appreciate significantly. As observed in the previous cycle, NFTs usually lag in performance before the market frenzy peaks, so late-stage wealth effects may once again trigger a new wave of demand for highly scarce collectibles.
We predict that early Artblocks collectibles will naturally benefit from this momentum. These collectibles combine historically significant on-chain generative art, recognition from renowned artists, verified collector demand, and genuine scarcity. Moreover, these collectibles maintained a relatively high price floor during the bear market and are expected to benefit in the next stage of market maturation, especially those that represent key moments in the history of digital art.
With the rise of a younger generation more familiar with digital technology, this trend may be further enhanced in future cycles.
Historical performance of CryptoPunks (priced in ETH and USD).
The historical performance of Fidenzas (priced in ETH and USD)
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