What are the key points of the cryptocurrency market in 2025?

On January 1, 2024, we published an article stating that 2024 will be an important turning point, and the crypto market may usher in a new round of significant growth cycles. As shown in the figure below.

In that article, we also listed some narratives that might become hot topics in 2024, including RWA, AI, GameFi, DePin, DeFi, Layer1, etc. Looking back, some of the narratives mentioned in the article performed quite well over the past year, but some did not meet our initial growth expectations.

In fact, over the past few years, I have customized a major theme for Huali Huawai each year, such as:

The major theme for 2022 was "Breakthrough." That year not only marked the official birth of the Huali Huawai media IP but also the beginning of our new round of regular investment in Bitcoin.

The major theme for 2023 was "Advancement." The articles that year mainly focused on crypto knowledge popularization and the exploration and listing of various potential projects during the bear market. Therefore, the corresponding annual e-book was titled "Blockchain Thinking Advancement."

The major theme for 2024 is "Methodology." Last year's articles mainly focused on organizing content related to experience, ideas, methods, strategies, and psychological development. Thus, the corresponding annual e-book was titled "Blockchain Methodology."

In the blink of an eye, it is now 2025. This year, I plan to set the major theme for Huali Huawai as "Era," which signifies that the crypto field may welcome or begin to enter a new era, and each of us will become participants and witnesses.

But for most partners, what they may be more concerned about is where the key points of the crypto market are this year.

Next, let's briefly summarize the key points (the issues that everyone is more concerned about).

1. Altcoin Season

In last year's articles, we mentioned the topic of altcoin season several times. For those holding a full or large position in altcoins, one of the most concerning questions might be: Will there still be opportunities for altcoin season in 2025?

Generally speaking, when BTC.D begins to show a clear downward trend, altcoins usually experience a rotating upward trend. At least in the past cycles, this pattern has been effective because, as Bitcoin rises and stabilizes, liquidity often shifts to altcoins in pursuit of higher returns.

For example, during the bull market of 2021, when BTC.D's dominance fell from around 73% to about 40% (the first phase was from January 2021 to May 2021), it directly triggered a large-scale altcoin season, with coins like SOL, DOGE, and ADA experiencing exponential growth. Correspondingly, TOTAL3 also grew from a total market cap of $210 billion to around $980 billion. As shown in the figure below.

Although the market rhythm was disrupted by the 519 incident, overall, many altcoins performed well in terms of price, and after the market recovered in July, TOTAL3 continued to grow until it began to enter the bear market in November.

In the week of November 18, 2024, BTC.D reached its highest point since April 2021 at 61.53%, then began to decline, and some altcoins also started to show a phase of upward trends, with tokens like AAVE experiencing good gains during this period. At the same time, TOTAL3 successfully broke through the ATH of 2021, reaching $1.13 trillion. As shown in the figure below.

Just as most people began to immerse themselves in the heated atmosphere of the long-awaited altcoin season, the Federal Reserve's interest rate meeting on December 19 seemed to directly crash the market, leading to a clear correction phase. Currently, BTC.D is maintaining around 58%, which appears to be a relative psychological resistance zone in the short term. Let's see how it goes; if it can continue to drop to around 40%, we may still have the opportunity to see an altcoin season in the first or second quarter of this year.

However, regarding the altcoin season, we still echo what we said in previous articles: this cycle has birthed a massive number of new projects, and many projects with high FDV and low circulation issues have not yet been thoroughly resolved. Additionally, the current market liquidity still faces insufficiency issues. Therefore, even if we welcome an altcoin season this year, it does not mean that all altcoins will have opportunities for price increases or breakthroughs of previous highs.

2. Narratives

If you currently cannot grasp the rhythm of the altcoin season in advance and do not have much time and energy for research, the simplest way to participate is to buy core assets like ETH in batches. Although the returns may not be as great as imagined, at least it can provide peace of mind.

If you want to gain greater profit opportunities during the altcoin season while also being able to bear greater risks, which key narratives should you focus on?

Although everyone's understanding and focus on this matter may differ, we can make a simple list here (the following is just a partial list, and the order is not ranked):

- AI

Although the AI boom has gone through several rounds since the low in 2022, the enthusiasm for AI seems to show no signs of slowing down, even giving rise to new sub-narratives like AI Memes and AI Agents.

Especially in recent days, the popularity of AI Agents seems to be quite high, and I have noticed that many partners in the group are discussing this topic. As shown in the figure below.

- MemeCoin

Every round of bull market wealth stories is basically inseparable from the topic of MemeCoin. As of now, I checked the on-chain data, and the number of MemeCoins providing liquidity pool trading has exceeded 10.97 million. As shown in the figure below.

Although the MemeCoin sector appears chaotic overall, with significant price volatility, and the vast majority of MemeCoins are likely to end up at zero, retail investors seem more willing to participate. It is foreseeable that if there is still an opportunity to see an altcoin season this year, MemeCoins will undoubtedly be at the forefront and will see a new round of wealth creation.

If you cannot keep up with the fast pace here but do not want to miss out on MemeCoins, it is advisable to focus on projects with strong communities or viral marketing capabilities.

- RWA

Currently, RWA mainly focuses on tokenizing real estate, government bond products, commodities, etc., to bring traditional finance into the cryptocurrency market. Some projects have also received favor and support from large institutions like BlackRock.

Although many retail investors still do not have a positive outlook on the RWA sector, if we extend the time dimension, with the advancement of regulations and other aspects, RWA will definitely usher in further development in the future and may become a new avenue for some enterprises to capitalize.

As of the writing of this article, the market size of RWA is $15 billion, but compared to the global traditional asset scale (over $300 trillion), this number is still in its infancy. As shown in the figure below.

- DeFi 3.0

The development of DeFi seems to be entering a critical turning point. With the advancement of institutional RWA and the deep integration of AI and blockchain technology, the combination of DeFi and TradFi may become one of the core trends this year.

Moreover, with Trump's official inauguration this year, if regulations on DeFi can be further relaxed, it will undoubtedly create a more favorable development environment for this field.

At the same time, since last year, the approval of spot ETFs for BTC and ETH has been granted, and major institutions are continuously entering the deep waters of the crypto market. In the future, as more traditional investors begin to accept DeFi tools and this new investment concept, it is expected to attract more traditional capital inflows, which will further accelerate the development of the DeFi sector and drive a new round of explosive growth in related ecosystems.

As for whether DeFi will become a complementary role in the traditional financial structure or usher in a new wave of decentralized revolution, we cannot predict; we can only wait and see.

Of course, in addition to the few main narratives we listed above, some paradigm narratives that emerged last year are also worth continuing to pay attention to, such as Telegram bots, Gaming (including platforms like Polymarket), etc. Whether you focus on key leading projects or those low-market-cap potential projects depends on your time, energy, and risk preferences.

In the already passed 2024, we experienced many key events, such as witnessing another Bitcoin halving (April 20, 2024), seeing Bitcoin break $100,000 (December 5, 2024), witnessing the official approval of Bitcoin ETF (January 11, 2024) and Ethereum ETF (July 23, 2024), observing CZ's box lunch journey, experiencing the airdrop frenzy of various well-known projects, going through the super cycle of AI narratives, experiencing the viral spread cycle of MemeCoins, witnessing Trump's crypto highlight moments, and welcoming a new round of interest rate cuts from the Federal Reserve… and so on.

Although 2024 has done enough homework, for 2025, opportunities and risks still coexist. Whether it is the altcoin season issue that everyone is concerned about or which narratives may become hot topics this year, if you wish to continue participating in the market, you must also manage your positions well and think clearly before making any specific operations:

• Why do you want to buy it?

• What proportion of your position do you plan to invest in it?

• What is the maximum loss you can bear on it?

• What are your profit-taking and stop-loss plans?

• How long do you plan to hold it?

Having discussed several key points that everyone may be concerned about, let's also make a brief summary.

In fact, in an article last year (November 4, 2024), we mentioned two key points for this year: one is related to Huali Huawai, and the other is related to trading aspects. As shown in the figure below.

From a trading perspective, for us, 2025 will mainly be a year to execute the exit plan. We will continue to maintain focus and patience and strictly adhere to our trading discipline. Below, I will briefly summarize my position situation during the period from 2022 to 2024 in four aspects.

First, regarding overall position management:

……To be continued, the remaining content will continue to be updated through Huali Huawai.