Crypto Market Outlook: AI Bubble, Decline of OG Memes and Return to Fundamentals

In the latest episode of the Hivemind podcast, core team members from Delphi engaged in an in-depth discussion about the prospects of the crypto market in 2025. They primarily discussed hot topics such as the evolution of AI narratives, the Bitcoin L2 ecosystem, and the return of infrastructure value.

Market Observation

The market has been highly volatile recently, but the fundamentals have not changed. Bitcoin remains the best-performing asset, while DeFi projects and old Meme coins are performing mediocrely. There has been no fundamental shift in market interest, and the projects that are performing the best during the rebound are still those that have stood out from the bottom.

Macroeconomic factors and technical adjustments have both impacted the market. Trump's inauguration may drive the development of encryption currencies, and the officials he appoints will also affect the larger macro market.

AI Bubble

AI may become the biggest market narrative by 2025. Currently, the fundamentals of AI are strong, but humans tend to get overly excited about emerging things, leading to cyclical market fluctuations. The big AI bubble has not yet arrived, but it is almost inevitable.

Current AI projects are seen as trustworthy investment choices, with a large influx of funds driving short-term growth. However, if new projects with greater long-term value emerge in the future, they may perform better.

The Decline of OG Memes

In 2025, most of the funding in the crypto market may shift towards AI. AI proxies for Memes outperform traditional Memes in some ways, able to tell bigger stories.

The market is tired of traditional Memes and is more inclined towards projects that at least have some practical value or value paths. However, DOGE may not have peaked yet and remains a good benchmark for assessing the overall Meme coin market.

Fundamental Return

In the long run, except for a few projects that reach escape velocity, projects without actual business support are difficult to sustain. Infrastructure projects have entered a new era and require long-term revenue stories.

Solana applications are generating significant revenue, and if it can achieve an 80% market share by the end of the year, it's hard not to believe it could surpass ETH. The market is maturing, and investors are starting to pay attention to fundamentally sound projects.

Next Generation L2 and L3

L2 performed well last year, with total locked volume doubling. In the future, at least one large financial institution is expected to launch its own L2. Institutions like BlackRock may place tokenized securities on L2 for greater flexibility.

Bitcoin Dominance

The traditional concept of the "shanzhai coin season" may be outdated. Projects with strong fundamentals and clear narratives will perform significantly, while others will perform mediocrely.

Bitcoin is expected to outperform Ethereum again this year. If Bitcoin rises to $125,000-$150,000, BTC's dominance may return to 62%-63%, and then pull back.

Feasibility of Bitcoin L2

In 2025, Bitcoin L2 may become a dark horse. The emergence of ZK L2 not only provides scalability but also enables programmability. Even with only a small amount of Bitcoin entering the L2 ecosystem, it would be enough to multiply the TVL of L2 several times.

After OP_CAT is passed, trustless bridging can be achieved. Starknet may be a dark horse in the Bitcoin L2 space. The main source of future Bitcoin demand may come from non-encryption native markets.