Article Reposted from: Zen
Author: Zen, PANews
As the New Year approaches, the crypto industry has reached a new development node. In the recently concluded 2024, the market experienced recovery, innovation, and adjustments, with leading projects continuously consolidating their positions and emerging sectors quietly rising, laying the foundation for the future. Throughout the fluctuations of this year, VCs have acted as a barometer for industry development, witnessing market changes and shaping the industry's direction through the intersection of capital, community, and technology.
Standing at the starting point of 2025, PANews invited more than a dozen top VCs to share their observations and thoughts on the crypto industry. They reflected on the highlights of the past year, analyzed current market opportunities and challenges, and made predictions about future development trends. In this rapidly changing field, which projects and sectors are becoming the focus of VCs? Let’s step into the VCs' perspective and explore the 'yesterday, today, and tomorrow' of the crypto industry.
The most impressive project of 2024
Over the past year, the crypto industry has welcomed a new growth wave driven by both market recovery and technological innovation. From infrastructure upgrades to breakthroughs in emerging sectors, countless projects have emerged this year, showcasing strong vitality and innovative potential. Some of these projects have not only attracted substantial attention but have also left a profound mark both within and outside the industry due to their unique technological paths or business models.
James Wo, founder and CEO of DFG (Digital Finance Group), pointed out that Hyperliquid initially started as a high-performance perpetual contract decentralized exchange (perp DEX), attracting a large number of users while maintaining trading execution speed and liquidity. Furthermore, the tokens launched by Hyperliquid have no VC backing or listing on centralized exchanges (CEX), making it one of the most successful airdrops in crypto history. 'The platform is expanding its products and launching its own HyperEVM ecosystem, which includes many native decentralized applications (dApps) to enhance the utility of its spot ecosystem. The platform earns substantial fees through on-chain liquidation and market-making, gradually eating into the market share of top DEXs and CEXs.'
Chris, co-founder of Web3Port, also highly praised Hyperliquid, expressing his admiration for its market share, community airdrop, and distribution mechanism, as well as its wealth effect. Additionally, he mentioned Pump.fun—this year's most successful meme coin launch platform. Compared to existing platforms in the market, Pump.fun successfully elevated the concept of a 'meme launch platform' to a top narrative and ignited a craze in the meme market. Chris stated that the insight from Pump.fun is that Web3 projects can achieve success by building products that truly possess practicality, high user experience, and market fit.
Ryan Rodenbaugh, CEO and co-founder of Wallfacer Labs (vaults.fyi), expressed excitement about the revival of mature lending protocols in the DeFi space, such as AAVE and Compound, as well as the emergence of high-quality newcomers like Morpho, Euler, and Ajna. Although DeFi has not garnered as much attention in the current cycle as before, the quiet successes of these protocols are still very much worth following and tracking.
Among the answers provided by many VCs, Pudgy Penguin is one of the most frequently mentioned projects. Joanna, founder and CEO of Jsquare Group, praised Pudgy Penguin, believing it revitalized the entire NFT sector by its own efforts. 'As a first-round investor and a holder of Pudgy NFTs, I felt the powerful energy that Luca, as a representative of the new generation of entrepreneurs, has unleashed through the integration of Web2 and Web3, which also strengthened my belief in one of the first principles: Invest in the next generation.'
"Ethena has performed brilliantly in the DeFi space with its USDE stablecoin, profiting from establishing long and short positions on centralized exchanges (CEX) at 1x leverage and high funding rates." Dinghan, a partner at Jsquare, noted that Ethena's collaboration with the BlackRock BUIDL fund ensures that even when the funding rate is negative, USDE can maintain stable returns, further solidifying its long-term viability.
What will the market trend of Bitcoin look like?
Bitcoin exhibited remarkable growth momentum in 2024. According to CoinGecko data, as of December 31, 2024, Bitcoin's price has increased by 119.1%. This surge is mainly attributed to the institutional adoption of spot ETFs, the halving event in April, and the market's optimistic sentiment after the U.S. elections. Looking ahead to 2025, Chris, co-founder of Web3Port, believes the Bitcoin bull market is likely to continue, with a breakthrough of $200,000 being a high-probability event. He stated that as the market matures, the supply-demand relationship of Bitcoin will further strengthen, and Bitcoin priced below $50,000 may become a thing of the past in future bull-bear cycles.
Regarding the upper limit Bitcoin can reach next year, Allen, a research analyst at Ryze Labs, holds a similar view. He mainly uses technical indicators Pi Cycle and 2Y MA Multiplier to gauge peaks. He stated that historically, the times when these two indicators resonated were December 5, 2013, December 16, 2017, and the most recent appearance of the Pi Cycle peak signal on April 12, 2021. According to historical data, these indicators have high reference value. Allen pointed out that based on the estimates from the 2Y MA Multiplier, the peak for Bitcoin may be around $200,000. Both signals are available as ready-made indicators on TradingView, allowing for alerts to be set for peak determination and reduction decisions.
"If we predict with a cautious perspective, I believe Bitcoin's next peak may reach between $120,000 and $150,000, after which it will oscillate between $100,000 and $150,000." Evan Lu, an investment manager at Waterdrip Capital, stated that based on Trump's comments regarding establishing a Bitcoin strategic reserve, assuming gold's market value remains unchanged, as long as Bitcoin's market value does not surpass that of gold, Bitcoin can be viewed as a growth asset, potentially pushing its price to $600,000 per coin, but this process may take 5 to 10 years.
Evan noted that during the last halving cycle (in May 2020), Bitcoin experienced a slow rise, reaching its first peak in April 2021, climbing from approximately $9,000 to $65,000. During the period from April to July, Bitcoin's price saw a significant correction due to the impact of the '519 Incident.' However, the market then welcomed a second wave of increases, eventually reaching the highest point of the last cycle. If the price at the halving day of this cycle is used as a benchmark, this may mark the beginning of a new round of increases. It is expected that Bitcoin may experience slight declines or sideways consolidation between the end of 2024 and the first quarter of 2025, before entering a second wave of upward trends, at which point prices may reach between $120,000 and $150,000.
"Unlike in the past, the dynamics of this market cycle will be profoundly influenced by multiple factors, of which the most crucial include the external liquidity brought by Bitcoin spot ETFs and the continuous capital inflow driven by future Bitcoin reserve policies." Evan believes this means that from now until the peak next year, the Bitcoin market may not experience significant corrections but will instead maintain a trend of gradual upward movement toward higher price levels.
In the discussion about Bitcoin, Nemo, investment director at Web3.com Ventures, quoted comments from Michael Saylor, co-founder of MicroStrategy: 'Spend 1,000 hours studying, and you will become a Bitcoin extremist. You will realize that this is not just a technology but a moral justice. Bitcoin brings freedom, economic, and property rights to 8 billion people and provides 4 million companies globally the opportunity to invest in non-toxic assets.'
Will the meme and 'VC token' battle continue, and what is the remedy to solve the dilemma?
The series of controversies surrounding 'VC tokens' has been an unavoidable topic over the past year. Will Wang, partner at Generative Ventures, proposed a novel angle and perspective on this, stating that once the scale of primary market VC funds exceeds $30 million to $50 million, it becomes challenging to deliver excess returns to LPs. Will Wang believes that only funds that are sufficiently nimble can compel VCs to delve into early-stage investments, genuinely supporting entrepreneurs in need, thus nurturing genuine 'myths.' In contrast, large-scale VC funds often fall into the trap of expanding management scale, participating in later rounds, and releasing market-criticized 'VC tokens.' This practice is actually an old problem of Web2 VCs, which has also plagued Web3 VCs in recent years.
"I believe this situation will gradually be corrected. Whether in technology or financial innovation, there will always be phases of non-consensus, and that is precisely when VCs should step in. The market will ultimately reward those VCs who dare to act during periods of non-consensus," Will Wang added.
What is the essence of the meme versus VC token battle? Chris, co-founder of Web3Port, pointed out that it ultimately boils down to the competition for market liquidity and existing funds. In an environment with limited new funds, VC tokens, due to their low circulation and high FDV characteristics, coupled with the constant emergence of new VC token projects, make it difficult for market funds to sustain, significantly reducing retail investors' willingness to take the bait. The advantage of meme coins lies in their full circulation and fair distribution mechanism, which resonates with market investors' psychology and has become a 'new weapon' for retail investors to counter institutional advantages.
However, the PVP (player versus player) attribute of meme coins is essentially unsustainable, as most meme coins, apart from a few top meme projects, struggle to possess long-term value support. Chris stated that in looking at the overall landscape of the crypto market, apart from BTC and ETH, and a very few DeFi infrastructure projects with stable income sources, most other projects’ tokens are PVP; market participants compete against each other, sharing the same gains and losses. Regarding the existing dilemmas of VC tokens, he believes that there is currently no good solution in the short term. In the context of tight market liquidity and the increasing advantages of institutional investment, resolving VC token issues will require going through a complete bull-bear cycle to allow the market to naturally clear and rebuild trust and fairness.
"Issuing tokens is not the end, but the true starting point of a project's operation." Evan Lu, an investment manager at Waterdrip Capital, believes that project teams should not operate under the idea that 'financing equals profit and issuing tokens equals delivery.' Instead, they need to seriously consider whether they can truly realize application scenarios, whether they can have more stable cash flow income, and whether the project will still maintain active users and a real community post-token issuance.
Jiawei, the main person in charge of IOSG Ventures, admitted that 'VC token projects' need to better consider Token Market Fit, whether there is a necessity for the token to be launched, what its use is, and what kind of tokens the community will pay for, allowing a broader community to participate and diversifying the chips to strengthen interest binding.
Which ecosystems, sectors, and projects may shine and become the industry's rising stars?
As the crypto market rises, new rounds of innovation narratives in AI, DeSci, etc., are driving the industry towards a new development stage. After experiencing the baptism of market cycles, leading ecosystems continue to solidify their competitive edges, while emerging sectors and projects are quietly rising, accumulating strength for future explosions. Looking ahead to the coming year, which ecosystems, sectors, and projects are likely to stand out and become the 'rising stars' of the industry? Many institutions have provided unique insights.
Will Wang, partner at Generative Ventures, believes many people have a limited understanding of RWA (Real World Asset). 'We believe that RWA is essentially one thing: letting the blockchain account for mainstream global financial assets.' He noted that currently, the penetration rate of this 'on-chain accounting' is still less than 0.1%. Even a mere one-order-of-magnitude increase in penetration could spawn multiple secondary assets similar to ONDO and USUAL.
Jiawei, the main person in charge of IOSG Ventures, stated that re-staking is a major narrative for 2024 that has not yet been reflected in token prices. With the gradual launch of AVS, it may peak in 2025; in addition, ZK projects (like RiscZero and hardware-accelerated Ingonyama) will also gradually demonstrate their market potential.
"AI Agents are expected to become the rising stars of the crypto industry." Allen, a research analyst at Ryze Labs, stated that AI Agents possess the ability to process vast amounts of market data and can make precise trading decisions in real-time, with response speeds far surpassing those of traditional human traders. In the DeFi space, AI Agents can optimize lending rates and liquidity pool pricing mechanisms, significantly enhancing the efficiency of fund utilization. Furthermore, they open up new possibilities for the intelligent management of crypto assets, redefining the boundaries of asset management.
In this topic, the PayFi sector has been mentioned repeatedly by several institutions and is undoubtedly a focal point of market attention. With the popularity of cryptocurrencies, ecosystems capable of achieving seamless, low-cost payments are entering a rapid development phase. Jsquare partner Dinghan predicts that projects bridging traditional finance and cryptocurrencies (such as Layer 2 solutions and stablecoin issuers) will receive widespread attention in the future. Payment protocols that can deeply integrate with mainstream services and facilitate convenient cryptocurrency-to-fiat conversions will become key forces driving the integration of cryptocurrencies into daily life.
The integration of AI and blockchain is also seen as an important development direction for the future. Dinghan noted that with the rapid rise of decentralized AI infrastructure and AI agents, this field is entering a new growth cycle. Projects aimed at building decentralized AI networks or AI-driven applications are on the verge of launch and are expected to become new highlights in the industry. 'Blockchain provides a trustworthy foundational layer for AI interactions and transactions, enhancing data transparency and security while opening new avenues for the widespread deployment of autonomous AI applications, further accelerating innovation in this field.'
Can the often-discussed topic of 'mass adoption' finally break through? Who will hold the Holy Grail?
"In different fields of the industry, we are already seeing some instances of 'mass adoption.'" James Wo, founder and CEO of DFG, stated that vertical fields like DePIN are attracting Web2 users and providing value to their ecosystems through additional resources. 'For example, Helium connects existing Web2 telecom giants through 5G networks, while Render provides low-cost GPU services to support gaming, rendering, and AI.' James believes that the next field driving larger-scale adoption may be payments. Infrastructure that can provide efficient cryptocurrency payment and fiat conversion solutions for physical stores will drive a new wave of users, and as retail investors begin to invest in and hold crypto assets, this trend will accelerate further.
Zeke, investment research manager at YBB Capital, believes that based on recent industry discussions, the payments sector is likely to become the first track for blockchain 'Mass Adoption.' Stablecoins have already demonstrated their capacity to surpass the efficiency of traditional banking in non-dollar countries, and for residents of third-world countries, they also offer various utilities, including protection against local currency inflation, virtual service subscriptions, and financial investments. Once a compliant framework is established, the potential of this sector is equivalent to the trillion-dollar traditional payment system of Web2. Enormous demand will also spawn various startup projects, from upstream stablecoin issuers to downstream payment services, leading to a true flourishing of innovation. The first large-scale application era of blockchain is likely to begin here.
Joanna, founder and CEO of Jsquare Group, expressed an optimistic attitude toward the progress of 'mass adoption' in the coming year. She stated that mass adoption involves both bringing in money (institutional/retail) and bringing in users (mainly retail). Traditional institutions are likely to enter the market driven by policy factors, while on the retail side, from the perspective of ecological positioning and sector selection, the Solana ecosystem has a leading advantage. At the same time, Joanna has high hopes for Pudgy Penguins in her investment portfolio, looking forward to breakthroughs in the future and believing that Luca can set a benchmark image for the new generation of entrepreneurs.
Ryan Rodenbaugh, CEO and co-founder of Wallfacer Labs (vaults.fyi), stated that the breakthrough will be driven by a new front-end user experience, making it easier for less experienced users to start using DeFi. Additionally, products with existing distribution channels (such as wallets) will provide seamless interactions for users through embedded DeFi experiences.
What stage of the bull market are we in, and how long will it last?
"Currently, we may be in the mid-stage of the bull market, and regarding when it will end, we need to consider the significance of Bitcoin ETFs passing." Zeke, investment research manager at YBB Capital, stated that ETFs place Bitcoin under a centralized regulatory framework, making trading legal and fully supervised, which also means that broader financial derivatives will emerge. As the number of legitimate participants increases, this will directly reduce price volatility in the market. Therefore, in the future, it will be challenging to see a possibility of a market halving or significant downturn in the short term, and with the cyclical impact of Bitcoin halving weakening, the market will transition from the previous sharp bear-bull cycles to a long-term slow bull.
James Wo, founder and CEO of DFG (Digital Finance Group), also commented on the long-term direction of the market. Currently, we may be in the 'optimistic phase' of the market cycle, where those who previously doubted crypto are now starting to purchase and hold some crypto assets, while more and more institutions and governments show interest in the crypto industry. The Trump administration's return to power will also promote a more friendly regulatory environment for crypto, and the proposal for Bitcoin strategic reserves will undoubtedly further enhance market interest and confidence in Bitcoin and the entire crypto industry.
"Predicting the end of a market cycle seems somewhat counterintuitive." James added that if we expect a market crash like in 2022, this scenario is unlikely to occur since the crypto environment has improved and evolved. Many institutions have begun to follow Microstrategy's example of accumulating Bitcoin in large quantities, so it is unlikely we will see an 'end' to the market cycle with an 80% drop. There may be adjustments in the future, but it is unlikely to return to the levels seen during the bear market.
Nemo, investment director at Web3.com Ventures, believes that in the short term, Bitcoin has at least completed half of the bull market process. He stated that from an optimistic and faith-based perspective, Bitcoin will not let anyone down. The essence of Bitcoin is to fight inflation and safeguard wealth.
How should retail investors seize opportunities in a bull market?
Chris, co-founder of Web3Port, suggests that retail investors should focus on high-certainty sectors, with an emphasis on BTC, meme coins, and AI narrative sectors, while being cautious about investing in older altcoins that lack new narrative support. Furthermore, one should learn to go with the flow, understand market trends, and keep up with hotspots and focal points of attention. 'The cycle is the core of the market; timely layout when the cycle comes, and timely exit before the cycle fades.'
Allen, a research analyst at Ryze Labs, stated that bull markets are actually the main reason most people lose money. 'Investors may earn unexpected profits in the early stages, but begin to use borrowed funds and leverage in the mid-term, ultimately during a rapid correction, all unrealized gains turn into unrealized losses, and they may even be forced to cut losses.' Allen believes that to avoid this situation, the best strategy is to prepare a fund that would not affect one's current life even if completely lost, and at the right time withdraw costs to ensure that the funds remaining in the market are all profits. The most taboo practice is to continuously add principal and invest repeatedly, and when the principal is insufficient, to then use leverage. This operation seems to quickly increase profits but is actually extremely risky; once the market fluctuates sharply, the consequences are often disastrous.
Zeke, investment research manager at YBB Capital, also pointed out the potential risks of the bull market: 'The market changes in 2025 will be more complex than in previous years; overall investment strategies need to be more robust than before 2024. The higher the market rises, the riskier it actually becomes; no one can accurately judge the market direction, and we should have more reverence for market changes in 2025.' Zeke stated that investment trading is a practice; the crypto market is continuously evolving towards greater maturity and professionalism. Investors should first learn inwardly before learning outwardly, maintaining a stable and strong core is particularly important, and always prioritize risk.
Dinghan, a partner at Jsquare, advises retail investors to prioritize risk management. 'Although cryptocurrencies have significant return potential, their volatility remains a key issue,' he added. For those seeking passive investment, blue-chip assets like Bitcoin and Ethereum are generally safer choices. For more actively participating investors, safety is paramount—using hardware wallets and trusted security tools. It is crucial to focus on high-quality, sustainable projects rather than chasing short-term trends. In any market, identifying assets with long-term excellent performance, instead of holding underperforming assets, is essential.
Recommended reading: (The 2024 'Cultivation Guide' for Seasoned Traders: How to Capture Opportunities from Volatility and Safeguard Profits)
