The following will mainly analyze the possible direction of the cryptocurrency market in 2025, especially in the absence of innovation, the demand for stable markets may increase. The author believes that if the market continues to be bearish, yield-generating stablecoin products may occupy 20-30% of the stablecoin market. With the growth of the stablecoin market, more developers and new DeFi innovations may emerge. Additionally, Trump's supportive policies for cryptocurrencies contribute to the development of the domestic cryptocurrency industry, and investors should pay attention to the potential of domestically produced cryptocurrency tokens.
Cryptocurrency market outlook: Five things to watch in 2025.
1. Strong development of stablecoins.
In 2024, the stable market's market value is expected to grow by 48% to reach a new high of $193 billion, with a trading volume exceeding $27 trillion, approximately three times that of the same period in 2023. Its role is shifting from trading to global capital flow and business expansion, with prospects for continued growth and greater roles in global payments.
2. The tokenization of real-world assets has good prospects.
In 2024, significant progress in the tokenization of real-world assets (RWA) is expected, with developments in multiple fields beyond U.S. Treasuries. While challenges remain, ongoing investment and technological advancements in 2025 are expected to make it an important foundation for the cryptocurrency market cycle, simplifying portfolio construction and investment processes.
3. ETFs change the supply and demand of the cryptocurrency market.
After the successful launch of the U.S. spot Bitcoin ETF, various institutional investors have rushed to hold crypto ETFs. The industry is now focused on the approval of tokens like XRP for spot ETF issuance, and if SEC regulations change, such as removing restrictions on share creation and redemption in cash or allowing staking functions, it will enhance the attractiveness of ETFs.
4. The influence of Decentralized Finance (DeFi) is expected to expand.
After encountering setbacks in the previous cycle, DeFi now has a more sustainable and resilient ecosystem, with total locked value and decentralized exchange trading volumes reaching new heights. New applications are utilizing it to create new experiences, and with changes in the regulatory environment in the U.S., its future influence may expand.
5. Regulatory support is expected to boost the development of the cryptocurrency market.
The U.S. will welcome a more favorable cryptocurrency Congress, with bipartisan support for cryptocurrencies, likely establishing a comprehensive regulatory framework, including stablecoin legislation, ending the era of law enforcement regulation. At the same time, countries like G20 and major financial centers are also drafting rules to create a favorable environment for innovation and growth, attracting more people and institutions to participate in the crypto economy.
Bitcoin and Solana in 2024.
2024 is brutal, unless you are a loyal supporter of BTC or a warrior fighting on the front lines. Venture capital, liquid funds, diamond hands, and true believers have all been crushed, and with the explosion of AI, the future cryptocurrency market looks even darker.
BTC reached $100,000, ETFs were approved, BTC's market dominance reached 60%, and the adoption of traditional finance accelerated. 2024 is truly the year of Bitcoin.
Solana, a tokenization platform. At its peak, SOL's daily trading volume reached $36 billion, about 10% of NASDAQ's daily average trading volume, which is huge for cryptocurrency. The trends of MEME coins and AI coins contributed to all of this.
Hyperliquid is the dark horse in this market. They took bold actions by refusing venture capital funding, and their post-airdrop adoption demonstrated a strong demand for non-KYC perpetual trading and 'thick' platform liquidity.
XRP, ADA, any Dino coin. Uber drivers and the U.S. government seem to like them, so I give them a thumbs up.
Aside from that, I can't think of any rises in this market that lasted more than two weeks.
In 2025, from casinos to new DeFi and U.S. cryptocurrencies. After Trump’s downturn, I noticed that the market's profits did not flow back into AI tokens. Therefore, aside from a small SOL position (a foolish decision), I converted everything into stablecoins.
It is becoming increasingly clear that after months of player versus player (PVP) battles, people are already tired of MEME coins and AI castles in the air. The entire AI sector has been wiped out, with most tokens down 70-80% from their peaks, and the Libra incident nearly sealed this narrative's fate. In short, Pumpfun will go to zero.
So, where did the money from MEME go?
With no obvious catalysts for MEME coins, the wealth effect is fading, leading to a downward spiral that drives players away from MEME coins. Meanwhile, in the current...
In the cryptocurrency market of the day:
Lack of breakthrough innovation.
Existing altcoins continue to stagnate, and ETH is also facing troubles.
Fundamentals suddenly became unimportant.
The MEME coin on the 1st has already died.
The survival rate of newly listed tokens is low, with only a few tokens able to maintain for more than two weeks.
This indeed sounds quite bearish, right? In this case, I believe investors will be more inclined to choose 'risk-averse' investment methods, which is why I believe most of the funds will flow into fiat-backed stablecoins in 2025. Some may wish to leverage their assets to earn passive income through stablecoins. Therefore, yield-generating 'stablecoins', such as USDe or USDS, would be very attractive to them.
While the AI and MEME markets have been destroyed, the total value of stablecoins continues to grow steadily, with a monthly growth rate of 3%, and as of now, TVL has exceeded $220 billion.
Those who want safety and security choose fiat-backed stablecoins. USDT and USDC maintain a 90% market dominance, almost unshakeable, thanks to their widespread adoption across different exchanges and payment platforms. Those who wish to put their stablecoins to work choose yield-generating/decentralized stablecoins. For example, USDe, USDS, DAI, USDO, etc. So far, this area has only occupied a little over 10% of the market share, but they have actually had an incredible year, with total TVL increasing by more than 70%.
Well, I'll say it directly. The current market landscape is:
90% of fiat currency supports stablecoins.
10% of yield-generating stablecoins.
I believe that yield-generating stablecoins still have room for growth because:
1. 'Low volatility options' combined with yields are always attractive to those in the crypto space.
2. Innovation may emerge in new stability mechanisms and capital efficiency strategies, leading to higher yields.
3. Stablecoins have found a product-market fit in cryptocurrency, serving both as currency and investment tools.
Thus, this also forms my cryptocurrency plan for 2025.
My 'bearish' cryptocurrency plan for 2025.
If there is no innovation or new narrative in 2025, I believe the market will have two directions:
New DeFi innovations driven by the growing stablecoin market.
Supportive cryptocurrency policies are driving 'made in America' cryptocurrencies.
1. Stablecoins and new DeFi innovations.
In the next 3-6 months, more stablecoins will be launched as dollar-based tokenization strategies, previously generating competitive yields through different types of collateral or strategies.
Given the composability and 'price stability' of stablecoins, they can easily collaborate with different DeFi protocols and create synergies among themselves.
Examples of existing DeFi integrations include interest rate swap-related products such as Pendle Fi and Spectra Finance, both of which are great designs that allow users to speculate on asset yields, effectively creating new markets for yield-generating assets (including stablecoins).
Currency markets like MorphoLabs, 0x fluid, etc., also provide leveraged yield farming, driving economic activity for stablecoins.
DEXs like CurveFinance also provide a great venue for launching stablecoin pairs' liquidity, etc.
Among all these innovations, my favorite examples are those that create new asset classes, such as Pendle's YT-USDe, which creates a new market on top of yield 'LEGO' and provides an additional layer of yield for stablecoin enthusiasts. In addition to yield optimization, I also hope to see some innovative CDP designs, especially those ideas that can remove over-collateralization and minimize liquidation risks, which can breathe new life into decentralized stablecoins.
After all, I expect that as the stablecoin market grows, there will be more innovations emerging, as this is where funds will flow.
Supportive cryptocurrency policies are driving U.S. cryptocurrency.
Recently, Trump announced an attempt to promote a cryptocurrency strategic reserve program, which includes a basket of 'made in America' coins such as SOL, XRP, etc.
Despite the uncertainty regarding whether cryptocurrency reserves will gain government approval, Trump's influence on the cryptocurrency market cannot be ignored. Here are several examples of Trump's support for cryptocurrencies:
1. Fire Gary Gensler at the first opportunity.
2. Retain all Bitcoin seized by the U.S., establishing a 'strategic national Bitcoin reserve' (for example, the Bitcoin on Silk Road is an example).
3. Launch WiFi DeFi fund and introduce Trump coin, which is very much in line with the native attributes of cryptocurrency.
4. The U.S. Securities and Exchange Commission (SEC) has withdrawn accusations against exchanges and cryptocurrency projects (such as Coinbase, Uniswap, Krakenfx, etc.). Furthermore, Trump's team is likely to support the domestic cryptocurrency industry. Therefore, we can expect more regulatory policies favorable to domestic cryptocurrencies; this is not investment advice, but I will closely monitor these tokens as Trump's influence is significant.
Summary:
As mentioned earlier, this is just a brainstorming and intuitive discussion, and the above views are not supported by statistical data. So please do not take it as investment advice.
Given the lack of cryptocurrency innovation and the market's malaise, if the market remains 'bearish' in 2025, I expect the demand for stablecoins to increase. Assuming investors want their stablecoins to generate returns, I estimate that yield-generating stablecoin products could occupy 20-30% of the stablecoin market in the long term (similar to stETH). This growth in the stablecoin market will attract more developers and builders, possibly leading to the birth of new DeFi infrastructure in the ecosystem. Trump's supportive policies for cryptocurrencies will have a positive impact on the market in the long run.
At the same time, his policies may favor the development of domestic cryptocurrencies. Therefore, it makes sense to pay attention to domestically produced cryptocurrency tokens, as some 'news' has already been enough to cause token prices to surge.
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