As 2025 approaches, let's take a look at how crypto VCs view market developments and potential opportunities

Author: Zen, PANews

As the New Year’s bell is about to ring, the crypto industry welcomes a new development node. In the past year of 2024, the market experienced recovery, innovation, and adjustment, with leading projects continuously solidifying their positions and emerging tracks quietly rising, laying the foundation for the future. Throughout the ups and downs of this year, VCs, as the barometer of industry development, not only witnessed the changes in the market but also shaped the direction of the industry at the intersection of capital, community, and technology.

Standing at the starting point of 2025, PANews invited more than ten top VCs to share their observations and thoughts on the crypto industry. They reviewed the highlights of the past year, analyzed the current market opportunities and challenges, and made predictions about future development trends. In this rapidly changing field, which projects and tracks are becoming the focus of VCs? Let’s delve into the perspectives of VCs and explore the "yesterday, today, and tomorrow" of the crypto industry.

Most Impressive Projects of 2024

In the past year, the crypto industry welcomed a new wave of growth driven by market recovery and technological innovation. From infrastructure upgrades to breakthroughs in emerging tracks, countless projects emerged this year, showcasing strong vitality and innovative potential. Some projects, with their unique technological paths or business models, not only attracted significant attention but also left a profound mark both within and outside the industry.

James Wo, founder and CEO of DFG (Digital Finance Group), pointed out that Hyperliquid started as a high-performance perpetual contract decentralized exchange (perp DEX), attracting a large number of users while maintaining trading execution speed and liquidity. Moreover, the tokens launched by Hyperliquid were not listed on VC or centralized exchanges (CEX), making it one of the most successful airdrops in crypto history. "The platform is expanding its products and launching its own HyperEVM ecosystem, which includes many native decentralized applications (dApps) to enhance the utility of its spot ecosystem. The platform earns substantial fees through on-chain liquidation and market-making, gradually eating into the market share of leading DEXs and CEXs."

Chris, co-founder of Web3Port, also highly praised Hyperliquid, being impressed by its market share, community airdrop and distribution mechanism, and wealth effect. Additionally, he mentioned Pump.fun—the most successful meme coin launch platform this year. Compared to existing platforms in the market, Pump.fun successfully elevated the concept of "meme launch platform" to a top narrative, igniting a wave in the meme market. Chris stated that the insight from Pump.fun is that Web3 projects can achieve success by building products that truly have utility, high user experience, and market fit.

Ryan Rodenbaugh, CEO and co-founder of Wallfacer Labs (vaults.fyi), expressed excitement about the revival of mature lending protocols in the DeFi space, such as AAVE and Compound, as well as the emergence of high-quality newcomers like Morpho, Euler, and Ajna. Although DeFi has not received as much attention in the current cycle as in the past, the understated success of these protocols is still very worthy of attention and tracking.

Among the answers provided by numerous VCs, Pudgy Penguin was one of the most frequently mentioned projects. Joanna, founder and CEO of Jsquare Group, praised Pudgy Penguin, believing it has single-handedly driven the revival of the entire NFT track. "As an early investor and Pudgy NFT holder, I have fully felt the powerful energy of Luca as a representative of the new generation of entrepreneurs, bursting forth with the integrated thinking of Web2 + Web3, which has also strengthened my conviction in one of the first principles: Invest in the next generation."

"Ethena stands out in the DeFi space with its USDE stablecoin, profiting from establishing 1x long and 1x short positions on centralized exchanges (CEX) from high funding rates," said Dinghan, a partner at Jsquare. He noted that Ethena's collaboration with the BlackRock BUIDL fund ensures that USDE can maintain stable returns even when funding rates are negative, further solidifying its long-term viability.

How Will Bitcoin's Market Trend Play Out?

Bitcoin exhibited astonishing growth momentum in 2024. According to CoinGecko data, as of December 31, 2024, the price of Bitcoin had increased by 119.1%. This surge was primarily driven by institutional adoption of spot ETFs, the halving event in April, and optimistic market sentiment following the U.S. elections. Looking ahead to 2025, Chris, co-founder of Web3Port, believes that the Bitcoin bull market is likely to continue, with a breakthrough of $200,000 next year being a high-probability event. He stated that as the market matures, the supply-demand relationship of Bitcoin will further strengthen, and Bitcoin priced below $50,000 may become a thing of the past in future bull-bear cycles.

Regarding the upper limit Bitcoin can reach next year, Allen, a research analyst at Ryze Labs, holds a similar view, primarily judging the peak through technical indicators Pi Cycle and 2Y MA Multiplier. He noted that historically, the resonance times of these two indicators were December 5, 2013, December 16, 2017, and the most recent Pi Cycle top signal on April 12, 2021. According to historical data, these indicators have high reference value. Allen pointed out that based on the 2Y MA Multiplier estimate, Bitcoin's peak might be around $200,000. Both signals have ready-made indicators on TradingView, which can be set for alerts, facilitating peak judgment and reduction decisions.

"If we adopt a cautious perspective, I believe Bitcoin's next phase peak could reach between $120,000 and $150,000, followed by fluctuations between $100,000 and $150,000," said Evan Lu, an investment manager at Waterdrip Capital. Based on Trump's statements regarding establishing a Bitcoin strategic reserve, he hypothesized that as long as Bitcoin's market cap does not surpass that of gold, Bitcoin can be viewed as a growth asset, with its price potentially touching $600,000 per coin, though this process may take 5 to 10 years.

Evan mentioned that during the last halving cycle (May 2020), Bitcoin experienced a slow rise, reaching its first peak in April 2021, climbing from about $9,000 to $65,000. During the period from April to July, due to the impact of the "519 incident," Bitcoin's price saw a significant correction. However, the market then welcomed a second wave of increases, ultimately reaching the highest point of the previous cycle. If the price at this round's halving day is used as a benchmark, it may mark the beginning of a new wave of increases. It is expected that Bitcoin may experience slight declines or sideways consolidation from the end of 2024 to the first quarter of 2025, followed by entering a second wave of increases, at which point the price may reach $120,000 to $150,000.

"Unlike before, the dynamics of this market cycle will be profoundly influenced by multiple factors, with the most critical being the external liquidity brought by Bitcoin spot ETFs and the sustained capital inflow driven by future Bitcoin reserve policies," Evan believes. This suggests that from now until next year's peak, the Bitcoin market may not experience significant corrections but rather maintain a trend of gradual upward movement towards higher price levels.

In discussing Bitcoin, Nemo, investment director at Web3.com Ventures, quoted MicroStrategy co-founder Michael Saylor: "Spend 1,000 hours studying, and you will become a Bitcoin extremist. You will realize that this is not just a technology but a moral justice. Bitcoin brings freedom, economic, and property rights to 8 billion people, while also providing 4 million companies worldwide with the opportunity to invest in non-toxic assets."

Will the Meme and "VC Coin" Debate Continue, and What is the Solution to the Dilemma?

The series of controversies surrounding "VC coins" has been an important topic that cannot be overlooked in the past year. Will Wang, a partner at Generative Ventures, offered a novel perspective, stating that once the scale of primary market VC funds exceeds $30 million to $50 million, it becomes challenging to deliver excess returns to LPs. Will Wang believes that only funds of a sufficiently compact scale can compel VCs to delve into early stages and genuinely support entrepreneurs in need, thus nurturing true "myths." In contrast, large-scale VC funds often fall into the trap of managing scale expansion, participating in later rounds, and launching market-criticized "VC coins." This practice is actually an old problem of Web2 VCs, and Web3 VCs have not been spared in recent years.

"I believe this situation will gradually be corrected. Whether in technology or financial innovation, there will always be phases of non-consensus, and this is precisely when VCs should step in. The market will ultimately reward those VCs who dare to act during non-consensus periods," Will Wang added.

What is the essence of the meme and VC coin debate? Chris, co-founder of Web3Port, pointed out that it ultimately boils down to the competition between the existing funds and liquidity in the market. In an environment with limited new funds, VC coins, due to their low circulation and high FDV characteristics, along with the continuous emergence of VC coin projects, make it difficult for market funds to sustain, significantly reducing retail investors' willingness to take over. The advantage of meme coins lies in their full circulation and fair distribution mechanism, which aligns with the psychology of market investors, becoming a "new weapon" for retail investors to counter institutional advantages.

However, the PVP (player versus player) nature of meme coins is inherently unsustainable, as most meme coins, except for a few top projects, struggle to possess long-term value support. Chris stated that from the overall landscape of the crypto market, apart from BTC and ETH, and a very few DeFi infrastructure projects with stable income sources, most other projects' tokens are PVP, where market participants compete against each other, with gains and losses originating from the same source. Regarding the current dilemma of VC coins, he believes there is no good solution in the short term. In the context of tight market liquidity and the increasing advantages of institutional investments, alleviating the VC coin issue requires undergoing a complete bull-bear cycle, allowing the market to naturally clear and rebuild trust and fairness.

"Issuing tokens is not the end, but the true starting point for project operation," said Evan Lu, investment manager at Waterdrip Capital. He believes that project teams should not approach projects with the mindset of "financing equals profit, issuing tokens equals selling." Instead, they need to seriously consider whether they can truly land application scenarios, whether they can have more stable cash flow income, and whether the project can still maintain active users and a real community after issuing tokens.

Jiawei, the main person in charge of IOSG Ventures, candidly stated that "VC coin projects" need to think better about Token Market Fit, whether there is a necessity to launch tokens, what their purposes are, and what kind of tokens the community will pay for, allowing a broader community to participate and disperse chips to strengthen interest binding.

Which Ecosystems, Tracks, and Projects May Shine and Become Tomorrow's Stars in the Industry?

As the crypto market rises, new rounds of innovative narratives such as AI and DeSci are driving the industry towards a new development stage. After undergoing the baptism of market cycles, leading ecosystems continue to solidify their moats, while emerging tracks and projects are quietly rising, accumulating strength for future explosions. Looking ahead to the next year, which ecosystems, tracks, and projects are likely to stand out and become the "tomorrow's stars" leading the industry? Many institutions have provided unique insights.

Will Wang, a partner at Generative Ventures, believes that many people do not fully understand the essence of RWA (Real World Asset). "We believe RWA essentially boils down to one thing: enabling blockchain to account for mainstream financial assets globally." He stated that currently, the penetration rate of this "on-chain accounting" is less than 0.1%. Even if the penetration rate increases by just one order of magnitude, it could give rise to multiple secondary assets similar to ONDO and USUAL.

Jiawei, the main person in charge of IOSG Ventures, stated that re-staking is a major narrative for 2024 that has not yet been reflected in coin prices. With the gradual launch of AVS, it may reach a climax in 2025. Additionally, ZK projects (such as RiscZero and hardware-accelerated Ingonyama) will gradually showcase their market potential.

"AI Agents are expected to become the tomorrow's stars of the crypto industry," said Allen, a research analyst at Ryze Labs. AI Agents have the ability to process vast amounts of market data and can make precise trading decisions in real-time, with response speeds far exceeding those of traditional human traders. In the DeFi space, AI Agents can optimize lending rates and liquidity pool pricing mechanisms, significantly enhancing the efficiency of fund utilization. Furthermore, they open up new possibilities for the intelligent management of crypto assets, redefining the boundaries of asset management.

In this topic, the PayFi track has been repeatedly mentioned by multiple institutions and is undoubtedly a focal point of market attention. With the popularization of cryptocurrencies, ecosystems capable of achieving seamless, low-cost payments are entering a rapid development phase. Dinghan, a partner at Jsquare, predicts that projects bridging traditional finance with cryptocurrencies (such as Layer 2 solutions and stablecoin issuers) will receive widespread attention in the future. Payment protocols that can deeply integrate with mainstream services and facilitate convenient conversions between cryptocurrencies and fiat currencies will become key forces driving the integration of cryptocurrencies into daily life.

The integration of AI and blockchain is also seen as an important development direction for the future. Dinghan stated that with the rapid rise of decentralized AI infrastructure and AI agents, this field is entering a new growth cycle. Projects building decentralized AI networks or AI-driven applications are gearing up and are expected to become new highlights in the industry. "Blockchain provides a trusted foundational layer for AI interactions and transactions, enhancing data transparency and security, while also opening up new avenues for the widespread deployment of autonomous AI applications, further accelerating innovation in this field."

Is the Long-Talked "Mass Adoption" Expected to Break Through? Who Will Hold the Holy Grail?

"In different areas of the industry, we have already seen some signs of 'mass adoption,'" said James Wo, founder and CEO of DFG (Digital Finance Group). "In vertical fields like DePIN, Web2 users are being attracted, providing value to their ecosystems through additional resources." For example, Helium connects existing Web2 telecom giants through 5G networks, while Render provides low-cost GPU support for gaming, rendering, and AI fields. "James believes that the next area likely to drive larger-scale adoption may be the payment sector. Infrastructure that can provide efficient crypto payment and fiat settlement solutions for physical stores will spur a new wave of users, and as retail investors begin to invest in and hold crypto assets, this trend will further accelerate."

Zeke, investment research manager at YBB Capital, believes that based on recent industry discussions, the payment track is likely to become the first track for blockchain "mass adoption." Stablecoins have already demonstrated the ability to surpass traditional banking financial efficiency in non-dollar countries, and for residents of third-world countries, they also offer various utilities such as protection against domestic currency inflation, virtual service subscriptions, and financial investments. Once a compliant framework is established, the potential of this track is equivalent to the trillion-dollar traditional payment systems of Web2. The enormous demand will also give rise to various startup projects, from upstream stablecoin issuers to downstream payment services, leading to a true flourishing of innovation. The first large-scale application era of blockchain is likely to begin here.

Joanna, founder and CEO of Jsquare Group, expressed an optimistic attitude towards the progress of "mass adoption" in the coming year. She stated that mass adoption involves both bringing in money (institutions/retail investors) and bringing in user heads (mainly retail investors). Traditional institutions are more likely to enter the market driven by policy factors, while on the retail side, from the perspective of ecosystem positioning and track selection, the Solana ecosystem has a leading advantage. At the same time, Joanna has high hopes for Pudgy Penguins in her portfolio, expecting it to achieve breakthroughs in the future, and believes that Luca can set a benchmark image for the new generation of entrepreneurs.

Ryan Rodenbaugh, CEO and co-founder of Wallfacer Labs (vaults.fyi), stated that the breakthrough will be driven by new front-end user experiences, making it easier for less experienced users to start using DeFi. Additionally, products with existing distribution channels (such as wallets) providing seamless interactions through embedded DeFi experiences will also become key.

What Stage Are We in the Bull Market, and How Long Will It Last?

"We may currently be in the mid-stage of the bull market, and when considering when it will end, we feel it is necessary to contemplate the significance of Bitcoin ETFs being approved," said Zeke, investment research manager at YBB Capital. "ETFs place Bitcoin within a centralized regulatory framework, making trading legal and fully regulated, which also means that a wider range of financial derivative products will emerge. As legitimate participants become more widespread, this will directly reduce price volatility in the market. Therefore, in the future, it will be difficult to see the possibility of a short-term halving or significant decline, and coupled with the diminishing cyclical impact of Bitcoin halving, the market will transition from previous sharp bears and bulls to a long-term slow bull."

James Wo, founder and CEO of DFG (Digital Finance Group), also commented on the long-term direction of the market, stating that we may currently be in the "optimistic phase" of the market cycle, with non-believers in crypto starting to buy and hold some crypto assets, while more and more institutions and governments express interest in the crypto industry. The Trump administration's return to power will also promote a more favorable regulatory environment for crypto, and the proposal for a Bitcoin strategic reserve will undoubtedly further enhance market interest and confidence in Bitcoin and the entire crypto industry.

"Predicting when the market cycle will end is somewhat counterintuitive," James added. "If we expect a market crash like in 2022, that scenario is unlikely to occur because the crypto environment has improved and developed. Many institutions have begun to follow MicroStrategy's lead in accumulating Bitcoin, so it is unlikely that we will see the market cycle 'end' with an 80% crash. There may be adjustments in the future, but it is unlikely to return to the levels seen during the bear market."

Nemo, investment director at Web3.com Ventures, believes that in the short term, Bitcoin has at least completed half of its bull market process. He stated that from an optimistic and faith-based perspective, Bitcoin will not disappoint anyone. The essence of Bitcoin is to combat inflation and safeguard wealth.

How Should Retail Investors Seize Opportunities in the Bull Market?

Chris, co-founder of Web3Port, advises retail investors to focus on high-certainty tracks, paying close attention to BTC, meme coins, and AI narrative tracks, while being cautious with investments in old altcoins lacking new narrative support. Additionally, they should learn to follow the trend, understand market trends, and keep up with hotspots and points of attention. "Cycles are at the core of the market; timely positioning during the arrival of a cycle and timely exit before it fades is crucial."

Allen, a research analyst at Ryze Labs, stated that bull markets are often the main reason most people lose money. "Investors may earn unexpected returns in the early stages, but as they start to use borrowed funds and leverage in the mid-term, all floating profits can turn into floating losses during a rapid correction, forcing them to cut losses." Allen believes that to avoid this situation, the best strategy is to prepare a sum of money that, even if completely lost, will not affect current living conditions, and to withdraw costs at appropriate times, ensuring that the funds remaining in the market are all profits. The most taboo practice is to continuously add principal and invest repeatedly, and when the principal is insufficient, resort to leverage. This operation may seem to quickly expand returns, but it is actually extremely risky, and once the market fluctuates violently, the consequences are often dire.

Zeke, investment research manager at YBB Capital, also pointed out the potential risks of the bull market: "The market changes in 2025 will be more complex than in previous years, and the overall investment strategy needs to be more robust than before 2024. The more the market rises, the more dangerous it becomes; none of us can precisely judge the market direction, and in 2025, we should approach market changes with greater reverence." Zeke stated that investment trading is a form of practice, and the crypto market is continuously evolving towards greater maturity and professionalism. Investors should first cultivate internally and then learn externally, maintaining a stable and strong core is particularly important, always prioritizing risk.

Dinghan, a partner at Jsquare, suggests that retail investors should prioritize risk management. "Although cryptocurrencies have significant return potential, their volatility remains a key issue." He added that for those seeking passive investments, blue-chip assets like Bitcoin and Ethereum are usually safer choices. For more actively participating investors, safety is crucial—using hardware wallets and trusted security tools. It is essential to focus on high-quality, sustainable projects rather than chasing short-term trends. In any market, identifying assets with long-term excellent performance, rather than holding assets that lag behind the market, is crucial.