2025 Crypto Market Forecast: Cycle Review, Outlook, and Hot Narratives

Historically, Bitcoin Tends to Perform Strongly in February Following Halvings

1. Cycle Review and Forecast

1) Review of 2017 and 2021 Cycles

• 2017: Bitcoin experienced a correction in January but resumed its upward trend in February.

• 2021: Similarly, BTC fell in January before regaining momentum in February.

2) Forecast for 2025

If history repeats itself, February of this year may also witness a similar upward trend.

3) Market Rumors and Potential Driving Factors

Recently, market speculation about executive orders related to Bitcoin has been heating up. Although not yet confirmed, historical experience suggests that such events usually have a significant impact on the market.

Next, we will delve into the performance across various sectors.

2. Industry Overview

1) Infrastructure & Interoperability

• Reducing Network Tribalism and Enabling Cross-Chain Connectivity

  • Developments: Superposition (Arbitrum L3) and Abstract (Hydra integrated with Stargate) are introducing more efficient solutions for asset transfer and data sharing. LayerZero is expanding its influence, allowing applications on Superposition to access liquidity from over 100 connected chains. Arcana Network has partnered with Scroll, allowing users to pay gas fees in stablecoins (USDC/USDT) on any chain, greatly simplifying the onboarding process for users.

  • Perspective: These developments indicate a growing momentum in advancing cross-chain interoperability. From L1 to L2 to L3, seamlessly moving assets and data is gradually becoming an industry requirement. Projects that can integrate user-friendly interfaces, gas abstraction, and universal cross-chain bridges are poised to reduce barriers that have hindered the adoption of DeFi due to "network tribalism" in the past. Looking ahead, we may see more customized L3s launched in vertical fields, such as gaming, RWAs (Real-World Assets), and institutional-grade DeFi.

2) Liquidity, Borrowing, and Real-World Assets

• The Holy Grail of Credit and Lending Ecosystems

  • Developments: Coinbase has introduced BTC-collateralized loans for US users, providing a way for a more mainstream audience to leverage their Bitcoin assets. Tradable has partnered with ZKsync to bring 1.7billioninRWAsontothechain,demonstratinghowinstitutional−gradeproductscanfurtherpenetratetheDeFispace.PlumeNetworkhasattractedover4.5 billion in asset commitments for asset tokenization, with a TVL of 64millionbeforelaunchandthelaunchofa25 million RWAfi ecosystem fund.

  • Perspective: The blurring line between CeFi and DeFi is an important sign of industry maturity. Coinbase's entry into the crypto mortgage lending market shows that centralized exchanges are willing to offer products traditionally associated with DeFi platforms. This may divert DeFi users but also validates the importance of on-chain lending as a key financial tool. The integration of RWAs is considered the "holy grail" of connecting traditional finance and on-chain liquidity. If this trend continues, DeFi could experience stronger returns, deeper liquidity, and higher institutional trust, but it may also come with more regulatory scrutiny. The development of these two areas not only represents technological and ecological progress but also reflects the transformation of the entire industry from "novel technology" to mainstream financial tools.

3) Liquid Staking & Synthetic Bitcoin

• Innovation in Staking Mechanisms

  • Developments: Babylon Labs has launched $YBTC, a liquid staking token backed 1:1 by BTC, integrated with pSTAKE. BrahmaFi has introduced the Onchain+ program, combining multi-chain strategies and AI agents (ConsoleKit) for automated DeFi operations.

  • Perspective: Liquid staking has proven to be a key means of unlocking additional returns for stakers without sacrificing liquidity. By tokenizing staked assets (such as BTC, ETH, etc.), DeFi participants can use them as collateral or trade freely. This "dual yield" model (earning staking rewards and potentially DeFi yields) is likely to accelerate further. However, there are inherent risks: the more assets are "liquid staked," the more complex the system becomes. Protocols must remain transparent and undergo thorough audits to prevent hidden leverage from eroding system stability.

4) Ecosystem Expansion and Strategic Collaborations

• Introducing Large-Scale Users and Corporate Partnerships

  • Developments: Polygon Labs has partnered with India's largest telecom company, Reliance Jio (with over 450 million users), to integrate blockchain solutions into Jio's applications. Ledger has integrated Uniswap into Ledger Live Desktop, providing a smoother experience for hardware wallet users. Abstract is preparing for its mainnet launch, hinting at a wave of innovations in multi-chain products to come.

  • Perspective: Introducing large-scale users and corporate partnerships are key to the mainstream adoption of blockchain technology. This not only increases the visibility of blockchain technology but also further validates its value through practical application scenarios. Especially in high-growth markets like India, the partnership between Polygon and Reliance Jio could become an important example of driving blockchain adoption.

5) Airdrops, Incentives, and Liquidity Mining

• Intensifying User Competition

  • Developments: Multiple projects such as Scroll, Quai Network, Fuel, and Bubblemaps are launching airdrops or continuing incentive seasons, each with different community participation criteria. Protocols like Vertex (rewarding 2.1 million SEItokens)andDerive(rewarding2millionDRV to liquidity providers) continue to offer user incentives. Nodepay and Solayer provide early claim processes or direct distribution models at the TGE stage.

  • Perspective: Airdrops have proven to be an effective way to initiate an initial user base but have gradually become a "standard" in competition among new protocols. As more projects offer incentives, user fatigue may become an issue. The key for projects is to attract users through genuine utility, not just by "chasing incentives." In the long term, protocols need to find a balance between incentive mechanisms and sustainable token economics. The best strategy is to design a reward system that attracts new users and retains them through the actual value of the product.

3. Narrative Overview

From liquid staking and ecological collaborations to user incentives, the current industry focus is on enhancing user experience and engagement through innovation and strategy. These developments not only drive infrastructure improvement but also mark the gradual evolution of DeFi towards a more mature and efficient stage.

1) BTC Price Dynamics and Macro Impacts

• Market Dynamics

  • On the first Monday of the new year, the market experienced a significant "bull trap." Bitcoin ($BTC) surged after the New York market open, with Coinbase premiums attracting investors who believed a bull market was imminent. However, this signal proved false. The next day, Bitcoin's price quickly stagnated and fell sharply, with the altcoin market weakening subsequently.

2) Uncertainties Arising from Key Macro Factors

• Inflation Concerns: Strong employment market data (NFP report) released on January 10 indicated underlying inflationary pressures, which could lead to fewer interest rate cuts, serving as a bearish signal for stock and crypto markets.

• US Dollar Index (DXY): Reached a new high of 110.

• 10-Year Treasury Yield: Rose from 4.6% to 4.8% year-to-date.

• S&P 500: Retested pre-election price levels.

3) AI Token Corrections and Opportunity Consolidations

• VIRTUAL:Fell575.2 billion.

• AI16Z:Dropped632.5 billion.

• ZEREBRO:Declined73820 million.

• FAI:Fellfrom650 million to $500 million.

• $AIXBT: Remained near all-time highs despite market weakness.

• $GOAT: Dropped 55% and remained weak.

Emerging Winners

• ANON:Grewfrom20 million to $240 million.

• AVA:Increasedfrom60 million to $300 million.

• PIPPIN:Rosefrom15 million to $320 million.

4. Memecoins Dynamics

1) FARTCOIN

• A meme coin loosely associated with the AI narrative, it rebounded 75% after experiencing a 56% decline. Market speculation suggests its market cap could break through $5 billion or even higher.

BUTTHOLEandLLM

• BUTTHOLE:Fell70140 million.

• LLM:RelatedtotheAInarrative,itdeclined75150 million.

2)Analysis and Interpretation

Dino Coin and USA Coin (represented by $XRP)

XRPhasoutperformedthemarketthisyear,witha6XRP, thereby driving its price up.

Other Strongly Performing Tokens

• $HBAR: It has shown robust growth momentum, possibly due to its innovations and applications in the field of blockchain technology.

• $XLM: As another digital currency, its growth may have been fueled by the overall increasing interest in digital currencies and its advantages in payments and transfers.

• $ADA: The token of Cardano, its growth may be linked to its progress in smart contracts and decentralized finance (DeFi).

Other Notable Strong Performance Trends

• SPXandGIGA: Both approached or surpassed a market capitalization of $1 billion but subsequently experienced significant declines. This may indicate that market enthusiasm for these projects has waned or that investors have doubts about their long-term potential.

• $SUI: Despite also experiencing a decline, its drop was relatively small, potentially suggesting that the market still has some confidence in it.

1. New Project Launches

• BIO:AsthefirstmajorDeSciprotocoltolaunch,itsFullyDilutedValuation(FDV)reached3 billion, but it has since declined by 55%.

• $GRASS: After weeks of sideways trading, it showed a strong rebound.

  $USUAL: Due to controversy surrounding changes to the USD0++ redemption rules, it has fallen 66% from its all-time high.

  Tokens to Approach with Caution

  $FTM: Although it may experience a resurgence due to the removal of trading contracts, it faces significant migration issues.

  $RUNE: It faces risks associated with ThorFi lending and has been compared to LUNA.

  Animal-themed meme coins: POPCAT,WIF, and NEIROperformedtheworst,withPOPCAT falling 73% from its all-time high.

• 6. Outlook for 2025
  The market has embarked on a new chapter, but the macroeconomic environment and the diversity of the token market remind us to remain cautious while seeking potential opportunities.