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. In the past year, the market has experienced recovery and innovation, with leading projects consolidating their positions and emerging sectors quietly rising. As a barometer of the industry, VC has not only witnessed market changes but is also shaping the direction of the industry.

This article gathers the insights of several top VCs, reviews the highlights of 2024, analyzes the current market, and makes predictions about future trends. Let us explore the development context of the encryption industry from the VC perspective.

The Most Influential Projects of 2024

In the past year, numerous projects have emerged due to market recovery and technological innovation. Hyperliquid, as a high-performance perpetual contract DEX, has attracted a large number of users while maintaining excellent trading speed and liquidity. Its token issuance is considered one of the most successful airdrops in encryption history. The platform is expanding its ecosystem, including the launch of native dApps, gradually encroaching on the market share of DEXs and CEXs.

Pump.fun is considered the most successful Meme coin launch platform of the year, elevating the concept of "Meme launch platform" to a top narrative height and igniting a wave in the Meme market. This indicates that Web3 projects can achieve success by building practical, high-experience products that meet market demands.

In the DeFi sector, mature lending protocols like AAVE and Compound are experiencing a revival, while high-quality new players such as Morpho, Euler, and Ajna are emerging. Although the attention is not as high as in previous periods, their understated success is worth noting.

Pudgy Penguin has been mentioned by multiple VCs and is seen as a driving force behind the revival of the entire NFT sector. Its founder, Luca, is regarded as a representative of the new generation of entrepreneurs, demonstrating the powerful energy of the fusion of Web2 and Web3 thinking.

Ethena has performed remarkably in the DeFi space with its USDE stablecoin. The collaboration with the BlackRock BUIDL fund ensures the long-term viability of USDE, maintaining stable returns even in the case of negative funding rates.

Bitcoin Market Outlook

In 2024, Bitcoin demonstrated an astonishing growth momentum, with an annual increase of over 119%. Multiple VCs expect that the Bitcoin bull market is likely to continue in 2025, with a breakout above $200,000 considered a highly probable event.

Some analysts use technical indicators like the Pi Cycle and 2Y MA Multiplier to determine the top, predicting that Bitcoin's peak may be around $200,000. More conservative forecasts suggest that the next peak could reach $120,000 to $150,000, followed by oscillation between $100,000 and $150,000.

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

The Dispute Between Meme and "VC Coin"

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

However, the PVP attributes of Meme coins are essentially difficult to sustain. Except for a few top projects, most Meme coins lack long-term value support. There is currently no good solution for the dilemma of VC coins in the short term. Solving this problem may require going through a full bull-bear cycle, allowing the market to naturally clear, and rebuilding trust and fairness.

The project team must carefully consider issues such as the implementation of application scenarios, stable cash flow income, and community activity. The "VC coin project" needs to better think about Token Market Fit, clarify the use of tokens, engage a wider community, and decentralize chips to strengthen interest binding.

Future Potential Tracks and Projects

RWA(Real World Asset) is considered an important direction, essentially allowing blockchain to account for global mainstream financial assets. Currently, the penetration rate is less than 0.1%, and there is significant room for improvement.

Re-staking as the grand narrative of 2024 may reach its climax in 2025. ZK projects ( such as RiscZero and hardware-accelerated Ingonyama will gradually showcase market potential.

The AI Agent is regarded as the rising star of the encryption industry, expected to bring innovations in trading decisions, DeFi optimization, and asset management.

The PayFi track is receiving a lot of attention. An ecosystem that can achieve seamless, low-cost payments is entering a rapid development phase. Payment protocols that are deeply integrated with mainstream services and conveniently enable the conversion of encryption currency and fiat currency will become a key force in promoting the integration of encryption currency into daily life.

The integration of AI and blockchain is also an important development direction for the future. Projects that build decentralized AI networks or AI-driven applications are poised to emerge, and are expected to become new highlights in the industry.

"Mass Adoption" Breakthrough Prospects

The payment track is considered to be the first breakthrough for blockchain "Mass Adoption". Stablecoins have demonstrated the ability to surpass the financial efficiency of traditional banks in non-US dollar countries. Once a compliance framework is established, this track will unleash tremendous potential.

From the perspective of ecological positioning and track selection, the Solana ecosystem has a greater leading advantage at the retail level. The new front-end user experience and embedded DeFi will be key to driving mass adoption.

The approval of the Bitcoin ETF means that a wider range of financial derivatives will be born, helping to reduce market price volatility and promoting the formation of a long-term slow bull market.

Bull Market Stage Judgment

We may currently be in the mid-stage of a bull market. After the approval of the Bitcoin ETF, encryption assets will be more widely incorporated into the regulatory framework, which is beneficial for the long-term healthy development of the market. In the future, it may be difficult to see a significant drop in the short term, and the market may shift from a rapid bear and bull cycle to a long-term slow bull.

Institutional and government interest in the encryption industry is increasing, along with a potentially friendly regulatory environment, which will further enhance market confidence. In the future, even if adjustments occur, it will be difficult to return to bear market levels.

Retail Investor Recommendations

1. Focus on high-certainty tracks, with a key focus on BTC, Meme coins, and AI narrative tracks, and invest cautiously in old altcoins that lack support from new narratives.

2. Grasp the market cycle, and timely layout and exit.

3. Implement risk management, prepare funds that can withstand total loss, and extract costs in a timely manner.

4. Avoid excessive use of leverage and maintain a sound investment strategy.

5. Prioritize blue-chip assets like Bitcoin and Ethereum, focusing on high-quality, sustainable development projects.

6. Emphasize security by using trusted security tools such as hardware wallets.

7. Maintain a stable and strong core, always prioritize risk.