At the beginning of 2025, the market prospects and investment opportunities in the eyes of encryption VC.

As the New Year bells are about to ring, the encryption industry stands at a new development node. In 2024, the market has experienced recovery, innovation, and adjustment, with leading projects consolidating their positions and emerging tracks quietly rising. As a barometer of the industry, VC has not only witnessed market changes but also shapes the direction of the industry at the intersection of capital, community, and technology.

Standing at the starting point of 2025, we invited several top VCs to share their observations and thoughts on the encryption industry. They reflected on the highlights of the past year, analyzed the current market opportunities and challenges, and made predictions about future trends. In this rapidly changing field, which projects and tracks have become the focus of VCs? Let's explore the "yesterday, today, and tomorrow" of the encryption industry together.

The Most Impressive Projects of 2024

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

The founder of a digital financial group pointed out that Hyperliquid started as a high-performance perpetual contract decentralized exchange, attracting a large number of users while maintaining trading speed and liquidity. Its token issuance has become one of the most successful airdrops in the history of encryption. The platform is expanding its product line by launching the HyperEVM ecosystem to increase the practicality of the spot ecosystem. By earning significant fees through on-chain clearing and market making, it is gradually capturing market share from both DEX and CEX.

A co-founder of a Web3 investment institution also highly praised Hyperliquid's market share, community distribution mechanism, and wealth effect. He also mentioned that Pump.fun is the most successful meme coin launch platform this year, pushing this concept towards top narratives and igniting the meme market frenzy. This indicates that Web3 projects can achieve success by building practical, high-experience, and relevant products.

The CEO of an asset management company believes that the revival of mature lending protocols like AAVE and Compound in the DeFi space, as well as the emergence of newcomers like Morpho, Euler, and Ajna, is exciting. Although the attention on DeFi is not as high as it once was, the understated success of these protocols is still worth noting.

In the eyes of many VCs, Pudgy Penguin is one of the most impressive projects. The founder of an investment institution praised its role in revitalizing the entire NFT sector, reflecting the Web2+Web3 integration mindset of the new generation of entrepreneurs.

A partner at an investment firm stated that Ethena has performed impressively in the DeFi space with the USDE stablecoin, profiting by establishing long and short positions through CEX. Collaborating with BlackRock ensures the long-term viability of USDE.

Bitcoin Market Trend Prediction

In 2024, Bitcoin has shown an astonishing growth, with a cumulative price increase of 119.1%. Looking ahead to 2025, a co-founder of a Web3 investment firm believes that the bull market is likely to continue, and a breakthrough of $200,000 is very probable. As the market matures, the supply and demand relationship of Bitcoin will be further strengthened.

An analyst from a research institution predicts that the Bitcoin top may be around $200,000 based on technical indicators. He suggests paying attention to the Pi Cycle and 2Y MA Multiplier indicators, which can be used for top determination and reduction decision-making.

A capital investment manager predicts that the next peak for Bitcoin could reach between $120,000 and $150,000, followed by fluctuations between $100,000 and $150,000. Based on potential policy impacts, the long-term price could touch $600,000, but this would require 5 to 10 years. He believes that the current market dynamics will be influenced by multiple factors, including external liquidity brought by ETFs and capital inflows driven by reserve policies.

A director of an investment institution quoted a well-known figure in the industry: "After studying for 1000 hours, you will become a Bitcoin extremist. Bitcoin brings freedom, economic and property rights to the world, and also provides funding investment opportunities for enterprises."

The Controversy Between Meme and "VC Coin"

A venture capital partner has proposed an innovative viewpoint: overly large VC funds struggle to bring excess returns to LPs. Only well-sized funds can delve into the early stages and support entrepreneurs who truly need help. Large-scale funds often fall into the dilemma of expanding management scale, launching the market-criticized "VC coin." He believes this situation will gradually be corrected.

A co-founder of a Web3 investment firm pointed out that the competition between Meme and VC coins is essentially a contest between the existing market funds and liquidity. Meme coins resonate with retail investors due to their fully circulated and fairly distributed mechanisms. However, apart from a few top projects, most Meme coins struggle to provide long-term value support. He believes there is currently no solution in the short term, and it requires experiencing a complete bull and bear cycle to rebuild trust and fairness.

A capital investment manager emphasized that issuing tokens is not the end point, but rather the starting point for the project's actual operation. Project teams need to seriously consider issues such as the implementation of application scenarios, stable cash flow, and an active user community.

The head of an investment institution suggested that "VC coin projects" need to think more about Token Market Fit, considering the necessity of token launch, its use, and community recognition, to encourage broader community participation in decentralized fundraising and strengthen interest binding.

Future Potential Tracks and Projects

AI, DeSci and other new rounds of innovative narratives are driving the industry towards a new stage of development. Looking to the future, several institutions have provided unique insights:

A certain venture capital partner believes that RWA essentially allows blockchain to account for mainstream financial assets globally, with a current penetration rate of less than 0.1%. An increase in penetration rate may give rise to multiple secondary assets similar to ONDO and USUAL.

A leader of an investment institution stated that re-staking will be a major narrative for 2024, with AVS gradually launching, and a peak may be reached in 2025. ZK projects will also gradually show market potential.

Analysts at a research institution are optimistic about AI Agents, believing they have great potential in trading decisions, DeFi optimization, and asset management.

The PayFi track is receiving a lot of attention. A partner at an investment firm predicts that payment protocols that enable seamless conversion between cryptocurrencies and fiat currencies will become crucial.

The integration of AI and blockchain is seen as an important development direction. Decentralized AI infrastructure and AI agents are rapidly emerging, and related projects are expected to become new highlights in the industry.

"Mass Adoption" Breakthrough Prospects

The CEO of a certain digital finance group believes that vertical fields such as DePIN are attracting Web2 users. The payment sector may drive the next wave of mass adoption, and efficient encryption payment and fiat settlement solutions will accelerate this trend.

A capital investment research manager stated that the payment track is expected to become the first track for blockchain "Mass Adoption". Stablecoins have demonstrated efficiency that surpasses traditional banks in non-US dollar countries and possess various utilities. Once a compliance framework is established, it will spur the emergence of various innovative projects.

The CEO of a certain investment institution is optimistic about next year's progress, believing that the entry of traditional institutions and retail investors will drive adoption. From the perspective of ecological positioning and track selection, the Solana ecosystem has a leading advantage.

The CEO of a certain laboratory stated that the new front-end user experience and embedded DeFi will be key to driving adoption.

Bull Market Phase and Duration

A capital investment research manager believes that we are currently in the mid-stage of a bull market, and the approval of ETFs means that Bitcoin will be included in the regulatory framework, which may reduce market volatility and shift towards a long-term slow bull.

The founder of a certain digital financial group stated that we may be in an "optimistic phase," with increased institutional participation and potential friendly policies further boosting confidence. There may be adjustments in the future, but it is unlikely to return to bear market levels.

A director of an investment institution believes that Bitcoin has completed half of its bull market process in the short term and is optimistic about its nature of combating inflation and preserving wealth in the long term.

Retail Investor Advice

1. Focus on high certainty tracks, such as BTC, Meme coins, and AI narratives.
2. Follow the trend, understand the market trends, and keep up with the hotspots.
3. Control risk and avoid excessive use of leverage.
4. Prioritize risk management and use reliable security tools.
5. Focus on high-quality, sustainable projects rather than short-term trends.
6. Maintain a cautious attitude and respect the changes in the market.

Investors should recognize the complexity and risks of the encryption market, while seizing opportunities and managing risks effectively, maintaining a rational investment mindset.