Original title: Bitcoin Suisse OUTLOOK 2025
Original authors: Dominic Weibel, Denis Oevermann, Wolfgang Vitale, Matteo Sansonetti, Bitcoin Suisse.
Original text translated by: Wu Says Blockchain
Bitcoin Suisse, founded in 2013 and headquartered in Zug, Switzerland, is one of Europe's earliest crypto financial service providers. The company offers a comprehensive range of services, including trading and storage of cryptocurrencies (such as providing secure wallet solutions) and custodial services.
Preface
1. The macroeconomic environment will fundamentally ease and support achieving a soft landing.
2. Bitcoin (BTC) will become a strategic reserve asset for the United States, with other sovereign nations following suit.
3. The price of Bitcoin will break through 180,000 dollars, approaching historical highs.
4. Bitcoin's volatility will be lower than that of major tech stocks, indicating its gradual maturity as an institutional-grade asset.
5. Financial giants will launch institutional-grade Rollups on Ethereum.
6. Ethereum staking ETFs will drive market-cap-adjusted capital inflows 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 transition to 'currency' attributes.
9. The Altcoin season will peak in the first half of 2025, with total market capitalization growing fivefold.
10. Solana will solidify its market position as a top-tier general-purpose smart contract platform.
11. The wealth effect will drive the NFT craze in the latter stages of the cycle.
The U.S. elections have sparked what could be the largest paradigm shift in the history of digital assets. This marks a dramatic change in the regulatory environment, with the world's largest economy shifting from stringent restrictive regulations to an institutional embrace. It can be said that this is a dramatic reversal—from the 'strangulation actions 2.0' that suppressed banking services to discussions of establishing a national strategic Bitcoin reserve. This process signals a fundamental shift in the government's stance towards digital assets, far exceeding the Bitcoin ETF or BlackRock's tentative contacts with crypto assets.
Crypto Political Action Committees (Crypto PACs) have invested over 130 million dollars in elections, achieving bipartisan victories and shaping the most pro-crypto Congress in history. We believe the upcoming era will resemble the 'Internet boom of the late 1990s' in the cryptocurrency space. Back then, a loose regulatory environment and friendly policy framework unleashed a wave of innovation. However, as with all political promises, words are cheap, and we will closely monitor whether the new government truly follows through on its commitments.
Against the backdrop of broken ETF records and unprecedented institutional entry speed, traditional financial giants are not just testing the waters in the crypto space but are fully committed. However, the development landscape far exceeds traditional finance, with emerging areas such as DePIN, DeSci, and DeAI no longer just narratives but solutions to real challenges. Polymarket has crossed the chasm, and the development of on-chain privacy technologies and institutional-grade DeFi provides even more exciting reasons for the next wave of crypto adoption.
Transforming the above into more actionable substance, (2025 outlook) attempts 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 the journey of Bitcoin expected to reach an all-time high. 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 topics worth exploring in depth. Before diving into a detailed analysis, I would like to express my deepest gratitude to Denis Oevermann, Wolfgang Vitale, and Matteo Sansonetti, whose exceptional 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 good time to rest, we also recommend keeping an eye on market trends: all signs indicate that 2025 will be even more spectacular.
— — Dominic Weibel / Head of Research
Elected candidates in the U.S. supporting cryptocurrency.
1. Macroeconomic conditions will fundamentally ease, supporting the achievement of 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 3-month and 10-year Treasury yield curve (3m 10y) remains severely inverted, indicating that market imbalances persist. Bitcoin (BTC) has shown significant sensitivity to these changes; for instance, in August 2024, when the 2y 10y curve briefly normalized, Bitcoin experienced an intraday drop of 9,000 dollars (-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, given bullish market sentiment and stabilizing economic conditions, provided major recession risks can be avoided.
Based on historical patterns and the duration of the 2y 10y inversion, the 3m 10y curve may normalize by the end of the year, and the Federal Reserve's FOMC meeting on December 18 may serve as a major catalyst. This normalization trend aligns with improvements in financial conditions, such as the decline in the National Financial Conditions Index (NFCI), which has eased from the tight conditions of 2023 to 'normal' levels. Reduced use of emergency liquidity tools (such as the Bank Term Funding Program, BTFP) also further indicates a relaxation of conditions. 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 peak of 2021. Ongoing liquidity growth is crucial for maintaining the upward momentum of the crypto market, especially as the second half of the bull market cycle unfolds.
So far, liquidity dynamics have been primarily driven by fiscal measures, while monetary liquidity has lagged. However, a policy transformation has emerged post-election, shifting macroeconomic policies from demand-side stimulus to supply-side economic strategies. The new policies focus on deregulation, targeted tax cuts, and reducing corporate financing costs, aiming to promote long-term productivity and employment growth. This strategic shift is expected to alleviate inflationary pressures while creating a more stable environment for economic growth. Additionally, increasing U.S. oil production to stabilize reserves and energy costs could reinforce deflationary trends and benefit energy-dependent industries, indirectly supporting broader markets. This will further drive the relaxation of monetary conditions and interest rates.
The evolving macroeconomic background 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, combined with liquidity improvements and stabilizing 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, with improvements in macro conditions potentially driving stronger performance and releasing significant growth opportunities in the current bull market cycle.
Global net liquidity is improving but remains significantly below the peak of 2021.
Impact of yield differentials and normalization of the yield curve.
Global net liquidity vs. global M2 money supply
Global net liquidity: the total of asset purchases and balance sheet expansions by major central banks worldwide, thus serving as the primary driver of available liquidity in financial markets. The contraction of global net liquidity often synchronizes with downturns in financial markets, while liquidity expansion drives overall economic growth and upward trends in 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 integrating into the core of global reserve strategies. Against a backdrop of increasing fiscal uncertainty, geopolitical fragmentation, and shifts in monetary order, we predict that 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. The record amount of gold purchases by central banks and the growing experimental attempts of sovereign nations with Bitcoin further highlight the increasing importance of diversifying reserve assets.
With the impending Trump administration, we observe a growing momentum for the U.S. to adopt Bitcoin as a strategic reserve asset. The Bitcoin bill proposed by Lummis suggests purchasing 1 million BTC, representing a significant watershed moment that could make the U.S. the largest national holder of Bitcoin, accounting for about 5% of the network's supply. This share in dollar terms is comparable to the U.S.'s share of global gold reserves. The U.S. government currently holds 200,000 Bitcoins through enforcement actions, which could 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 following suit. For example, Florida and Pennsylvania are actively making direct purchases of Bitcoin for their treasury departments, while Michigan and Wisconsin are taking a more cautious approach through Bitcoin-related ETFs and trusts. Furthermore, as indicators of public and private sector adoption continue to rise, corporations are adding substantial amounts of Bitcoin to their balance sheets, further highlighting Bitcoin's increasingly important role in financial management.
From a global perspective, the influence of Bitcoin as a reserve asset is becoming increasingly evident. Our assessment shows that Bitcoin has surpassed the British pound to become the fifth largest currency globally, while also ranking as the seventh largest asset worldwide. These milestones are significant. From a geopolitical standpoint, Bitcoin's neutral characteristics are increasingly favored, as evidenced by recent confirmations of Bitcoin as property by countries like Russia and China.
As a hedge against potential instability of the dollar and a support for its dominance, Bitcoin is being seen as a promising solution to current financial challenges. Since 2000, the purchasing power of major fiat currencies has declined by over 70%, reinforcing the demand for a 'hard monetary anchor.' Moreover, Bitcoin provides a key option to tackle the rising challenges of sovereign debt. The U.S. federal debt has now reached a record 36 trillion dollars, and is expected to increase to 153 trillion dollars by 2054; Bitcoin's compound annual growth rate (CAGR) could provide the government with a powerful tool to offset the impact of debt growth.
Bitcoin's reserve asset status may not only enhance the fiscal resilience of the United States but also counter efforts by hostile nations to de-dollarize. Legislative interest and bipartisan support, particularly against the backdrop 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 Nixon's cancellation of the Bretton Woods system in 1971, Bitcoin may experience a similar monetary repricing as it transforms from a controversial fringe asset to a national reserve asset. Achieving reserve asset status may lead to a snowball effect, with sovereign nations competing to accumulate holdings, fundamentally changing Bitcoin's market dynamics and potentially breaking the traditional four-year cycle pattern in the coming years. The key variables are timing and implementation strategies, rather than the certainty of developmental direction.
History of global reserve assets.
Distribution of Bitcoin supply.
"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 break through 180,000 dollars, approaching historical highs.
Entering 2025, we continue to monitor the developments in Bitcoin market dynamics, consistent with our peak cycle prediction first released in November 2023. According to 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 dollars in 2025, creating a historic high.
At the beginning of 2025, Bitcoin price entered a phase of heightened risk, accompanied by increased dynamic cycle risk. However, from a cyclical perspective, the model does not indicate that this is an ideal time to take profits. Since the beginning of this year, the price of Bitcoin has consolidated within the range of 50,000 to 60,000 dollars, followed by a significant surge, approaching 100,000 dollars. Meanwhile, risk indicators suggest that the current price environment is more stable than at the beginning of the year.
Earlier this year, Bitcoin reached a nominal all-time high of approximately 73,000 dollars (the inflation-adjusted price is still more than 5% below the 67,000 dollars historical high of 2021). While on-chain risks remain elevated, they have not reached a level warranting profit-taking. Notably, long-term holders (LTHs) exhibit some selling pressure, but this pressure is offset by institutional demand, particularly from Bitcoin ETFs. Since their launch, these ETFs have consistently absorbed volumes of Bitcoin that are several times the daily mining output.
Currently, Bitcoin 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 that may soon be taken by countries like the United States—Bitcoin's trajectory could undergo significant changes, disrupting traditional markets and accelerating its exponential growth. In the context of the current global asset total reaching 910 trillion dollars, even if Bitcoin occupies 5% to 10% of these assets, under unchanged conditions and ignoring the significant growth of global asset totals over time, the price of Bitcoin could increase by 25 to 50 times, reaching 2.5 million to 5 million dollars per coin.
Although this scenario is already very significant, it may just be a transitional phase in the long-term outlook. For example, Michael Saylor predicts that by 2045, the price of Bitcoin will reach approximately 13 million dollars per coin. In the short term, such adoption may trigger a 'supercycle,' driving Bitcoin's valuation to surpass 300,000 dollars within this cycle, consistent with the upper limit predicted by the current trend line.
The dynamic cycle risk indicator of Bitcoin Suisse and the dynamic on-chain cycle risk indicator.
• Price color points:
Mapped using Bitcoin Suisse's Bitcoin Dynamic Cycle Risk Indicator to assess the relative risk levels of Bitcoin price.
• Bottom oscillators:
Constructed based on the Bitcoin Dynamic On-Chain Cycle Risk Indicator 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 assess the relative risk of Bitcoin price levels by analyzing key factors such as momentum, trend strength, and inter-cryptocurrency cyclic dynamics. This indicator can be adjusted according to market conditions, maintaining stable risk levels 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 Bitcoin's on-chain activity by analyzing a variety of individually optimized and adjusted on-chain risk indicators. Each indicator is designed to reflect cross-cycle dynamics and can independently identify market tops and bottoms. This indicator dynamically adapts to market conditions, lowering risk during periods of subdued activity and increasing risk during spikes in on-chain activity.
Comparison of Bitcoin and crypto assets in the global financial asset market capitalization.
4. Bitcoin's volatility will drop below that of major tech stocks, marking the maturity of institutional-grade assets.
Since its inception, one major characteristic of Bitcoin has been its significant volatility. However, this volatility has been consistently decreasing, and we believe that new investment products may further narrow its volatility range. 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 late summer, Bitcoin ETFs have accounted for approximately 5%-10% of the average daily trading volume of spot Bitcoin.
The main drivers of compressing Bitcoin's volatility include stable demand flows brought by institutional adoption, greater market capitalization leading to price inertia, systematic portfolio rebalancing flows from asset allocators, and complex strategies from hedge funds that weaken extreme volatility, as well as the overall maturity of the asset class.
Additionally, the options market has played an important role in this trend. Historically, the options market has been shown to reduce the volatility of underlying assets in the medium to long term through the combined effects of hedging activity and enhanced liquidity.
Professional investors may amplify Bitcoin's inherent volatility through newly created markets. They may potentially intensify volatility in the short term through strategic trading techniques.
We believe that ongoing regulatory progress around Bitcoin will accelerate its position within mature asset classes. As volatility continues to compress in the future, we expect Bitcoin to further solidify its status as 'digital gold' and potentially reach volatility levels lower than 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 accompanied 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 comparison, Tesla's return rate during the same period was around 2,000%, with a Sharpe ratio of 1.101, while Nvidia's return rate was 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 metrics and institutional applicability improve, while also diminishing the historical asymmetric return potential of this asset class.
Volatility predictions for Bitcoin and select stocks.
The chart shows the 30-day rolling volatility of four assets: BTC (Bitcoin), Meta, Tesla, and Nvidia. Gaussian smoothing was applied to reduce noise, with a sigma value parameter of 30. The shaded area indicates the confidence interval for the average 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 group 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 has completed the largest acquisition ever by acquiring blockchain payment company Bridge; BlackRock has quickly replaced Grayscale as the largest crypto fund by assets under management (AUM). Among 22 major global financial institutions, 13 have begun exploring the tokenization market, which is expected to reach 16 trillion dollars by 2030. The adoption speed of Bitcoin ETFs has reached historical 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 plan.
Ethereum offers undisputed high uptime, security, fairness, neutrality, and decentralization, remaining the preferred platform for institutional on-chain use cases (such as stablecoins or tokenization). For instance, BlackRock launched its tokenized fund BUIDL, while Visa announced its tokenized asset platform VTAP, planning 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 1 cent, with average daily Rollup transaction volume increasing to 30 million. Base, Arbitrum, and Optimism are the Rollups with the highest capital inflow in the industry year-to-date, with TVL (Total Value Locked) growing over 60%. Furthermore, significant cross-chain interoperability improvements are expected in the future, enabling these institutions to seamlessly access Ethereum, the most capital-intensive smart contract ecosystem.
In addition to market expansion, efficiency improvements, and overall first-mover advantages, institutions can also access entirely new revenue sources through sequencing (including MEV and transaction fees). According to existing Rollup benchmarks, sequencers can achieve annual revenues of up to 80 million dollars.
Proprietary Rollups can also give institutions complete control over latency, consensus rules, token standards, and execution environments, while supporting built-in compliance features such as mandatory KYC or AML checks, blacklisting functions, and automated regulatory reporting at the protocol level.
Additionally, tokenization of ETFs and payment-related opportunities could further supplement the revenue sources of sequencers. Cross-border payments, cost savings, short settlement windows, built-in foreign exchange features achieved through DeFi integration, B2B payments, programmable payment schemes, and real-time fund management operations all provide strong support for Rollups. The packaging of equity and ETFs can also help institutions enter emerging markets, as 90% of the global population still lacks access to brokerage services. Recently, institutional funds like BUIDL, which entered DeFi through the Elixir deUSD protocol, indicate that this trend is already very apparent.
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 operating on top of it. The advantages are clear: 2025 will be the inaugural year for 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 revenues with data and proof submission costs on Ethereum, assessing the profitability of Rollups. Profitability enhancements come from high block space demand (supporting premium pricing) or operators increasing the multiple of base fees.
Institutional adoption of cryptocurrency.
The current conditions are highly 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-cap-adjusted capital inflows to surpass BTC.
Despite Bitcoin ETFs achieving record net inflows of 32 billion dollars and IBIT nearing 50 billion dollars in AUM (assets under management) in just 225 trading days, we anticipate a structural shift in the flow of funds towards ETH ETFs following the elections. Although ETH has underperformed since the ETF launch, the fundamentals indicate that, against the backdrop of surging institutional participation, ETH is displaying increasingly attractive risk-return characteristics. November marks a turning point for capital inflows into ETH ETFs, achieving net inflows for the first time since its launch in July, with a single-day inflow reaching 332.9 million dollars, surpassing Bitcoin's 320 million dollars. Additionally, recent capital inflows have caught up with Bitcoin on a market-cap-adjusted basis.
We believe that ETH's relatively poor performance since its ETF approval mainly reflects institutional preferences for the mature narrative and higher recognition of Bitcoin, coupled with regulatory resistance surrounding ETH ETF staking yields. Regulatory uncertainty and opportunity costs due to the inability to earn staking rewards have significantly restricted institutional capital inflows. However, this gap lays the foundation for strong rebound potential once the bottleneck is lifted. We anticipate that under the new Trump administration, ETH staking ETFs will be rapidly approved, unlocking yields of 3%-4%. This characteristic caters to the needs of institutional allocators and is particularly attractive in a declining interest rate environment. We predict that staking yields will significantly benefit Ethereum and become a primary catalyst for sustained capital inflows into ETH ETFs. Additionally, strategic acquisitions by staking service providers (such as Bitwise) further indicate that these participants are actively preparing for this outcome.
In addition to the ETH staking ETF, we expect more cryptocurrency ETFs to be approved in 2025, including SOL and XRP, which may trigger a broader discussion on classifying L1 as commodities. However, ETH's unique position—as a regulated, yield-generating asset with proven institutional adoption rates—may remain uncontested. Compared to Bitcoin, ETH is currently in the early stages of its institutional adoption lifecycle. Given that institutional capital is limited to rotating between the two main 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 static, while staking participation rates have reached an all-time high.
In short, we predict that the new wave of institutional crypto allocations post-election will be primarily driven by returns, leading to a reversal in capital flows. The favorable intersection of regulatory tailwinds, yield potential, and supply dynamics will allow ETH ETFs to surpass BTC in market-cap-adjusted capital inflows in 2025.
Performance since the launch of the ETH ETF.
Cumulative net inflows of ETH ETFs and daily capital flows
Market-cap-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 reach a turning point in 2025, marking the peak of this cycle, which signifies 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 stage of the bull market as capital shifts towards investing in other crypto assets (i.e., Altcoins). This pattern aligns with the halving-driven market cycles of Bitcoin: Bitcoin's dominance typically skyrockets in the early stages, but as the bull market enters its final phase, Altcoins begin to dominate, leading to a decline in Bitcoin's share.
Ethereum (ETH) and Solana (SOL) are key assets expected to outperform Bitcoin in this phase when traded against BTC. Unlike most Altcoins, although the dollar value of many Altcoins remains relatively stable, their ratios to Bitcoin tend to approach zero over time. In contrast, ETH and SOL perform like oscillators, maintaining resilience in relative strength against Bitcoin. This resilience reflects their increasingly important role in the broader crypto ecosystem, providing investors with a more diversified growth trajectory than Bitcoin.
The expected decline in Bitcoin's dominance aligns with historical trends and broader macroeconomic dynamics, including liquidity cycles, halving processes, and the characteristic slowdown of market sentiment usually observed post-halving and post-election. As liquidity improves, the attractiveness of investing in high-risk assets increases, and the trend of capital shifting to Altcoins will amplify their excess returns. This structural shift highlights the role of Altcoins in the later stages of the cycle, with their relative returns expected to exceed Bitcoin's.
Although Bitcoin will continue to deliver strong returns, the majority of gains in the later stages of the bull market are expected to come from Altcoins. This situation reflects an increasingly mature market structure, where capital tends to favor high-risk opportunities during periods of heightened market sentiment. As Bitcoin's dominance declines, Altcoins will occupy a larger market share, prompting investors to reassess their portfolio strategies in the final phase of the bull market. After this phase ends, Bitcoin's dominance is expected to rebound, laying the groundwork for the next market cycle.
Trend of Bitcoin's dominance.
Comparative cyclic volatility of Ethereum (ETH) and Solana (SOL) against Bitcoin (BTC)
8. The anchor point 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 in 2025, nor will there be consensus to include modifications in the anticipated hard fork in 2026. During 2024, several Ethereum researchers questioned the sustainability of staking economics and proposed adopting new issuance curves, setting caps on staking ratios, or mechanisms to stabilize them near 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), which would have unacceptable effects on Ethereum.
We believe that it is crucial for ETH to maintain its role as a trusted neutral currency in global settlements, and thus express concerns about excessively high staking ratios. However, there are also opposing voices advocating for monetary goals, arguing that any issuance adjustments could undermine its perception as 'sound money' (especially compared to Bitcoin's fixed monetary policy).
Despite multiple changes to ETH's issuance policy, the most notable 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 quickly optimize specific areas, the process of having their new tokens accepted as currency is far more challenging.
Due to the significance of this decision and the divergence on how to achieve monetization, it is expected that the Ethereum community will struggle to reach consensus on changing issuance policies by the end of 2025. Additionally, we believe that even if ETH staking ETFs are approved, their staking ratios will not reach the levels exhibited by most PoS chains. We anticipate that the staking ratio will increase at a similar pace as last year (+18%), reaching around 33% by 2025. The relatively low staking ratio and integration of validators following the implementation of EIP-7251 will further reduce 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 broader social consensus, which would define the 'final form' of the staking economy.
Example: Proposed changes to the issuance curve and issuance yield.
The issuance yield is lower than the staking yield because it does not include trading fees and MEV.
Changes in total ETH 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 crucial phase in 2025, the Altcoin season is about to arrive. Historically, this transition usually occurs in the late stages of a Bitcoin-dominated bear market when Altcoin performance continues to lag (depicted in the dark gray area of the chart). However, the upcoming market rotation will drive capital (mainly from Bitcoin) into Altcoins, marking the onset of a decisive and significant Altcoin season.
The most explosive Altcoin seasons typically coincide with the final sprint of Bitcoin's bull market, usually occurring when Bitcoin reaches its cyclical peak. This cycle seems no exception. Bitcoin's market capitalization is expected to approach 4 trillion dollars, and its dominance will decline, creating ideal conditions for Altcoin's outperformance. Current trends indicate that the first half of 2025 will welcome the strongest and most significant Altcoin season of this cycle, driven by capital rotation and high-risk preferences, particularly evident as Bitcoin consolidates near its peak.
Using the market capitalization targets of Bitcoin and Ethereum as benchmarks, the potential performance scale of Altcoins can be clearly seen. Assuming the total crypto market capitalization reaches around 15 trillion dollars in this cycle, Bitcoin is expected to have a market capitalization of 4 trillion dollars, while Ethereum is expected to be between 1 and 1.5 trillion dollars, leaving approximately 10 trillion dollars of allocation space for Altcoins. Currently, TOTA L3 (the total market capitalization of Altcoins excluding Bitcoin and Ethereum) is only 1 trillion dollars, indicating that as the cycle matures, the Altcoin market could potentially have up to 10 times growth potential.
The peak market capitalization of Bitcoin, the expansion of Ethereum, and the anticipated capital flow into Altcoins collectively constitute the basis for a deep Altcoin season in the first half of 2025. This period will provide significant excess return opportunities, with certain assets expected to achieve exponential growth. As market dominance shifts, actively positioning and diversifying 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 cryptocurrencies (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 crypto market cap excluding Bitcoin and Ethereum essentially represents the market cap of all Altcoins.
Market capitalization predictions for Bitcoin, Ethereum, and Altcoins: pointing to several times growth in the future.
10. Solana solidifies its market position as a top-tier general-purpose smart contract platform.
In 2024, Solana will become a strong competitor to Ethereum in terms of actual economic value (REV: transaction fees + MEV tips) and recognition from founders, investors, and users. We expect Solana to continue to hold an advantage in a competitive environment as foundational improvements progress.
With rapid iteration cycles, a strong core developer team, and consistency in value propositions and optimization strategies, Solana is currently in an ideal position to enhance its network effects. However, next year it will face fierce 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 not be significant differentiators anymore, so key improvements must be made at the foundational level while 'increasing bandwidth and reducing latency.'
The most anticipated upgrade of 2025 is the maturity of Firedancer, which will make Solana a more robust multi-client network. Firedancer's 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 running on the mainnet in non-voting mode, enabling 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 technologies.
• State contention handling: Improve state contention issues by globally adopting a centralized transaction scheduler.
• Development of zk-rollups: Anticipating the emergence of more zk-rollups relying on recently introduced dedicated system calls.
• Improvements in token economics: Through reallocating priority fees to stakers (SIMD-0123) and continuing discussions on reducing issuance.
• Scalability enhancement: Improve scalability through advancements in asynchronous execution technology and hardware capabilities.
• Enhanced censorship resistance: Strengthened 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 do not expect to achieve all these improvements in 2025, the shift from 'rapid iteration and breaking down to rebuilding' towards greater focus on strategic foundational improvements by independent teams gives us confidence in Solana's sustainable success as a top-tier general-purpose smart contract platform. This success will be reflected in Solana continuing to be the preferred platform for DeFi and DePIN founders, making it more attractive to institutional-grade tokenized asset issuers, which is crucial for realizing the potential of a global, permissionless, and efficient state machine.
Monthly actual economic value of Solana and Ethereum
11. The wealth effect will drive NFT momentum in the latter stages of this cycle.
In recent years, the NFT market has experienced a deep correction, with a gap between market expectations and reality. We expect this trend to reverse in the later stages of this cycle, primarily driven by the wealth effect and capital rotation within the industry. Although 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 realm and high-end digital art, especially in the case of generative art. Backed by blockchain, generative art has found an ideal performance platform, demonstrating the value of persistent, non-fungible, and ownable digital content through verifiable scarcity and on-chain provenance.
Projects represented by Pudgy Penguins have recently gained more attention, ranking as the second-largest NFT project by market capitalization, buoyed by expectations of the upcoming launch of its PENGU ecosystem token. In the current trend of cryptocurrency culture, there is a clear bias towards MemeCoin, and the memetic nature of PENGU could surprise the market. Additionally, as the most successful consumer brand in the crypto space, the launch of Abstract chain by its parent company 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 relevant NFT collectibles to appreciate significantly. As observed in the last cycle, NFTs typically lag in performance before the market frenzy peaks, so the late-stage wealth effect may 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 true scarcity. Additionally, these collectibles maintained a fairly 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 technologies, this trend may be further enhanced in future cycles.
Historical performance of CryptoPunks (measured in ETH and USD).
Historical performance of Fidenzas (measured in ETH and USD)
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