Original title: Crypto Truths & Lies for the Year 2025
Original author: Ignas | DeFi Research
Source: https://www.ignasdefi.com/
Translated by: Daisy, Mars Finance
BTC will reach $250,000 in 2025, and ETH will reach $12,000.
This is a prediction I just made up; it may or may not come true.
Most predictions are like this, although some have (some) data backing them. For example, VanEck provided reasonable predictions, while Cathie Wood is known for her exaggerated high figures. She predicts BTC will reach $500,000 by 2026 and $1 million by 2030. As for Saylor? He predicts it will reach $13 million by 2045.
Here is a great summary from DLNews of the 2024 predictions.
Source: DLNews
But how profound and useful are price predictions? Besides making you more resolute in holding your coins with 'diamond hands', it doesn’t provide actionable insights.
I propose a different mental framework that will not only make you a better investor in 2025 but will also help you succeed in future investments.
'What important truths do very few people agree with you on?'
This question posed by Peter Thiel is intellectually challenging because maintaining the status quo is much easier than thinking independently.
Matti offered his perspective on evaluating investments at Zee Prime Capital through a re-framing of questions.
I believe he wrote one of the most important articles of 2024, prompting reflection on the current state of cryptocurrency and providing a mental framework for how to outperform the market in 2025 and beyond.
'If you hear the current discussions and narratives, what do you think is real and obvious? What is the obvious lie? What is the non-obvious truth, and what is the non-obvious lie?' — Matti
Some examples of obvious truths from the last cycle include:
Higher interest rates are bearish for cryptocurrencies.
Wars are unfavorable for cryptocurrencies.
And some obvious lies include:
Crypto super cycle.
Bitcoin is an inflation hedge.
(3,3) Cooperation is sustainable and can exist long-term.
Obvious issues are easy to identify.
Matti explained: 'The distinction between obvious and non-obvious can be redefined as popular versus unpopular, or knowable versus unknowable based on existing data.'
'Non-obvious truths require unique insights, while obvious truths can be seen from a distance, but even then, they can’t be 100% certain, because nothing is truly certain. The boundary between the two is not necessarily binary; it may be more like a continuum.'
Non-obvious truths and lies are harder to identify, but they provide insights into what’s to come, especially when non-obvious things become obvious. At that point, the crowd rushes in, and FOMO (fear of missing out) begins to spread.
You want to be at the starting point of FOMO.
Some non-obvious truths from the last cycle:
The UST collapse was just a matter of time.
FTX is a criminal operation.
L2 leads to liquidity fragmentation.
And some non-obvious lies:
SOL is dead.
Gaming is the natural product-market fit (PMF) for cryptocurrency.
The shiny new L1 trading has ended.
Here are some examples from Matti's blog post.
I really like this approach and shared my thought process in an article about 'counter-narrative trading' in 2022.
To outperform the market, you must find 'ideas or investments that already exist but are not widely understood or are underrated by many.'
I identified RWA, DeFi options, SBTs, and Instadapp (INST) as potential counter-narrative trading opportunities. Although DeFi options and SBTs have not made progress, RWA and INST have performed quite well.
The key here, as always, is timing. INST took a year and a half to see significant gains.
Side note: Writing trade logs is a superpower. It allows you to revisit past thoughts and understand how your thinking and investment strategies have evolved. Feel free to read my full article on counter-narrative trading.
In hindsight, identifying these truths and lies is easy, but predicting the future is really hard.
Really, give it a try. I posed this question on platform X, and you can read some thoughts.
Before we continue, it might be good to read Matti's full blog post for deeper background.
In the remainder of this article, I will share some truths and lies about the current cycle.
I will start with what I think is obvious and then move on to the challenging non-obvious parts. To gain more insights, I also consulted with some individuals in the crypto industry.
Here is the unified framework for 2025.
Obvious truths.
Facts or outcomes that are widely accepted and based on observable evidence.
The combination of AI and cryptocurrency will persist.
In the past year, AI has dominated the focus of the cryptocurrency community and may continue to do so in 2025.
Crypto 'diehards' once craved AI tokens, but options were few, with TAO being the leading choice.
All of this has changed with the emergence of AI agents. Now, we have crypto-native AI agents that post content on platform X or trade on platforms like Polymarket while also launching tools to help kickstart these AI agents.
I believe the combination of AI and cryptocurrency is an obvious truth that will persist.
This does not mean AI agent tokens will continue to soar. Current AI agents are relatively simple (for example, AIXBT merely scans data and others' opinions and re-presents them). Additionally, the idea that 2025 will be the super cycle for AI agents is also an obvious lie.
But bubbles ultimately inspire innovation, and just as DeFi continued to mature after the DeFi bubble burst, AI agents will persist.
Spot ETFs are bullish.
I am still surprised that so many believe ETFs are bearish. Some think, 'Bitcoin (BTC) in an ETF is part of traditional finance (TradFi) packaging, a Trojan horse that will destroy Bitcoin from within.'
For Ethereum (ETH), ETFs may provide stronger bullish momentum than all ETH locked in L2, as traditional finance will allocate a portion of crypto portfolios to BTC and ETH.
Digital up, brrrrr.
Stablecoins are the killer application/product-market fit (PMF) of cryptocurrencies.
This is Stacy Muur's insight, carried over from the previous cycle.
However, in this cycle, stablecoins may eventually surpass crypto trading, extending into the fintech space.
PayPal already has stablecoins, Revolut is launching its own stablecoin, and even Visa may issue a stablecoin, although this may impact their profit margins. As Robbie from Delphi Digital predicted, this move is 'clouded by the risk of disruption.'
Many projects perform better before TGE.
This viewpoint was also proposed by Stacy Muur.
'My thought is that the overall metrics of most protocols before launching tokens are much better (with $HYPE and $F being exceptions). So, the demand for the product before the token goes live is stronger than after TGE.'
DeFi Made Here also agrees with this. He cleverly stated:
'9/10 chains/projects are garbage, with no organic usage; fake TVL supported by private trades.'
I share this perspective to remind you that we are in a very niche industry. Like venture capital (VC), we cannot expect all investments to moon.
In fact, most tokens will not survive long and will trend downward. Our task is to find those exceptional tokens that change the game.
Obvious lies.
Airdrops are dead.
Low circulation and high FDV token issuance have caused significant damage, making investments in otherwise good protocols unworthy.
But I am bullish on airdrops in 2025, as expectations have returned to rationality, and discussions related to airdrops are no longer popular.
Hyperliquid may not be the last great airdrop of this cycle. And now is not the time to stop clicking the button.
This perspective was also shared by Aylo.
Crypto projects need venture capital to succeed.
This is another lesson learned from low circulation, high FDV issuances. The venture capital moat has been shrinking year by year. With the rise of public and private placement platforms like Echo and Legion, projects can now raise funds from a diversified pool of crypto-native investors.
Many VCs contribute little besides providing funds and a logo. In contrast, attracting crypto-native investors makes them more strongly aligned with the success of the investment.
However, lesser-known projects will still rely on venture capital. However, finding 'that 100x' opportunity is no longer the exclusive right of venture capital.
Bullish.
(Memecoin, AI agents...) Super cycle
There is one term that should always keep you on alert: 'super cycle'.
The Memecoin super cycle was once a hot topic until some old tokens, including 'dead' tokens like XRP and Litecoin began to rise.
Now, AI agents are the main focus. But this narrative will ultimately lose momentum, to be replaced by a new narrative that has yet to enter the sight of most people.
Next, we transition directly from this lie to the one below...
Retail investors prefer memecoins.
This perspective comes from CryptoKoryo, who tracks narrative price performance and rotation.
His conclusion is very simple: 'Rotation always happens after people have already entered.' In simple terms, whenever someone says 'projects x, y, z (like sol, tao, hype, etc.) will dominate this cycle', it is likely a lie.
To track this rotation, you can check out his new analytical tool dexu.ai.
Additionally, retail investors are no longer that naive: they can access Phantom wallets and find new narratives on Reddit, TikTok, and elsewhere.
In fact, a non-obvious truth is that crypto-native users may end up buying tokens held by 'dumb retail investors' sourced from TikTok rather than from the crypto community (CT).
DAOs are decentralized, efficient, 'smart', and transparent.
In 2024, I embarked on a new journey: becoming a representative for multiple DAOs, including Aave, Lido, Instadapp, Arbitrum, Paraswap, and Uniswap.
The turning point was the attack on Compound DAO, where the attacker managed to pass a vote and allocated $24 million in COMP tokens.
What’s the problem? DAOs are too apathetic, and token holders are generally unaware of the voting process. It's quite sad.
To empower DAOs, highlight key votes, and consider this as a potential career path, I decided to become a DAO representative.
In the process, I learned many valuable lessons worth blogging about in the future. But I also sought additional insights from Doo (from Stablelabs), as he has been running DAO representative companies for several years.
His insights confirmed the truths many of us were skeptical about:
DAOs are not truly decentralized, efficient, transparent, nor operated by 'smart money'.
Additionally, the financial reserves of DAOs are limited and may go bankrupt.
Most DAOs are still led by founders or core teams and are relationship-based.
They also have protectionist tendencies.
DAOs can be protectionist.
For example: Uniswap DAO is completely unaware that Unichain is under development. Hahaha :(
Why is this important?
We cannot continue to deceive ourselves and the community; the current DAO model is unsustainable and needs to be disrupted. Whoever can fundamentally improve the DAO model will create a new successful business.
Non-obvious truths.
Insights that are subtle or not widely recognized often require a deeper understanding or unique analysis.
Bitcoin is a hedge against macroeconomic uncertainty.
Blackrock's crypto department head mocks those who insist on viewing BTC as a risk asset and trade based on metrics like unemployment rates, non-farm payroll data, or the ISM manufacturing index.
Bitcoin cannot be both digital gold and a risk asset simultaneously.
Blackrock claims in its 2024 research that Bitcoin is a unique diversification asset with the following characteristics:
Bitcoin, with its high volatility, is clearly a 'risk' asset. However, most of the risks and potential drivers of returns Bitcoin faces are fundamentally different from traditional 'risk' assets, making it ill-suited for most traditional financial frameworks — including the 'risk on' and 'risk off' frameworks adopted by some macro commentators.
Bitcoin, as a scarce, non-sovereign, decentralized global asset, leads some investors to view it as a hedge during panic or when certain geopolitical turmoil occurs.
In the long run, Bitcoin’s adoption trajectory may be driven by concerns over global currency stability, geopolitical stability, US fiscal sustainability, and political stability in the US. This is in stark contrast to how traditional 'risk assets' relate to these forces.
Bitcoin sometimes sells off at the start of major macro events. However, chaos, turmoil, and potential monetary printing are bullish for Bitcoin.
The danger is that commentators continue to depict Bitcoin as a risk asset, leading traditional finance (TradFi) to mistakenly view Bitcoin as digital gold.
Perception can turn into reality.
Tokens do not need to have utility.
Almost all crypto projects will eventually issue tokens.
Think about it: which DeFi protocol cannot operate without a token?
Uniswap can operate normally without UNI, and Aave, Maker, Fluid, Ethena... they can all function without a token.
However, they all have tokens. Why? For governance? Community? Fundraising?...
In fact, I addressed this question in a post in 2022.
A few years ago, launching a token required proof of some utility. This is no longer the case.
Memecoins have changed this perception the most, but the launch of Arkham's $ARKM token was a pivotal moment.
If analytical platforms can issue tokens, then any crypto project can: wallets, extensions, marketing agencies...
This trend continues, with future token issuance from Nansen and Kaito included, but 2025 is expected to become even crazier. Anything that can attract attention can be tokenized. Utility doesn’t matter; attention, community, and users are key.
In fact, this is an insight shared with me by Aylo: attention and price are correlated.
My advice is similar to DeFi protocols: click the button, register any analytical tools gaining attention, share your referral links, and avoid discussing 'why it needs a token.'
It needs a token because it makes us (early users and founders) wealthy.
DeFi is more decentralized than CeFi.
This is a spicy perspective brought to you by DeFi Made Here.
The centralization here does not refer to the decentralization of blockchain or self-custody.
As DMH said, 'Few protocols have the majority of TVL, few risk providers work for the same project, and there are vested interests for each project, etc.'
Here are some unedited quotes:
J.P. Morgan has about 12% market share in the US, while Aave's market share is 50-70%.
L2 is an unregulated multi-signature wallet worth billions.
Tether is a multi-signature wallet worth hundreds of billions.
Chainlink almost completely controls all value in DeFi.
The same risk assessment team receives salaries across different protocols, and there are clearly conflicts of interest.
Wait, wait, wait.
Thus, the argument is that the concentration of business and TVL in DeFi is higher than in CeFi. As shown by the collapse of USDC, reliance on a few participants can be detrimental to DeFi.
I am optimistic about DeFi. As the market develops, more participants will enter the industry, and risks will decrease over time.
Tether USDT's dominance has ended.
USDT's dominance in the crypto stablecoin market is about to end, as the market landscape is changing with the emergence of new players and use cases. Currently, Tether leads in trading and collateral.
However, future trends will focus on two rapidly growing areas: savings products and payments.
Traditional finance is entering the on-chain savings market, while fintech and Web2 firms are entering the crypto payments space (if Visa launches a stablecoin, it will become a major player).
While these categories are relatively small today, they could drive over $50 billion in new capital inflows in the next two years (as predicted by Ethena).
Ethena and Sky are already leading in the savings sector, while sUSDe is expected to benefit from the integration of traditional finance.
In the payment space, the TON ecosystem is leveraging Telegram's network to build seamless crypto-native solutions.
Thus, the war of stablecoins is shifting from trading and store of value dominance to innovation in savings and payments, marking the start of a new era in the crypto space.
Moreover, crypto regulations like MiCA are pushing Tether to exit the EU and other markets. As an EU citizen, despite USDT still being an option in DeFi, I no longer use USDT.
Non-obvious lies.
Fee switching is bullish for token prices.
'Be careful what you wish for; you might get it.'
Token fee switching is often the primary demand of token holders. However, revenue sharing is not a panacea for token prices; it is just one bullish narrative for tokens.
Remember the #realyield narrative from two years ago?
In fact, most protocols' revenues are not sufficient to bring significant price increases to tokens, due to the abnormally high revenue/market cap ratio in cryptocurrencies.
However, fee switching is not bad. It becomes problematic when protocols generate significant income, but the trading price of the token is below the market cap of the DAO's treasury assets. This has led to the closure of some DAOs.
I believe fee switching does not affect how high tokens can rise; rather, it sets a floor for the minimum trading price of tokens. If revenue sharing is effective and income is significant, the token will eventually become worth buying at some point.
The bull market will continue until next year, expected to end in the fourth quarter.
I agree. This is more of a prediction than a fact/lie.
I mention this because there is a strong consensus in CT that 2025 will be a year to sell, potentially early in the fourth quarter. Notably, Delphi predicts that the fourth quarter of 2024 will see a new all-time high for Bitcoin.
But is it really that simple?
In 2023, the prevailing consensus is that Ethereum will outperform Bitcoin in 2024, while Solana will continue to 'die.'
However, like most consensus trades, I believe there will be certain factors that break this bull market cycle, possibly delaying or extending it.
Indeed, it will be an interesting year.
The fragmentation of user experience/interface in Ethereum L2 will persist.
I believe Ethereum's poor performance is largely due to its inferior user experience compared to Solana. The issues are evident.
Ethereum is slower and more expensive than Solana.
The increase in the number of L2s has led to fragmentation of liquidity and user experience.
Developers must choose a specific L2 for their applications to succeed, unlike building on the unified Solana.
If you use Metamask, this poor user experience is very apparent. However, over time, user experience/interface is continuously improving.
The OP Superchain and similar alliances like Polygon and zkSync are enhancing backend user experiences. However, if Delphi Digital's prediction about the 'Fat Wallet' theory holds true, the user experience issues may be resolved as early as 2025.
'Fat Wallet' theory addresses the inefficiency of Ethereum L2 by positioning wallets as key solutions to Ethereum L2 user experience issues.
As protocols and applications 'slim down', wallets become front-end aggregators, simplifying interactions like bridging and liquidity management through chain abstraction.
By integrating payment for order flow (PFOF) and providing distribution as a service (DaaS), wallets can simplify access to decentralized applications (dApps), reduce friction, and improve transaction execution.
Wallets also leverage their close connection with users to create more intuitive and seamless experiences, addressing high conversion costs and establishing smoother L2 onboarding processes, ultimately facilitating user adoption.
Now, with the rise of AI agents, user experiences are enhanced because agents can perform all the necessary bridging work for humans.
NFTs are dead.
This is an interesting perspective. Some find it obviously false, while others believe it is true. That's why I placed it in the 'non-obvious lies' category.
Currently, NFTs seem to be an obvious lie, especially due to the impact of the PENGU airdrop on the entire NFT space. But apart from a few exceptions, NFTs have been losing value over the past year.
However, I am looking forward to the next big trend in NFTs.
For me, 2024 will be the year of Bitcoin Ordinals and the launch of PENGU. I hope NFTs can transcend the realm of avatars and cultural icons.
Perhaps NFTs can evolve in the AI era to provide undeniable proof that a photo is original and not created or altered by AI.
One thing is certain: NFTs feel stagnant, but they are not stagnant.
Revolutionary things need to be built.
What are your non-obvious truths and lies?
You may disagree with my views, and that's fine! It means you have the potential to make money from things that are not yet consensus but soon will be.
Builders need to look beyond the 'obvious' to seek non-obvious truths to build lasting and meaningful projects. Popular vocabularies and trendy narratives (like the 'hot topics' in the crypto space) often lead to superficial efforts lacking true innovation.
Matti provides great advice in his blog.
For founders:
Align efforts with genuine curiosity and a first-principles mindset.
Avoid building solely based on popular trends or narratives.
And for most of my readers, as investors:
Assessing the founder's vision is based on surface-level obvious truths or deeper, unique insights.
Non-obvious truths are more likely to lead to breakthrough products and companies.
The ability to distinguish between obvious/non-obvious truths and lies helps investors support ideas that truly have potential rather than just hype.
So, please share your thoughts in the comments!