HTX Ventures 2024 Crypto Market Review and 2025 Outlook: 5 Tracks with Bright Development

The year 2024 is a milestone year for the encryption industry. From the approval of Bitcoin and Ethereum ETFs at the beginning of the year, to the thriving bull market, and the push from the U.S. elections, cryptocurrencies like Bitcoin have reached record high valuations, increasingly influencing social and political landscapes.

Looking ahead, the five tracks have shown exciting progress in 2024 and are expected to continue their strong momentum in 2025. These tracks include the Bitcoin ecosystem, infrastructure (Infra), meme, artificial intelligence (AI), and TON ecosystem.

! HTX Ventures 2024 Crypto Market Review & 2025 Outlook: Top 5 Tracks

Bitcoin Ecosystem

market dominance

In the past year, Bitcoin's market dominance has increased from 45.27% to 56.81%. This means that most of the current liquidity in the crypto market is primarily concentrated in the Bitcoin ecosystem and is continuously increasing.

Bitcoin spot ETFs have accumulated 5.3% of the total amount of existing bitcoins, increasing their holdings by 613,708 to 1,243,608 from 629,900 at the beginning of the year. In 12 months, ETF holdings increased from 3.15% to 6.25%.

A new market has officially opened, centered around Bitcoin as the core asset, with ETFs and US stocks serving as the channels for capital inflow, utilizing US-listed companies represented by MSTR as the carriers to infinitely absorb US dollar liquidity. Therefore, the necessity for Bitcoin to further develop its ecosystem and improve capital efficiency has become increasingly prominent, which will also be achieved by increasing BTC demand and raising its price.

Layer 2

In the past three years, a total of 77 Bitcoin Layer 2 projects have been launched or completed funding. In the first half of 2024, driven by the Bitcoin ETF concept craze, the trading volume and token prices of earlier Bitcoin Layer 2 projects ( such as the Lightning Network, Stacks, and Liquid Network ) have surged significantly. These older Layer 2 projects have also witnessed further technological development. Various Layer 2 solutions have emerged on Bitcoin, including Spiderchain (, Botanix ), ZKRollup (, Nexio and Critea ), EVM-compatible chains ( BOB and B Squared ), and sidechains ( Merlin ), among others. As of now, the total locked value ( TVL ) of Bitcoin Layer 2 has reached $3 billion, contributed by 19 projects. Assuming all Bitcoin Layer 2 projects launch in the coming years, the total TVL is expected to grow by at least 2 to 4 times, reaching $6 billion to $12 billion.

Layer 1/Execution Layer

BRC-20, Ordinals, and Runes are the main new execution standards that emerged at the end of 2023. Despite an overall market decline in the second quarter, BTC Layer 1 activity continued to grow steadily. However, while the Bitcoin market showed signs of recovery in the third quarter, this growth momentum failed to sustain.

Other Bitcoin infrastructure

As the utilization of Bitcoin increases, other infrastructures including interoperability solutions and security layers are also beginning to emerge.

Interoperability

Bridging and WBTC are currently the mainstream interoperability solutions on Bitcoin. Since the Bitcoin network does not directly provide composability to build applications, people have to rely on these bridges/WBTC to unlock DeFi yields on other blockchains. More interoperability solutions, including Xlink, Atomiq, and Auran, are expected to be launched in the coming years.

Security Layer

However, these interoperability solutions may pose a threat to the security of underlying assets, as hacking incidents occur from time to time. To this end, security solutions related to Bitcoin have started to emerge.

Babylon is a typical example. It has developed a secure sharing protocol for Bitcoin, which includes:

Bitcoin timestamps: Timestamps that allow data to be recorded on the Bitcoin network, enhancing the credibility and immutability of data.

Bitcoin Staking: Allows Bitcoin to provide security for other networks through economic incentives.

In addition, with the emergence of new technologies, such as the data availability layer (DA layer ), the potential use value of Bitcoin is further being released. Nubit is a key player in the Bitcoin DA space. It expands data capacity through Bitcoin, supporting the development of applications, Layer 2, and oracles.

Whether the upgrade in 2025 passes OP_CAT is key.

The Taproot upgrade has enabled the Bitcoin mainnet to issue assets. From the emergence of BRC-20 inscriptions and the Ordinals NFT market in 2023, to the subsequent launch of asset issuance protocols like ARC-20 and SRC-20, along with the emergence of infrastructure such as Bitcoin Layer 2, Bitcoin Restaking, LST, and Bitcoin cross-chain bridges, the entire ecosystem has developed rapidly. Subsequently, after the Bitcoin conference in July 2024, the market shifted its attention to native BTCFi that can achieve decentralization and non-wrapping models, such as stablecoins.

Currently, through the cryptographic techniques of cautious log contracts (DLC) and adapter signature (Adaptor Signature), developers can program financial contracts in Bitcoin scripts that rely on external events, ensuring the permissionless nature of stablecoins and lending projects during liquidation (permissionless), and guarantee the permissionless nature of multi-party transaction operations through partially signed Bitcoin transactions (PSBT). However, this still involves game theory logic to some extent, which is to prevent malicious behavior from project parties by increasing the cost of wrongdoing, rather than achieving complete decentralization from the smart contract level. The stablecoin project Shell Finance, which is about to launch its mainnet, adopts this scheme.

The real game changer is OP_CAT. As long as OP_CAT passes, developers will be able to use high-level programming languages native to Bitcoin, such as sCrypt, to achieve fully decentralized and transparent smart contract development on the Bitcoin mainnet. sCrypt is a TypeScript framework for writing smart contracts on Bitcoin, allowing developers to directly use TypeScript, a popular high-level programming language, to write smart contracts. The current Bitcoin Layer 2 can also transition to ZK Rollup, and the total scale of BTCFi is expected to significantly increase.

With the dual support of the macro market and infrastructure, Bitcoin will witness a further surge in market demand over the next two years.

Infrastructure(Infra)

In 2024, infrastructure will still be one of the most attractive tracks in the encryption industry. The combination of capital and technology has driven the rapid development of projects such as Layer 1, Layer 2, and middleware. The continuous upgrades and construction of the Ethereum ecosystem, along with improvements in Layer 2 fees and performance; the rapid development of other high-performance Layer 1s led by Solana; the ongoing deepening of the multi-chain landscape; projects represented by EigenLayer increasing network security and capital efficiency through the Restaking mechanism; and various Bitcoin Layer 2 projects attempting to combine the security of Bitcoin with high-performance scaling solutions, all of these have contributed to the robust growth of the infrastructure sector.

Layer 1

Layer 1 projects continue to optimize their consensus mechanisms and performance, providing a solid foundation for on-chain applications.

• Ethereum: Launched EIP-4844, reducing costs for Layer 2 networks.
• Solana and TRON: Benefiting from the development of Meme Coins and infrastructure projects such as Pump.fun and SunPump, on-chain transactions are very active.
• Aptos and Sui: The applications in GameFi and DeFi drive user growth.

Layer 2

Layer 2 continues to be a critical path to scalability, with ZK Rollups and Optimistic Rollups each evolving.

• zkSync and StarkNet: Continuous iterative upgrades, significantly enhancing the user experience of ZK Rollup.
• Base and Arbitrum: DeFi and NFT projects are thriving on these platforms, with significant growth in TVL.

Layer 0 and cross-chain middleware

Layer 0 and cross-chain middleware break new ground in interoperability.

• A cross-chain project: More than 40 chains are connected, and the cross-chain transaction volume has increased significantly.
• Cosmos: IBC upgrade, cross-chain performance improved by 50%.

Modular public chain

Modular public chains offer high performance and flexibility, attracting a diverse range of applications.

• Celestia: Supports multiple modular execution layers and sets a benchmark for modular public chains.
• Monad: Attracts a large number of developers and DApp deployments with ultra-high TPS performance.

Bitcoin Layer 2

Bitcoin Layer 2 has become an emerging hot spot in the primary market this year, and a number of related projects such as Babylon, Taro, BounceBit, Corn, etc. have completed financing this year, mainly bringing smart contracts and extended functions to the Bitcoin network.

• Taro: Expanding Bitcoin's payment and contract capabilities through the Lightning Network.
• Stacks and RSK: Driving the growth of Bitcoin smart contract applications.

Restaking

Restaking has improved capital utilization efficiency and has also gained good development and market attention this year, with projects such as EigenLayer and Satori receiving tens of millions in investments from top-tier capital.

financing and investment events

Infrastructure continues to hold an important position in this year's investment and financing. Layer 1, modular public chains, and infrastructure related to the Bitcoin ecosystem have all attracted capital interest. Layer 1 currently represents the most concentrated technological development and exploration in the encryption field, and this track will still be a focus for development resources and capital in the future.

! HTX Ventures 2024 Crypto Market Review & 2025 Outlook: Top 5 Tracks

Meme

Important retail funding entry after the implementation of the encryption easing policy

In 2024, the Meme track has once again become a hotspot in the crypto market. As an ecological stronghold, it not only promotes community consensus but also combines with fields such as DeFi and GameFi to create new use cases. For example, Solana has successfully stimulated the activity and vitality of its ecosystem by vigorously promoting the innovation and development of Meme projects. From the early Bome and Slerf to the mid-year Pump.fun, these projects have demonstrated a strong "lottery attribute" with their Bonding Curve pricing models and low market cap opening strategies, attracting wide attention. In addition, the decentralized feature of Pump.fun, allowing "anyone to deploy Memes," has driven greater ecological prosperity, with over half of the Solana Meme projects originating from Pump.fun, and dozens of projects now having a market cap exceeding $1 billion. Public chains such as SUI and TRON have also quickly followed the Meme strategy, further invigorating their respective ecosystems.

Meme projects have become an important tool for attracting new users to the crypto market due to their simplicity and low entry barriers. The launch of Moonshot allows users to purchase Meme assets using fiat currency, while the post-election political Meme craze provides a strong sense of participation for new players. Looking ahead, the Trump administration's crypto policies and related governance trends will bring potential news impacts to the market or spawn new Meme hotspots. For example, if the "Government Efficiency Department" led by Elon Musk gains attention, it could trigger another surge in Dogecoin.

As the crypto market environment becomes more accommodative, more retail investors are expected to enter the market, and meme projects will become an important channel for capital inflows. The huge increase in the listing of meme coins on an exchange fully illustrates this trend, and it may continue to promote the development of this track in the future.

Meme Infrastructure

As the demand for fair issuance among market users further increases, this year has seen a high level of market attention and participation in the Meme fair launch track. Infrastructure projects such as Pump.fun and SunPump have become leading cash flow projects this year, injecting new momentum into the development of Meme.