Original author: Delphi Digital
Original translation: Deep Tide TechFlow
In 2024, the cryptocurrency market finds itself at a crucial moment: despite Bitcoin (BTC) performing strongly, the overall market remained weak until regulatory changes at year-end brought new hope.
The story of cryptocurrency is being rebuilt, and 2025 will usher in a new beginning that could unify the market. Here are the future directions.
This report provides an annual review of the market, revisiting our previous predictions and highlighting our outlook for developments in the coming year.
Read the full article (2025 market outlook).
Cycle strategy is proceeding as planned
At the end of 2022, we analyzed reasons why the bear market bottom may have already passed.
15 months ago, we began to express confidence in this bull market cycle. Last year's report predicted that BTC would hit a new high in Q4 2024.
At the macroeconomic level, the reality aligns with our expectations.
Currently, we understand that Bitcoin halving is not the main driver of the crypto market cycle, but rather liquidity cycles play a key role.
At the end of last year, we pointed out favorable conditions for BTC to ensure a strong performance in the first quarter—one of which is the surge in global liquidity we observed in Q4 2023.
We also warned that from the end of Q1 2024 to early Q2, the market may face higher risks of a correction.
The reason lies in the signs we observe of weakening liquidity momentum from the world’s two major central banks.
BTC has risen over 130% year-to-date—achieved without much support from the Fed.
In fact, the Fed's liquidity has been steadily declining over the past 9-10 months.
Return of optimism
2024 is an unusual year for the crypto market. On one hand, most major cryptocurrencies have returned to historical highs, while the altcoin market as a whole performed excellently.
But on crypto Twitter, many were in constant debate for most of the year. While crypto Twitter often shows over-sensitivity, the negative sentiment of 2024 stands in stark contrast to the positive price movements.
What is the reason for this contrast? First is Bitcoin's dominance: BTC's price has risen 130% year-to-date, reaching its highest dominance in three years.
Another reason for the negative sentiment is the divergence in market performance: some cryptocurrencies are up, some slightly up, but most are down or unchanged.
Despite Bitcoin rising over 100%, some cryptocurrencies achieved significant success in an overall declining market, showing the disparity in market performance.
The classic 'road to altcoin season' that many expected has not materialized.
Missing components
As we have mentioned in many reports over the past year, the cryptocurrency market faces a significant supply-demand imbalance.
In short, the demand for cryptocurrency has not kept pace with the overall supply of cryptocurrencies. But why?
Oversupply of tokens
Aggregators listed more than 10,000 tokens, compared to about 1,500 in 2017, a tenfold increase.
Apps like pump.fun have made token creation easy: since January 2024, over 4 million tokens have been issued, with Solana's Raydium issuing over 50,000 tokens.
Continuation of Meme, return to fundamentals... or both?
2024 witnessed the rise of a combination investment strategy between major cryptocurrencies and Memecoins. We explored these market dynamics in-depth in our reports 'The Dog Days of Summer' and 'Attention Is All You Need.'
Will these market trends continue, ushering in another year dominated by Memecoins? Or has the crypto market turned, returning to fundamentals?
The reality is more complex, influenced by speculative frenzy and ever-evolving market trends.
Solana accelerates development
In the previous cycle, $SOL rose from $1 to $260 in just one year, benefiting from 'Alt L1 trading' and its 'Sam coin' status.
Despite the ecosystem still being in its early stages, it has attracted teams like Jito, Drift, and Helium, which ultimately became the backbone of the Solana network.
However, Solana has been overly focused on rapid growth. By 2022, this phoenix fell due to FTX fraud, the bear market, and doubts about chain stability.
From peak to trough, SOL experienced a 96% drop.
On Christmas 2022, 'Bonk' airdropped half of its tokens to the Solana community. At that time, SOL was trading at $11, amid a gloomy market sentiment.
However, $BONK brought hope. Days later, SOL bottomed out at $8, ending a tough year.
From the ashes, Solana began its rebirth in 2023. The core team that faced the challenges of 2022 doubled down on their efforts.
@DriftProtocol, @jito_sol, and @TensorFdn are focused on serving loyal users. Solana is gradually recovering, driven by steady innovation.
Looking ahead to 2025, several questions remain unresolved:
Has the repricing of SOL been completed?
Will Memecoins lose popularity?
Can Base capture market share?
Will Ethereum mount a comeback?
While these concerns are valid, they overlook the core issues. Solana's story for 2025 is based on two core beliefs that will determine its future development:
Solana's data indicates that SOLETH is being repriced. Underlying activity shows strong fundamentals, suggesting there is still upside relative to ETH.
Leadership and culture: Solana's ongoing innovation and thriving ecosystem place it in a unique leadership position in the crypto space.
We view 2024 as a turning point for the industry.
While we cannot predict exactly what 2025 will look like, our analysts are already planning for potential opportunities and risks.
