Author: Kyle, crypto researcher
Compiled by: Felix, PANews
Since the current bull market cycle began in 2024, the cycle so far has been: January 10 BTC ETF launch → until Bitcoin's historical high, triggering altcoin season, entering a volatile Q2/Q3 2024, BTC continues to break through $50,000 and $60,000, currently hovering around $90,000.
Notably, altcoin season began when BTC peaked, with the first round being BTC's advance towards $69,000, but failing to break through properly; the next round aims for $100,000.
The next altcoin season is likely to occur when Bitcoin stabilizes at $100,000, hoped to happen in Q1 2025. However, the story of Q2/Q3 2024 may replay in the upcoming months. Here are all the potential scenarios:
Scenario 1: BTC + altcoins generally rise. A continuous rise in 2025, followed by another altcoin season as BTC continues to rise, and all tokens perform well, repeating the situation of the past two months, everything is rising (30-40% chance).
Strategy: Buy the dip in well-performing altcoins.
Scenario 2: BTC rises, altcoins rise very little; the 2024 story repeats, fluctuating up and down in the coming months, but more bullish than in 2024 (due to BTC rising); thus, choose tokens that perform well (50-60% chance).
Strategy: Buy the dip in selected altcoins. Avoid high-profile tracks and find the next 'get-rich-quick token'.
Scenario 3: BTC rises, altcoins generally decline (20-30% chance).
Strategy: Sell all altcoins. Reduce altcoin investments; if the altcoins held do not rise for a long time, one may have to sell everything.
Scenario 4: BTC declines, altcoins generally decline. Everything has peaked (10-20% chance).
Due to favorable macro conditions, the new BTC ATH breakthrough may not take as long as it did in 2024. During this hellish summer, ETFs have just launched, and TradFi is still struggling to sell the BTC narrative to customers. Most importantly, the general public does not believe in the significance of Bitcoin.
Now that Trump has won the election, discussions about strategic Bitcoin reserves are underway. Although the likelihood of establishing a strategic Bitcoin reserve is low, the perception of Bitcoin has changed.
The narrative is important — in fact, the new regime we are in brings new attention to the digital asset space, and now that the next U.S. president talks about Bitcoin so frequently, it makes it much easier to persuade people to buy Bitcoin.
This regime change is extremely important. Therefore, BTC will continue to maintain a tailwind in 2025. The situation is similar for altcoins, but with some differences.
Total3 (total market cap trend of all altcoins) reached a historical high in Q1 2024, then peaked in Q4 2024. It follows a similar pattern (the scenarios above, scenario 1 and scenario 2, are not much different).
The key is positioning and timing. While optimistic about 2025, it's unclear how long it will take. Although the rise in 2025 may come earlier than in 2024, altcoins will still see significant declines during periods without catalysts.
As long as the cycle has not ended, whether Bitcoin or altcoins, stay bullish. 2025 will not see the same situation as the summer of 2024, although there may be periods like now (just a stable period), but prices will still remain at relatively good levels.
On-chain situations are different; when the tide goes out, on-chain can easily see a 70% decline. It is expected that altcoins have not peaked at this time, as it is unclear how BTC could continue to rise while altcoins 'die', nor does it seem BTC will peak here.
Conclusion:
BTC rises, with gains exceeding 2024.
Altcoins are on an upward trend, although there will be declines, but not as severe as in 2024.
Risk
Cycle Top
We are far from the cycle top, but constant reassessments are necessary every week. The cycle top is not necessarily an 'event', but more like a range that gradually approaches over time.
Bitcoin Reserve Plan Risks
As the new presidential term begins, everyone will focus on Trump's actions and words. While there are positives for Bitcoin, if Trump completely ignores the reserve plan, it would be quite pessimistic. The more likely scenario is that the reserve plan does not happen/gets delayed by some events.
In the latter case: as long as it is favorable to Bitcoin, it is initially a bearish event, but ultimately a bullish one.
TLDR: Bullish signals = cycle continues. Bearish signals = plans must be adjusted. The cycle may continue, but the chances are lower.
Supply Risks
The summer of 2024 experienced a crazy macro environment, with the stock market hitting new highs repeatedly. However, due to large supply sharks like Gox and Grayscale GBTC repeatedly hammering the market, there has been no benefit, only drawbacks.
Supply risks can never be alleviated. There will always be someone with a large amount of Bitcoin — the UK government, Silk Road, FTX distributions, etc. This is just something you must keep a close eye on, but if all goes well, these events are good buying opportunities.
Macroeconomic Risks
A small rate cut is expected; while not overly optimistic, the fact is that as long as interest rates continue to fall, liquidity will improve. Similarly, bullish signals = cycle continues. Unless there are rate hikes/no cuts, the macro environment should be favorable for digital assets.
Bearish signals include inflation rising again, and the Federal Reserve may have to raise interest rates to curb inflation.
Token Recommendations
1. AI
We have already experienced several waves. The next wave is expected to come soon. Buying and holding will not yield good results. Goat, the token that triggered all of this, has fallen 60% from its peak and may continue to perform poorly.
Preferred: Application technology / Swarms / Gaming / Consumer-focused AI
ALCH (game development), Griffain (helps control wallet agents), Digimon, Ai16z, etc., are all preferred.
2. DeFi
DeFi will continue to be a great narrative, but it is very difficult to invest in, as few tokens can benefit from it, and even those that do may not see significant price increases.
Frankly, in terms of risk-reward, DeFi is not the preferred choice.
Preferred: AAVE / ENA / Morpho / Euler / USUAL
Second Choice: Stablecoins / Payment-related tokens
3. L1
L1 will make a comeback. It is evident that Hype is present. L1 itself is an area that the market has been ignoring — it is one of the untapped areas but holds tremendous opportunities (as evidenced by Hype growing 10 times).
Preferred: SUI / Hype
Second Choice: Abstract
4. NFT Tokens and Game Tokens
The realm of NFT tokens is worth watching. PENGU is slowly recovering, Azuki has ANIME tokens, Doodles has... whatever it is. NFTs are not expected to revive, but their tokens will return. Additionally, it is interesting to dig deep to find fun games with upcoming tokens.
Preferred: Pengu / Anime (Azuki) / Spellborne / Treeverse
Second Choice: Prime / Off the grid (if tokens launch) / Overworld
5. Other Narratives
Data Tokens: Kaito / Arkm
Meme: PEPE
DePIN: PEAQ / HNT
Ordinals
Old DeFi: CRV / CVX
2025 Predictions
DePIN will be implemented by a company in some way, perhaps through an acquisition.
Binance will lose market share as the largest exchange. Not from Hyperliquid, but from Bybit / OKX.
With new advances in VR, metaverse tokens are gaining new life.
ICOs are great again.
ETH on-chain altcoin season will not happen.
Sui reaches double digits (at least $10).
Ethereum ETF staking gets approved, leading to more yield products for staking other tokens, as well as yield aggregators.
A big-name artist uses NFTs and tokens to engage fans and provide rewards.
Bitcoin reaches $200,000.
More CEOs/founders of L1 institutions leave their original companies after seeing the Aptos Labs CEO's departure (Note: On December 20, the co-founder of Aptos Labs, Mo Shaikh, resigned from his CEO position, and co-founder Avery Ching will take over).
Base fails in competition with L1s, another L1 takes its place. Solana continues to hold.
Further Reading: 2024 Bitcoin Year-End Review: Coin Price Up 131% Not as Good as Last Year, TVL Soars 21 Times to Over $6.7 Billion
