Market Opportunities and Challenges in 2025 from the Perspective of Encryption VC

With the arrival of 2025, the encryption industry has ushered in a new development node. In 2024, the market experienced recovery, innovation, and adjustment, with leading projects solidifying their positions and emerging tracks rising. As a barometer of the industry, VC not only witnesses market changes but also shapes the direction of the industry.

PANews invited several top VCs to share their observations and thoughts on the encryption industry. They reviewed the highlights of 2024, analyzed current market opportunities and challenges, and made predictions about future trends. Let us explore the development context of the encryption industry through the perspective of VC.

The Most Impressive Projects of 2024

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

DFG founder James Wo pointed out that Hyperliquid, as a high-performance perpetual contract DEX, attracts a large number of users while maintaining trading speed and liquidity. Its token issuance has become one of the most successful airdrops in encryption history. The platform is launching the HyperEVM ecosystem to expand its product line.

Chris, the co-founder of Web3Port, also highly praised Hyperliquid's market share and distribution mechanism. He also mentioned that Pump.fun successfully pushed the "Meme Launch Platform" to the top narrative, igniting a wave in the Meme market.

Wallfacer Labs CEO Ryan Rodenbaugh stated that the revival of mature lending protocols such as AAVE and Compound, along with the emergence of newcomers like Morpho, is exciting. Although DeFi has not received the attention it once did, the success of these protocols is still noteworthy.

Multiple VCs mentioned Pudgy Penguin. Joanna, the founder of Jsquare, believes it has driven the revival of the NFT track and reflects the powerful energy of the integration of Web2 and Web3 thinking.

Jsquare partner Dinghan stated that Ethena has performed well in the DeFi field with the USDE stablecoin, profiting by establishing positions through CEX. The collaboration with BlackRock further solidifies long-term feasibility.

Bitcoin Market Outlook

In 2024, Bitcoin has cumulatively risen by 119.1%, benefiting from spot ETFs, the halving event, and market optimism. Chris, co-founder of Web3Port, expects the bull market to continue in 2025, with a high probability of breaking through $200,000. He believes that as the market matures, the supply-demand relationship of Bitcoin will strengthen, and prices below $50,000 may become a thing of the past.

Ryze Labs analyst Allen uses the Pi Cycle and 2Y MA Multiplier to determine the top, expecting around $200,000. He suggests paying attention to these indicators for top judgment and reduction decisions.

Evan Lu, the investment manager at Waterdrip Capital, cautiously predicts that the next peak will be between $120,000 and $150,000, followed by fluctuations between $100,000 and $150,000. In the long term, if Bitcoin's market cap does not exceed that of gold, it may reach $600,000, but this will take 5 to 10 years.

Evan believes that the current market, influenced by ETF and reserve policies, may maintain a fluctuating upward trend, gradually moving towards higher price levels.

The Battle Between Meme and "VC Coin"

Will Wang, a partner at Generative Ventures, pointed out that excessively large VC funds find it difficult to deliver excess returns for LPs and are prone to falling into the trap of expanding management scale. He believes this situation will gradually correct itself, and the market will ultimately reward VC firms that dare to act during non-consensus periods.

Chris, co-founder of Web3Port, believes that the essence of the controversy is the competition between existing funds and liquidity. The low circulation and high FDV characteristics of VC coins reduce retail investors' willingness to take over. Meme coins, with their fully circulated and fairly distributed nature, align with the psychology of retail investors, but the PVP attributes are difficult to sustain. He stated that there is currently no good solution in the short term and that a complete bull-bear cycle is needed to rebuild trust and fairness.

Evan Lu, Investment Manager at Waterdrip Capital, emphasized that issuing tokens is not the endpoint but rather the starting point of operations. Project parties need to think about the implementation of application scenarios, stable cash flow, and active communities.

IOSG Ventures' Jiawei suggests that "VC coin projects" need to better consider Token Market Fit, allowing a broad community to participate in decentralized fundraising to strengthen interest binding.

Future Potential Tracks and Projects

Generative Ventures' Will Wang is optimistic about RWA, believing that its essence is blockchain accounting for mainstream global financial assets. Currently, the penetration rate is less than 0.1%, leaving significant room for improvement.

Jiawei from IOSG Ventures stated that re-staking will be a major narrative for 2024 or peak in 2025; ZK series projects will also demonstrate market potential.

Ryze Labs Allen is optimistic about AI Agents, believing they have great potential in trading decision-making, DeFi optimization, and asset management.

Multiple institutions are paying attention to the PayFi sector. Jsquare Dinghan predicts that projects that bridge traditional finance and encryption will attract attention. The integration of AI and blockchain is also seen as an important direction.

"Mass Adoption" Breakthrough Prospects

DFG James Wo believes that vertical fields such as DePIN have shown signs of "mass adoption". He predicts that the payment sector may drive the next wave of user influx.

YBB Capital Zeke is optimistic about the payment track becoming the first field to achieve large-scale application. Stablecoins show advantages in non-US dollar countries, and after the establishment of a compliance framework, the potential is enormous.

Jsquare Joanna is optimistic about the progress for next year and is bullish on the Solana ecosystem and the Pudgy Penguins project.

Wallfacer Labs Ryan Rodenbaugh believes that the new front-end user experience and embedded DeFi will be key.

Market Cycle Judgment

YBB Capital Zeke believes that we are in the mid-term of a bull market, and after the ETF approval, market volatility will weaken, potentially transitioning to a long-term slow bull.

DFG James Wo assesses that it is in an "optimistic stage", with increased institutional participation. He expects that future adjustments will be less than in the past.

Web3.com Ventures Nemo believes that half of the bull market has been completed in the short term, and is optimistic about Bitcoin's nature of fighting inflation and preserving wealth in the long term.

Retail Investor Recommendations

Web3Port Chris suggests focusing on high certainty tracks, paying attention to BTC, Memes, and AI, and investing cautiously in old altcoins. Emphasize following trends and grasping cycles.

Ryze Labs Allen reminds to control risks, suggesting to recover costs in advance to avoid excessive leverage.

YBB Capital Zeke emphasizes that the market is more complex after 25 years, requiring more robust strategies and a sense of reverence.

Jsquare Dinghan suggests prioritizing risk management, beginners may choose blue-chip assets, and active investors should focus on security and project quality.