The 2025 in the Eyes of Encryption VC: Opportunities and Challenges Coexist

With the arrival of 2025, the encryption industry is ushering in new development opportunities. The market experienced recovery, innovation, and adjustment in 2024, with leading projects consolidating their positions and emerging tracks quietly rising. As an industry barometer, VC not only witnessed market changes but also shaped the direction of the industry.

Standing at a new starting point, several top VCs shared their observations and thoughts on the encryption industry. They reviewed the highlights of the past year, analyzed the current market situation, and made predictions about future trends. In this fast-changing field, which projects and sectors are becoming the focus of attention? Let us explore the encryption industry's "yesterday, today, and tomorrow" through the eyes of VCs.

The Most Influential Projects of 2024

In the past year, the encryption industry has ushered in a new round of growth driven by market recovery and technological innovation. From infrastructure upgrades to breakthroughs in emerging tracks, numerous projects have demonstrated strong vitality and innovative potential.

Hyperliquid attracts a large number of users with its outstanding performance in perpetual contract DEX, while maintaining trading speed and liquidity. Its token issuance created one of the most successful airdrops in encryption history. The platform is launching the HyperEVM ecosystem, expanding native dApps to increase usability. By obtaining considerable fees through on-chain liquidation and market making, it is steadily encroaching on the market share of leading DEXs and CEXs.

Pump.fun has successfully brought the "Meme Launch Platform" to the forefront of narratives, igniting a frenzy in the Meme market. It demonstrates the possibility for Web3 projects to achieve success by building products with high practicality, user experience, and market fit.

The resurgence of mature lending protocols like AAVE and Compound in the DeFi space, along with the rise of high-quality new projects such as Morpho, Euler, and Ajna, is exciting. Although DeFi has not received the same level of attention as before, the understated success of these protocols is still worthy of notice.

Pudgy Penguin has driven the revival of the entire NFT track, showcasing the powerful energy of the new generation of entrepreneurs' Web2+Web3 integration thinking, and confirming the importance of "investing in the next generation."

Ethena's USDE stablecoin has performed remarkably in DeFi, profiting from high capital rates through position establishment via CEX. Collaborating with BlackRock ensures long-term viability, further consolidating its position.

Analysis of Bitcoin Market Prospects

In 2024, the price of Bitcoin increased by a cumulative 119.1%, mainly benefiting from the adoption of spot ETFs by institutions, the halving event, and post-election optimism. Looking ahead to 2025, the Bitcoin bull market is expected to continue, with a high probability of breaking through $200,000. As the market matures, the supply and demand relationship of Bitcoin will strengthen, and prices below $50,000 may become a thing of the past.

The technical indicators Pi Cycle and 2Y MA Multiplier suggest that the Bitcoin top may be around $200,000. Cautious predictions indicate the next peak could reach $120,000 to $150,000, followed by fluctuations between $100,000 and $150,000. Based on Trump's statements regarding Bitcoin reserve policies, the long-term price could touch $600,000, but it would take 5 to 10 years.

Unlike in previous years, this round of the market will be influenced by multiple factors, especially the external liquidity brought by ETFs and the capital inflow driven by reserve policies. This means that from now until the peak next year, Bitcoin may maintain a fluctuating upward trend, gradually moving towards higher price levels.

The Battle Between Meme Coins and VC Coins

The essence of the competition between Meme and VC coins is the competition for the existing market liquidity and funds. In an environment with limited new funds, VC coins, due to their low circulation, high FDV characteristics, and the continuous emergence of new projects, make it difficult for market funds to sustain support. The full circulation and fair distribution mechanism of Meme coins aligns with the psychology of retail investors, becoming a "weapon" against institutional advantages.

However, the PVP attributes of Meme coins are essentially unsustainable. Apart from a few top projects, most Meme coins struggle to possess long-term value support. In the overall market landscape, aside from BTC, ETH, and a small number of DeFi infrastructure projects, most tokens are of the PVP nature.

In the short term, the VC coin dilemma has no good solution. Against the backdrop of tight liquidity and strengthened institutional investment advantages, alleviating the problem requires going through a complete bull-bear cycle, allowing the market to clear naturally and rebuild trust and fairness. Project teams need to seriously consider the landing of application scenarios, stable cash flow income, and the ability to maintain active users and a real community after the issuance of coins.

Future Potential Tracks and Projects

RWA(Real World Asset)is essentially about using blockchain to account for mainstream financial assets globally. Currently, the penetration rate is less than 0.1%, indicating a huge potential for growth.

Re-staking as the grand narrative of 2024, the price of the currency is not yet fully reflected. With the gradual launch of AVS, 2025 may welcome a climax. ZK projects ( such as RiscZero and Ingonyama ) are gradually revealing their market potential.

AI Agent is expected to become a star of tomorrow, demonstrating huge potential in trading decision-making, DeFi optimization, and asset management.

The PayFi sector has garnered widespread attention, with an ecosystem capable of seamless, low-cost payments rapidly developing. Payment protocols deeply integrated with mainstream services will drive the incorporation of cryptocurrency into daily life.

The integration of AI and blockchain is an important development direction. Decentralized AI infrastructure and AI agents are rapidly emerging, and projects that build related networks or applications are poised to take off.

"Prospects for Mass Adoption" Breakthrough

The payment track is expected to become the first breakthrough for "mass adoption" of blockchain. Stablecoins demonstrate advantages over traditional banking efficiency in non-US dollar countries. Once a compliance framework is established, the potential of this track is comparable to trillion-level traditional payment systems.

From the perspective of ecological positioning and track selection, the Solana ecosystem has a greater leading advantage at the retail level. New front-end user experiences and embedded DeFi experiences will drive breakthrough adoption.

The approval of the Bitcoin ETF means the birth of more widely financialized derivative products, and the increase in legitimate participants will directly reduce market price volatility. The future market may shift from sharp bear and bull cycles to a long-term steady bull.

Bull Market Phase Assessment and Investment Recommendations

The current situation may be in the "optimistic phase" of a bull market, with increased interest from institutions and governments in the encryption industry. There may be adjustments in the future, but it is unlikely to return to bear market levels.

Retail investors should focus on high-certainty tracks, such as BTC, Meme coins, and AI narratives, and be cautious when investing in old altcoins that lack new narrative support. Understand market trends, keep up with hotspots, and seize cycles.

Risk management is crucial. For passive investors, blue-chip assets like Bitcoin and Ethereum are safer choices. Active participants should focus on security, using trusted tools like hardware wallets. Pay attention to high-quality, sustainable projects rather than short-term trends. Identify long-term performing assets and avoid holding underperforming large-cap varieties.