Outlook highlights summary of the encryption market in 2025

I have always been very following some of the smartest Web3 teams' research reports. Their articles provide food for thought, show different perspectives, and help you be more confident in your own beliefs.

The research paper contains professional opinions that can help you better understand different perspectives on the Web3 field. Now let's take a look at the summary of Delphi team's "2025 Cryptocurrency Market Outlook".

1. Long live Bitcoin

Not long ago, many people thought that a $100,000 bitcoin was just a pipe dream.

Now, this sentiment has undergone a huge change. The market value of Bitcoin is about $2 trillion, which is truly astonishing. If Bitcoin were a listed company, it would become the sixth most valuable company in the world.

Bitcoin has attracted a great deal of attention, but there is still considerable room for growth.

• The market value of Bitcoin is only 11% of the total market value of the seven US technology giants (Apple, Nvidia, Microsoft, Amazon, Google, META, Tesla).
• It is less than 3% of the total market value of US stocks, about 1.5% of the total market value of global stocks.
• Its total market value accounts for only 5% of the total outstanding public debt of the United States, which is less than 0.7% of the global debt (public debt + private debt).
• The size of the US currency market fund is three times the market value of Bitcoin.
• The market value of Bitcoin accounts for only about 15% of the total global foreign exchange reserve assets. Assuming, if central banks around the world were to reallocate 5% of their gold reserves to Bitcoin, it would increase purchasing power by more than $150 billion—three times the total net inflow into IBIT this year.
• Household net worth has reached a record high, exceeding $160 trillion, more than $40 trillion higher than the pre-epidemic peak. This growth is mainly driven by continuously rising house prices and a booming stock market, which is 80 times higher than the current market value of Bitcoin.

In a world where the Federal Reserve and other central banks cause a depreciation of 5-7% in the domestic currency annually, investors need to target a 10-15% annual return to compensate for the resulting future purchasing power loss.

So you understand:

• Calculated at a depreciation rate of 5% per year, the real value of the currency will be halved in 14 years.
• Calculated at a depreciation rate of 7% per year, the real value of the currency will be halved in 10 years.

This is why Bitcoin and other high-growth industries have gained so much attention and traction.

2. The Disillusionment of Altcoins

Although Bitcoin has set new historical highs time and time again this year, 2024 is not a very successful year for most altcoins.

• ETH has not reached its all-time high.
• SOL once again hit a new all-time high, but it only rose a few dollars higher than its previous peak, which seems insignificant compared to the growth in market cap and network activity.
• ARB performed well at the beginning of the year, but started to underperform at the end of the year.

There are many more examples like this. Just look at the data of 90% of the altcoins in your investment portfolio, and it will be clear at a glance.

What is the specific reason?

The first reason is the dominance of Bitcoin. With the ETF liquidity and the push supported by Trump, Bitcoin has had an extraordinary year, resulting in a price increase of over 130% so far this year, and has elevated its dominance to a three-year high.

The second reason is the scattered market.

The diversification of this year's market is a new phenomenon in the cryptocurrency market. In previous market cycles, there was a tendency for synchronous trading. When BTC rose by 1%, ETH would usually rise by 2%, and altcoins would rise by 3%, following a predictable pattern. However, this cycle is different.

There is a small portion of cryptocurrencies that are performing exceptionally well, but there is also a large amount of red.

The surging wave of Bitcoin has not benefited everyone, and the anticipated classic 'Path to Altseason' has not materialized.

Another equally important reason is Meme Coin (and the recent AI Agents).

Cryptocurrencies have always been oscillating between being seen as a "pure Ponzi scheme" and a "technology that could change the world". In 2024, the former dominates the discourse.

The meme coin super cycle has amplified the concept of cryptocurrency as nothing more than a massive Ponzi scheme. People are beginning to question whether fundamentals really matter and whether cryptocurrency is just a "casino on Mars" - these concerns are valid.

In this regard, I would like to say more.

When Memecoin is labeled as the best performing of the year, only the largest Meme coins are considered - those that have created significant market value and established communities. People often overlook the fact that 95% of issued Meme coins fail to hold their value, but people are 'willing to believe'.

With this belief, many people who previously invested in altcoins turned to buy Meme coins - some succeeded, but most failed. As a result, capital flowed mainly between Bitcoin (institutional capital) and Meme coins (high-risk), pushing most altcoins aside.

Delphi believes that 2025 will usher in a transformation of technology that will 'change the world'.

Personally, I am not very optimistic. In 2024, many major KOLs who follow Meme coins emerged. For example, I created a Telegram folder with some truly valuable channels, and it was very difficult to find a channel that was not centered around "ape calls". This is an attention game, and the widely discussed narrative will seriously affect market trends.

3. What's next?

(1) Stablecoin Growth and Credit Expansion

One of the main obstacles facing the market is the oversupply of tokens. The market is facing a large number of new assets from private placements and public token offerings. For example, in 2024 alone, over 4 million tokens were issued on Solana's pump.fun. Meanwhile, since the last cycle, the total market value of cryptocurrencies has only tripled, compared to an 18-fold increase in 2017 and a 10-fold increase in 2020.

The missing elements - stable coin growth and credit expansion - are beginning to reappear. Lower interest rates and more friendly regulation are expected to stimulate speculation and address these imbalances. As stable coins regain traction, their role as a trading and collateral base will be crucial to market recovery.

(2) Institutional Capital Inflow

Until last year, due to regulatory uncertainty, institutional capital was still very hesitant to participate in cryptocurrencies. However, with the reluctant but inevitable approval of a spot Bitcoin ETF by the U.S. Securities and Exchange Commission, this situation began to change, paving the way for future institutional investment.

These institutional investors will look for investment opportunities they are familiar with. While some investors may dabble in meme coins, they are more likely to be interested in assets in areas such as ETH/SOL, DeFi, or infrastructure.

Delphi expects that in the coming year, there will be a phenomenon similar to the 'overall rise' in previous cycles. This time, projects based on fundamental principles or core objectives will regain follow. These assets may include OG DeFi and other assets that have demonstrated good historical performance and have been tested in practice. They may also be infrastructure assets, similar to the L1 transactions we have observed before. Others may include RWAs (Real World Assets) or emerging fields such as artificial intelligence or DePIN.

Not every cryptocurrency will experience triple-digit gains like before, but Meme coins will continue to exist. This may mark a new beginning and widespread crypto growth.

Note: In general, most institutional traders heavily rely on options hedging. Therefore, if there is a 'rally across the board', the assets that are most likely to attract investor interest are those with options, which can be traded primarily on Deribit or Aevo.

(3) Solana Dominance

Solana demonstrates the resilience of the blockchain ecosystem. After experiencing a 96% collapse during the FTX crash, Solana has seen an astonishing rebound in 2024.

The main highlights include:

• Developer Momentum: Solana's hackathons and airdrops (such as the Jito airdrop) have reignited the enthusiasm of developers and users, creating a virtuous cycle of innovation and adoption.
• Market Dominance: From meme coins to AI applications, Solana has dominated the 2024 trends. It is worth noting that its Real Economic Value (REV) - a measure of transaction fees and MEV - exceeds Ethereum by over 200%.
• Future Outlook: Solana is expected to challenge Ethereum's dominant position in scalability and user experience. Its seamless user experience and centralized ecosystem offer significant advantages over decentralized L2 solutions.

4. Final Thoughts

For many people, the current market situation may remind them of 2017-2018, when Bitcoin reached a peak of $20,000 before the new year and started to decline shortly after 2018 arrived. However, in my opinion, comparing the cryptocurrency market of 2018 to the market of 2025 is irrelevant. These are two completely different environments.

It is important to realize that the broad cryptocurrency market extends far beyond the timeline of CT and X. People outside of these platforms have very different views on the market.

In 2025, I expect the crypto market to be divided into two main verticals:

• Web3 natives: Refers to those traders who are deeply rooted in the crypto market. They have a detailed understanding of the unique features of Bitcoin and are willing to participate in high-risk trades, including meme coins, AI agents, and pre-sales - these elements are reminiscent of the wild west.
• Ordinary investors: The risk management methods of institutional investors and retail investors are often different. They usually adhere to more basic investment and trading strategies - viewing cryptocurrencies as alternatives to the stock market.

Which verticals will be marginalized? It's the early-stage DeFi, RWA, and DePIN protocols that cannot ensure a leading position in a niche market or at least on the chain. This is just my opinion.