Crypto Market 2025 Outlook: AI Bubble, OG Memes Decline and BTC Dominance

In the turbulent crypto market, accurately grasping trends and opportunities is crucial. Core team members of Delphi Digital engaged in a deep discussion about the prospects of the crypto market in 2025 in the latest episode of the Hivemind podcast, exploring hot topics such as the evolution of AI narratives, the Bitcoin L2 ecosystem, and the return of infrastructure value.

Market Observation

Recent market fluctuations have been severe, but there has been no fundamental change in the fundamentals. Bitcoin continues to perform the best, while DeFi projects and established Meme coins still show little movement. There has been no fundamental shift in market interest, and the assets that performed best during the rebound are still those that showed strong performance at the bottom.

Macroeconomic factors and technical adjustments have influenced this market fluctuation. The market trends before Trump's inauguration largely depend on his actual measures regarding encryption, as well as the influence of the officials he appoints in the larger macro market.

AI Bubble

In 2025, AI may become the largest market narrative. The fundamentals of AI itself are very strong, and the most attractive stories can be built around it. This could become one of the largest bubbles in financial history.

The current market value of AI-related projects is approximately $50 billion, and this scale will only continue to grow. The market will experience brutal capital rotation in the future, making it difficult to fully keep up with these changes. Current leaders like Virtuals and ai16z are likely to face challenges from new projects.

The Decline of OG Memes

In 2025, not only will most of the funds in the crypto market shift towards Meme coins, but AI will essentially be a bigger Meme than WIF, easier to tell stories about and more exciting for people.

The market is tired of traditional Meme coins, and people hope to buy something that at least has some actual value or a path to value. Some OG Meme coins may still perform well, but that wave of Meme coins in March may be finished.

Fundamental Return

Projects without long-term income stories struggle to sustain themselves. Those that can truly generate income, such as some L1/infrastructure projects, are gaining more attention. Currently, Solana accounts for 56.8% of the revenue in the crypto market, and if it can reach 80% by the end of the year, it's hard not to believe it has the potential to surpass ETH.

The market is moving towards some kind of balance, where those fundamental coins that can generate actual revenue will find buyer support at a certain price, while those Meme coins or overvalued infrastructure tokens will struggle to find a price bottom.

Next Generation L2 and L3

L2 performed well last year, with the total locked value increasing from 22 billion to 40 billion. In the future, at least one large financial institution is expected to announce the launch of its own L2. Currently, only three L2s have TPS exceeding that of Ethereum, and it is expected that when Mega ETH is launched, it may perform well, but its funding is likely to be transferred from existing L2 projects.

Bitcoin's Dominance

The traditional concept of "altcoin season" may have become outdated. Instead, projects with strong fundamentals and clear narratives will show significant performance, while other projects will perform mediocrely.

If Bitcoin rises to $125,000-$150,000, BTC's dominance may return to 62%-63%, and then start to decline.

Bitcoin L2 Feasibility

In 2025, Bitcoin L2 may become a dark horse. We might see some real ZK L2s launched on Bitcoin in the future, which not only provide scalability but also enable programmability. Even if only 1-2% of Bitcoin enters the L2 ecosystem, it would be enough to multiply the TVL of L2 several times.

Starkware's Starknet might be a dark horse for Bitcoin L2. Once OP_CAT is approved, they can start submitting proofs to Bitcoin.

The main source of future demand for BTC may come from non-encryption native markets. Currently, there are approximately $32 billion worth of BTC in a state similar to L2, and if BTC can have a real solution emerge, this number will increase significantly.