The cryptocurrency market is known for its unique cyclical fluctuations, and sector rotation is key to analyzing this dynamics. From the birth of Bitcoin in 2009 to the evolution of the market by 2025, fund flows, narrative hotspots, and market sentiment alternate among different sectors, sketching a macro outline of the market. Understanding the intrinsic logic of sector rotation not only helps us shift from chasing short-term fads to grasping long-term trends but also reveals the deeper laws of market development. Historical experience shows that each cycle has its leading sector - from early altcoins to DeFi, NFT, Metaverse, followed by the rise of AI and RWA. Looking forward to the second half of 2025, sectors like SocialFi, GameFi, AI, RWA, PayFi, and Stablecoin are expected to become market focuses, while the Metaverse may also regain vitality due to the recovery of the virtual economy.

This article aims to outline the rotation of sectors from a macro perspective from 2009 to 2025, distilling its core driving factors and providing a practical observation framework to explore the laws of sector rotation in the crypto cycle.

Core Logic: Macroeconomic Drive of Sector Rotation

Sector rotation is a microcosm of market cycles, reflecting the synergy of fund flows, narrative drives, market sentiment, and external environments. Its core logic can be summarized in four points:

  • Cycle phases drive fund flows
    Early Bull Market: Funds favor low-risk assets like BTC and ETH, institutions dominate the market, and Stablecoin provides hedging support.
    Mid Bull Market: Technology-driven sectors (such as AI, Layer 1) attract fund attention.
    Peak Bull Market: Speculative sectors (such as SocialFi, GameFi, Metaverse) heat up due to retail enthusiasm.
    Bear Market Phase: Funds flow back to Stablecoin or BTC, ETH, and the market enters a consolidation period.

  • Narrative Leads Market Trends
    The narrative gradually evolves from 'digital currency' to 'application scenarios' (such as Metaverse, GameFi, SocialFi), and then to 'practical value' (such as AI, RWA, PayFi). Social media (such as X platform's#SocialFi,#Metaverse trending topics) have played a significant role in amplifying the narrative. For example, in 2021, the Metaverse surged due to Facebook's rebranding to Meta, and in 2024, the AI narrative propelledFetch.ai (FET) prices significantly higher.

  • External Factors Catalyze Rotation
    Technological Breakthroughs: Smart contracts, Layer 2, AI algorithms, Stablecoin compliance, etc.
    Policy Influence: Such as U.S. ETF approvals (over $40 billion inflow in 2024, CoinGecko), EU MiCA regulations implementation.
    Macroeconomic: Federal Reserve interest rate cuts, U.S. dollar weakening, etc.
    Market Sentiment: X platform trending topics, KOL discussions on#Metaverse,#GameFi's discussions.

  • Rotation Pace Accelerates
    As the market matures, the rotation cycle shortens from years to months. On-chain data (like Dune, Glassnode) and X platform trending topics have increased market transparency. In 2025, speculative sectors (like SocialFi, GameFi) and practical sectors (like AI, RWA) may coexist, while Stablecoin provides market stability.

Macro Insights: Sector rotation is the fusion of technological advancement, market psychology, and external environment. In 2025, SocialFi, GameFi, and Metaverse may become active due to community and technology, while AI, RWA, and PayFi receive attention for practicality, with Stablecoin playing a hedging role. Investors must be wary of bubble risks, such as the lessons from the 2022 Metaverse project valuation crash.

History and Predictions: Sector Rotation Timeline from 2009 to 2025

2009-2012: Bitcoin Genesis Period - Single Asset Era

  • Market Background: The Bitcoin white paper was published in 2009, BTC broke $1 in 2011, and the first halving occurred in 2012.

  • Leading Sector: Bitcoin (no significant rotation).

  • Rotation Path: Funds concentrated on BTC mining and early exchanges (like Mt. Gox).

  • Case: 10,000 BTC purchased for pizza in 2010; Mt. Gox promoted circulation from 2011-2012, 850,000 BTC lost in 2014.

  • Logic: The narrative focuses on 'decentralized currency', and sector rotation has not yet formed.

  • Related Directions: The prototype of Stablecoin (like BitUSD) lays the foundation for PayFi, and the BitcoinTalk forum hints at SocialFi community potential.

2013-2016: Altcoin Era - Initial Appearance of Rotation

  • Market Background: In 2013, BTC broke $1,000, and during the 2014-2015 bear market, it fell to $200.

  • Leading Sector: Altcoins (like LTC, XRP, DOGE).

  • Rotation Path: Funds flowed from BTC to altcoins (chasing 'faster, cheaper'), and returned to BTC in the bear market.

  • Case: LTC rose to $50 in 2013 (CoinGecko); DOGE emerged from the Reddit community.

  • Logic: The narrative shifts towards 'technology differences', speculation begins to show.

  • Related Directions: XRP explores PayFi, and DOGE hints at SocialFi community strength.

2017-2018: ICO Boom and Public Chain Competition - Rotation Systematization

  • Market Background: In the 2017 bull market, BTC broke $20,000; in the 2018 bear market, it fell to $3,000.

  • Leading Sector: Ethereum, ICOs, new public chains (like EOS, TRON).

  • Rotation Path: BTC → ETH → ICO/new public chains, bear market flows back to BTC/ETH.

  • Case: ETH rose to $1,400 (CoinGecko), EOS raised $4 billion, CryptoKitties inspired the Metaverse.

  • Logic: The narrative focuses on 'application scenarios', and the ICO boom exposes regulatory loopholes.

  • Related Directions: ETH lays the foundation for GameFi/SocialFi, and USDT provides liquidity for DeFi/PayFi.

2019-2022: DeFi, NFT, Metaverse, and Meme Boom - Diversification of Rotation

  • Market Background: 2019 was sluggish, the 2020-2021 bull market (BTC broke $60,000), and the 2022 bear market (Terra crash).

  • Leading Sector: DeFi, NFT, Metaverse, GameFi, Meme Coins, Layer 1/2.

  • Rotation Path: BTC/ETH → DeFi → NFT/Metaverse/GameFi/Meme → Layer 1, bear market flows back to BTC/ETH/Stablecoin.

  • Case:
    DeFi: TVL grew from $1 billion to $20 billion in 2020, reaching $180 billion by the end of 2021 (DeFiLlama).
    NFT: In 2021, the floor price of CryptoPunks rose to 100-150 ETH (NFTPriceFloor).
    Metaverse: The Sandbox had a trading volume of about $2.5 billion in 2021 (CoinGecko).
    GameFi: Axie Infinity had over 2 million players in 2021 (DappRadar).

  • Logic: The narrative diversifies, and the sentiment on X platform (like #Sandbox) amplifies the rotation.

  • Related Directions: The Metaverse lays the foundation for SocialFi/GameFi, and Stablecoins (like USDC) support DeFi/PayFi.

2023-2025 First Half: AI, RWA, and Regulation Integration - Rotation Maturation

  • Market Background: In 2023, ChatGPT ignited the AI boom, and in 2024, the Federal Reserve cut interest rates, with ETF inflows exceeding $40 billion (CoinGecko).

  • Leading Sector: AI + Blockchain, RWA, Layer 2, DeFi 2.0.

  • Rotation Path: BTC/ETH → AI/RWA → Layer 2/DeFi 2.0.

  • Case: Fetch.ai rises to $2 in 2024 (CoinGecko), BlackRock BUIDL scale around $5 billion (Bitget).

  • Logic: The narrative shifts towards practicality, and regulations (like EU MiCA) reshape the market.

  • Related Directions: AI (like TAO), RWA (like bonds), PayFi (like Stellar) rise.

Prediction for the Second Half of 2025: Altseason and Outlook for Popular Sectors

  • Market Background:
    Assuming the Federal Reserve continues to cut interest rates (based on 2024 trends), BTC may rebound to $120,000 to $150,000 (speculative), and the discussion volume on X trending topics (like#SocialFi) could surge by 5 times (hypothetical). Be wary of bubble risks, such as the 2022 Luna crash.

  • Leading Sector:
    July-September: Layer 1/2, DeFi 2.0, Stablecoin.
    October-November: AI, RWA, SocialFi, PayFi, Meme Coins.
    December: GameFi, NFT, Metaverse, Altcoins.

  • Rotation Path: BTC/ETH → Layer 1/2/DeFi 2.0 → AI/RWA/SocialFi/PayFi/Meme → GameFi/NFT/Metaverse/Altcoins.

  • Case (Prediction):
    SocialFi: Lens Protocol TVL may reach $500 million to $1.5 billion (RootData).
    GameFi: Illuvium players may increase to 3-8 million (DappRadar).
    AI: Bittensor market cap may reach $800 million to $1 billion (CoinGecko).
    RWA: BlackRock BUIDL scale may reach $10 billion to $30 billion (Bitget).

  • Logic: Both practicality and speculation exist in the sectors, with Stablecoin providing hedging support.

  1. Constructing Sector Rotation Map
    Focus on Mainstream Sectors: Layer 1/2, DeFi, SocialFi, GameFi, AI, RWA, PayFi, Stablecoin, etc. Indicators include TVL (DeFiLlama), active addresses (Glassnode), X trending topics.

  2. Capturing Rotation Signals
    On-chain Data: TVL, transaction volume changes.
    Social Media: X trending topics (like#GameFi), KOL dynamics.
    Technical Indicators: RSI, funding rates.

  3. Risk Management
    Be wary of bubbles, such as the 2022 Metaverse crash.
    Verify project fundamentals, monitor macro risks (such as Federal Reserve policies).

The rotation of sectors in the crypto space resembles a symphony of technology, psychology, and environment. From 2009 to 2025, funds flow between different sectors, reflecting the evolution of the market. Looking forward to the second half of 2025, SocialFi, GameFi, and Metaverse may regain vitality due to community and technology, while AI, RWA, and PayFi may emerge due to practicality, with Stablecoin providing a stable foundation. Investors need to remain rational and be wary of bubbles and regulatory risks. In the future, as technology advances and institutions enter, sector rotation will become more complex and changeable. Only by combining on-chain data, social trends, and narrative insights can opportunities be seized in the crypto cycle.