In 2024, cryptocurrencies find themselves at a crossroads: Bitcoin's strong rise sharply contrasts with the overall market's weakness, only brightened by regulatory changes at the end of the year.
The cryptocurrency narrative is being recalibrated, with 2025 set to usher in a new beginning. This article aims to briefly review the market conditions this year.
Many people in the crypto space believe that with the launch of spot ETF products, the cryptocurrency market will rebound to historical highs. However, this is not entirely true, at least not as many people expect.
In Q1 of this year, with the launch of ETFs, Bitcoin surged over 50%, reaching $73,000. Billions of dollars flowed directly in, and the market no longer had any concerns about institutional demand. For about 7 months, Bitcoin mainly fluctuated between $60,000 and $70,000.
Unfortunately, most tokens are struggling, except for a few standout performers. The initial 'failure' (or lack of liquidity) following the mid-year launch of spot ETH liquidity exacerbated these challenges. Most of 2024's story revolves around sluggish market sentiment and infighting.
However, after the presidential election in November, the crypto industry finally saw a glimmer of hope. The changes in market sentiment and risk appetite over the past few weeks also reflect this.
Cycle strategies are getting back on track
At the end of 2022, Delphi Digital outlined the reasons for the bear market bottom, expressing confidence in the upcoming bull market cycle over 15 months ago. In last year's report, it predicted Bitcoin would break new highs in Q4 2024.
On the macro level, reality has always met expectations. So far, Bitcoin halving is not the main catalyst for the cryptocurrency market cycle, but rather the liquidity cycle.
At the end of last year, Delphi Digital listed favorable conditions for Bitcoin to perform strongly in Q1, one of which was a surge in global liquidity. It also warned of a higher risk of market pullbacks from the end of Q1 2024 to the beginning of Q2 due to signs of diminishing liquidity momentum.
So far this year, Bitcoin has risen over 130%, and this has been achieved without much support from the Federal Reserve. In fact, liquidity from the Federal Reserve has been steadily declining over the past 9-10 months.
Optimism is returning
2024 is a strange year for the crypto market. On one hand, most mainstream currencies have returned to historical highs, while the broader altcoin market has also shown signs of recovery.
However, the crypto community (such as Twitter) has been embroiled in infighting for most of this year. The gloomy sentiment of 2024 sharply contrasts with the positive price trends.
The primary reason for the poor market sentiment is Bitcoin's dominance. Bitcoin has surged 130% year-to-date, reaching a three-year high in dominance.
The second factor is decentralization: some tokens have risen in price, some have increased slightly, but most tokens have either fallen or gone sideways.
The classic 'path to altcoin season' that many have taken for granted has failed to materialize.
Supply and demand imbalance
As mentioned in many reports over the past year, the cryptocurrency market is facing a significant supply and demand imbalance. In short, demand for cryptocurrencies has not kept pace with overall cryptocurrency supply. The reasons are as follows.
Too many tokens
The aggregator has launched over 10,000 tokens, whereas there were only about 1,500 in 2017, growing tenfold.
Applications like pump.fun have made token creation simple: since January 2024, over 4 million tokens have been issued, with over 50 million tokens entering Solana's Raydium.
Continuation of Memecoins
2024 gave birth to the Major-Memecoin barbell investment portfolio.
Will these market dynamics remain unchanged, with memecoins dominating for a year? Or will the crypto market return to fundamentals?
The reality is more complex, influenced by speculative enthusiasm and ever-changing market trends.
Accelerated development of Solana
In the last cycle, SOL soared from $1 to $260 within a year. Although the ecosystem is still in its infancy, it has attracted teams like Jito, Drift, and Helium. All these teams will become foundational parts of the network.
Solana had ultimately risen too high. Following the FTX collapse, the bear market, and doubts about chain stability, SOL fell by 96%.
On Christmas 2022, Bonk airdropped 50% of its supply to the Solana community. SOL's trading price was $11, with a less than optimistic outlook. A few days later, SOL dropped to a low of $8, ending a brutal year.
Solana was reborn from the ashes in 2023. The core team focused on serving a loyal user base with Drift Protocol, Jito, and Tensor Foundation, steadily innovating to drive recovery.
As we enter 2025, some questions remain:
Has the SOL rally come to an end?
Will memecoins disappear?
Can Base capture market share?
Will Ethereum fight back?
While these concerns are valid, none have grasped the crux of the matter. Solana's performance in 2025 will be based on two core beliefs:
Solana's data shows that SOL/ETH is being repriced. Lower-level activity shows strong fundamentals, suggesting greater upside potential compared to ETH.
Leadership and culture: Solana's relentless innovation and thriving ecosystem give it a unique advantage in the cryptocurrency space.
2024 can be seen as a turning point for the industry, but no one knows exactly how 2025 will unfold.