Original author: 0xKyle
Translation｜Odaily Planet Daily
Translator｜Azuma
Editor’s note: This article is the market forecast and response plan for 2025 by renowned analyst and trader 0xKyle.
In the following text, 0xKyle analyzes multiple scenarios that may occur for Bitcoin and altcoins in 2025 and discusses why active portfolio management will outperform passive portfolio management in the new year. 0xKyle also lists the sectors and tracks he favors at the end of the article, which may help in planning for the new year.
Below is the original content by 0xKyle, translated by Odaily Planet Daily.
Predicting the future is difficult, but as traders and investors, we should have a plan. Like all other plans, this plan will also change as the underlying scenarios change—the market is constantly evolving. This plan is based solely on my predictions for market developments in the coming year, providing insights into my thoughts for 2025, but should not be interpreted as financial advice.
Let’s get straight to the point. As usual, I will first discuss macro expectations/scenario assumptions, then shift to thematic narratives.
Scenario Assumptions
The new cycle of "2024 - ??" has begun. Personally, I believe this cycle started at the end of 2023, but if we strictly sort out this round of cycles, the progress so far is:
→ January 10, Bitcoin ETF launched;
→ BTC hits a new high, briefly triggering an altcoin season;
→ Then enters the volatility period of Q2 and Q3, with BTC hovering between $50,000 and $60,000;
→ After election day, BTC hits a new high, soaring to $100,000;
→ Temporarily unable to break through the $100,000 barrier effectively, currently hovering above $90,000.
It is important to note that altcoin seasons often begin at the peak positions of Bitcoin, the first time during BTC's attempt to hit $69,000 but failing to break through effectively; the second time during BTC's attempt to hit $100,000.
The next round of altcoin cycles is likely to begin after BTC stabilizes above $100,000. I cannot predict the future, although I hope this will happen in Q1 2025. However, based on factual considerations, we may also see a repeat of the Q2 and Q3 2024 volatile market in the coming months—I must be prepared for this. Therefore, here are all the scenario assumptions I have drawn.
Assumption Scenario One: Bitcoin and altcoins rise together
If so, the rise will be the only theme of 2025, and we will also enter another round of altcoin season. Due to Bitcoin's continued rise, all coins will perform well, and we will repeat the market trends of the last two months of 2024, with the entire market 'rising'.
Probability: 30% – 40%;
Corresponding strategy: Buy during the current 'panic', get into strong altcoins.
Assumption Scenario Two: Bitcoin rises, other coins rise less
This will replay the story of 2024; in the coming months, we will see altcoins remain volatile, but Bitcoin will be more bullish (because only Bitcoin is rising). Some altcoin sectors will also perform well.
Probability: 50% – 60%;
Corresponding strategy: Still buy during the current 'panic', but need to buy specific sectors of altcoins, focusing on avoiding areas with high attention and looking for the next potential narrative to rise.
Assumption Scenario Three: Bitcoin rises, altcoins fall
This means that the current moment is the peak for altcoins, even though Bitcoin will continue to perform well.
Probability: 20% – 30%;
Corresponding strategy: Sell all altcoins. While we must endure some pullback, if altcoins don't rise, we might have to sell everything.
Assumption Scenario Four: Bitcoin falls, altcoins fall
Probability: 10% – 20%.
I believe several things will happen. I believe BTC’s next new high will not take as long as it did in 2024, as there are indeed macro tailwinds present. During a cycle where the regulatory environment is hellish, although ETFs have been launched, TradFi still needs to work hard to sell the story of BTC to customers, as the world does not believe in the importance of Bitcoin.
Now that Trump is about to take office, discussions about Bitcoin Strategic Reserve (SBR) are heating up. Market sentiment has changed, and I won't speculate on the likelihood of establishing a strategic Bitcoin reserve system—I have no experience in the intersection of politics and finance.
What I care about is the narrative—the fact is that this new regime about to take office has brought a lot of new attention to digital assets, and it is now easier to persuade people to buy Bitcoin because even the president of the world's largest country is frequently discussing it.
The changes in this macro backdrop are very important. Therefore, I believe Bitcoin will continue to enjoy tailwinds in 2025, while altcoins are a similar yet different story.
Total3 (Odaily Note: Total value of altcoins excluding BTC and ETH) reached its 2021 high in Q1 2024, then hit a cycle peak in Q4 20424. Honestly, my scenario assumptions one and two are not much different.
The key is positioning and timing. I am bullish on 2025, but I do not know how long it will take for the market to arrive—although I do believe that a market that only rises and does not fall will come faster than in 2024, altcoins will still bleed heavily in the absence of catalysts.
Whether Bitcoin or other coins, as long as the cycle has not peaked, my plan is to always maintain a net long position. I do not think 2025 will replicate the scenes of summer 2024, but I believe we will encounter periods similar to now—where the market is relatively quiet, but prices are still well maintained.
The on-chain world is entirely different; when the tide goes out, the on-chain market can easily see -70% volatility. Therefore, for the on-chain market, my goal has always been to sell during peak attention periods and reinvest in leading altcoins (top 20), then slowly start further deployments.
I do not believe altcoins will peak here, as I do not think Bitcoin can continue to rise while altcoins die, nor do I believe Bitcoin will reach a cyclical peak at this position.
So my conclusion is: BTC will continue to rise, and the increase will exceed that of 2024; for altcoins, my theme remains aggressive, but I need to know when to switch to defense, but the defensive inclination will be lower than in 2024.
Risk
Risk of cyclical peak
Predictions about cyclical peaks need constant self-correction. While I do not think we are close to a cyclical peak, we must continuously reassess weekly. A cyclical peak is not necessarily an "event" but rather a spectrum that slowly approaches over time.
SBR redemption risk
With the new president taking office, everyone will be watching his actions. Although Bitcoin is expected to see regulatory tailwinds, if the president completely forgets about it, that would be quite a bearish event. Possible risks I see include: SBR being forgotten; or more likely, SBR not happening but advancing in some other way.
For the latter situation (changing SBR plan), this could be an initially bearish but ultimately bullish event, as long as the plan itself supports Bitcoin.
In summary: The emergence of bullish signals indicates that the bulls continue; the emergence of bearish signals means that the plan must be re-evaluated—the bull market may continue, but the odds will decrease.
Supply Risk
In 2024, we witnessed crazy macro conditions in the summer, with the stock market hitting historic highs, but the cryptocurrency market fell more than it rose, due to supply giants like Mt. Gox, the German government, Grayscale GBTC, etc., continuously pressuring the market.
Supply risk can never be eliminated. There will always be entities holding large amounts of Bitcoin—the UK government, Silk Road, FTX holdings, or any other entity. This is something you have to keep an eye on, but in my view, if all goes well, these events could provide decent buying opportunities on dips.
Macro risk
I believe that smaller rate cuts are still rate cuts. While this is 'not so bullish', the fact is that as long as interest rates continue to decline, liquidity will improve.
Once again, the emergence of bullish signals means that the bull market will continue. Unless interest rates rise or do not lower, the macro economy should be favorable for digital assets.
Themes and Tokens
Now we come to the part everyone has been looking forward to. But before listing specific themes and tokens, I want to reiterate the idea I just mentioned of 'being aggressive but knowing when to switch to defense'—active portfolio management will outperform passive portfolio management in this investment cycle.
"Buy and hold forever" is a thing of the past. Although it rose 10 times in 2023, Solana's overall performance in 2024 was almost on par with Bitcoin; so-called leaders like TAO did not benefit from the AI hype we have seen in recent months; and for meme tokens, even dogs no longer wear hats (WIF), Chill guy is no longer chill, and Hippo (MOODENG) seems to be at the end of its rope...
Nothing on this list can allow you to "buy and hold".
Aside from that, I also like to think about a question—who are the marginal buyers? In this market, there are basically three main marginal buyers—institutions (traditional financial players), funds (venture funds/native crypto funds), and gamblers (contract traders, on-chain players, etc.).
A good narrative must be bought by at least one side. Let’s get straight to the point.
Theme One: AI
Yes, AI will still be a hot topic. As mentioned earlier, we have already gone through several waves of AI, but if you have read my paper on AI tokens (link here), I believe the next wave is coming.
Macro level: Hype > Fundamentals > Utility;
Micro level: Reply guy > Infrastructure > Applications/Avatars.
Buying and holding will not yield good results. GOAT was the start of it all, but it has dropped 60% from its peak and may continue to perform poorly.
Top Picks: AI focused on application technology, Swarms, games, and consumers.
Top Picks: ALCH (game development), Griffain (help control wallet agents), Digimon, ai16z (the king of all AI), are all top picks in my view, and there may be many that I missed.
Theme Two: DeFi
This goes without saying. DeFi will continue to be a great narrative, however, investing in DeFi is very difficult because there are really few tokens that benefit from it. Even if they do benefit, they may not rise (look at the LST track).
To be honest, in terms of risk-reward, this wouldn’t be my first choice, but I believe this will be a narrative that continues to grow until 2025.
Top Picks: AAVE / ENA / Morpho / Euler / USUAL;
Secondary Picks: Stablecoins/payment-related tokens.
Theme Three: Layer1
I may get a lot of hate for saying this, but I believe the trading opportunities in Layer1 are back. HYPE has undoubtedly performed well, but SUI was not favored by many when it was around $1, yet it rose to $2 and is now at $4. I believe the market has been missing Layer1 trades—it is one of the areas that no one is paying attention to but holds enormous opportunities (HYPE being a tenfold proof).
Top Picks: SUI/HYPE;
Secondary Picks: Abstract.
I don't know how much I like Monad and Berachain. However, I am very much looking forward to Abstract; I think it could be a bombshell.
Theme Four: NFT Tokens and Game Tokens
I also really like this topic. Recently, I have been buying some gaming projects, and I think the NFT token space is also worth paying attention to. PENGU is slowly recovering, Azuki will have ANIME, Doodles will also issue tokens... I don't think NFTs will warm up, but I think their tokens will.
Game tokens are also interesting; Off-The-Grid has shown us the potential of creating fun games. Given that this sector is so undervalued, I believe we should dig deep to find those truly interesting games that are about to launch tokens.
Top Picks: PENGU / ANIME (Azuki) / Spellborne / Treeverse;
Secondary Picks: PRIME / Off-The-Grid (if they issue tokens) / Overworld.
Theme Five: Other Narratives
The following are on my watchlist; I am not particularly fond of them, but they are interesting.
Data tokens: Kaito / Arkm;
Meme coins: I only like PEPE; the others… seem outdated;
DePIN: PEAQ / HNT
Ordinals;
Old Altcoins: XRP;
Old DeFi: CRV / CVX.
2025 Predictions
This is really just for fun, just some things I think sound a bit unbelievable but are not impossible.
DePIN is implemented seriously by serious companies, possibly through acquisitions;
Binance loses market share as the top exchange, not to Hyperliquid, but to Bybit/OKX;
With new advancements in VR technology, metaverse tokens gain new life;
ICOs become popular again;
Ethereum 'on-chain season' will not happen;
SUI price reaches double digits (at least $10);
Ethereum's staking returns are approved for inclusion in ETFs, resulting in the emergence of more yield products for staking other tokens, as well as yield aggregators like we saw in 2021;
A leading artist uses NFTs and tokens to track and reward their fanbase;
Bitcoin at $200,000;
More Layer1s are seeing their CEOs/founders leave after observing Aptos;
Base lost in the on-chain competition, another Layer1 took its place. Solana maintained its status.
Conclusion
The above content roughly summarizes my expectations for 2025. I expect the real situation will differ significantly from my predictions, just as I did with my plans for 2024.
The best advice and insight is actually to 'stay flexible, enjoy the journey.' The market will continue to change, but this is just part of the game of life.
No one can execute the same trade twice. Because trades are different, people's mindsets are also different.
Good luck, and we will meet on the other side. If you gain profits that change your fate in the process, remember to use it to change your life.
(The above content is authorized excerpt and reprint from partner PANews, original link | Source: Odaily Planet Daily)
Disclaimer: The article only represents the author's personal views and opinions, and does not represent the views and positions of Block. All content and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and trades, and the author and Block will not bear any responsibility for the direct or indirect losses formed by investor trades.
"How will the cryptocurrency market trend next year? When will altcoin season arrive? Renowned trader 0xKyle reveals 2025 investment strategies" was first published on (Block).
