Well-known trader 0xKyle explains his 2025 crypto investment strategy

Author: 0xKyle

Compiled by: Azuma, Odaily Planet Daily

Editor 's note: This article is the market prediction and response plan for 2025 by well-known analyst and trader 0xKyle.

In the following, 0xKyle analyzes the multiple scenarios that may occur for Bitcoin and altcoins in 2025, and discusses why active portfolio management will trump passive portfolio management in the new year. 0xKyle also lists himself at the end of the article The sectors and tracks that we are optimistic about may be helpful for the layout of the new year.

The following is the original content of 0xKyle, compiled by Odaily Planet Daily.

GM.

Predicting the future is difficult, but as traders and investors we should have a plan. Like all other plans, this one will change as the underlying scenario changes - the market is constantly evolving. This plan is based solely on my predictions of market development in the coming year. It provides insights into my thinking through 2025, but should not be construed as financial advice.

Let me first review my plan for 2024 (Odaily note: Since this part is mainly a review of Kyle's personal operations, this article chooses to pass directly).

Let’s get right to the point. As usual, I'll start by discussing the big picture expectations/scenarios and then move on to the thematic narrative.

Scenario

The new cycle of "2024-??" has begun. I personally believe that this cycle begins at the end of 2023, but if this cycle is sorted out in a more rigorous way, the process so far is:

• → On January 10, Bitcoin ETF was launched;
• → BTC hit a new high, briefly triggering the altcoin season;
• → Then it entered the shock period of Q2 and Q3, with BTC hovering between US$50,000 and US$60,000;
• → After the election day, BTC reached a new high, rising all the way to $100,000;
• → It has not been able to effectively break through the 100,000 mark for the time being, and it has been hovering above 90,000 US dollars.

It should be noted that the altcoin season often starts from the high point of Bitcoin. The first time was when BTC hit $69,000 but failed to effectively break through; the second time was when BTC hit $100,000. .

The next altcoin cycle is likely to begin after BTC stabilizes above $100,000. I can’t predict the future. Although I hope this will happen in the first quarter of 2025, based on the facts, we may also see a repeat of the volatile market conditions in Q2 and Q3 of 2024 in the next few months - I have to be prepared for this. Prepare. So, here are all the what-if scenarios I drew.

Scenario 1: Bitcoin and altcoins rise together

In that case, gains will be the only theme in 2025 and we will enter another copycat season. As Bitcoin continues to rise, all coins will perform well and we will repeat the last two months of 2024, with the entire market going "up, up, up."

• Likelihood: 30% - 40%;
• Corresponding strategy: Take advantage of the current "panic" to buy and get on board with strong altcoins.

Scenario 2: Bitcoin rises, while other currencies rise less

This will be a repeat of 2024, and over the next few months we will see altcoins remain volatile, but Bitcoin is more bullish (as only Bitcoin is rising). Some copycat sectors will also perform well.

• Likelihood: 50% - 60%;
• Corresponding strategy: Still take advantage of the current "panic" to buy, but you need to buy altcoins in specific sectors. The focus is to avoid areas with high attention and look for the next narrative that may rise.

Scenario 3: Bitcoin rises, altcoins fall

This means that the altcoin top is right now, although Bitcoin will continue to perform well.

• Likelihood: 20% - 30%;
• Corresponding strategy: Sell all altcoins. Although we will have to bear some of the retracement, if altcoins do not rise, we may have to sell them all.

Scenario 4: Bitcoin falls, altcoins fall

• Likelihood: 10% - 20%.

I believe several things will happen. I believe that BTC's next new high will not take as long as 2024, because the background of macro tailwinds is real. Although the ETF has been launched during a cycle of hellish regulatory environment, TradFi still needs to work hard to sell the story about BTC to customers because the world does not believe in the importance of Bitcoin.

Now that Trump is about to take office, there is a lot of talk about the Bitcoin Strategic Reserve (SBR). Market sentiment has changed and I will not speculate on the possibility of establishing a strategic Bitcoin reserve system - I have no experience with the intersection of politics and finance.

What I care about is the narrative - the fact is that this new regime that is coming in has brought a lot of new attention to digital assets, and it is now easier to convince people to buy Bitcoin because even the president of the world's largest country is frequently Discuss it.

Changes in this macro background are very important. So I believe Bitcoin will continue to have tailwinds in 2025, while altcoins are a similar but different story.

Tota l3 (note: the total value of altcoins excluding BTC and ETH) reached a 2021 high in the first quarter of 2024, and then reached a cycle high in the fourth quarter of 20424. To be honest, my scenario one and scenario two are not that different.

The key is positioning and timing. I'm bullish on 2025, but I don't know how long it will take to get there - while I do think the ups and downs will come sooner than 2024, altcoins will still bleed in the absence of a catalyst.

Regardless of whether it is Bitcoin or other coins, as long as the cycle has not yet peaked, my plan is to always remain net long. I don't think 2025 will be a repeat of the summer of 2024, but I do think we'll have a period like now where the market is just relatively quiet, but prices are still relatively well maintained.

The on-chain world is completely different. When the tide goes out, the on-chain market can easily experience fluctuations of -70%. So for on-chain markets, my goal is always to sell at the peak of interest and reinvest funds into the top altcoins (top 20) before slowly starting to deploy further.

I don’t think altcoins will top here because I don’t think Bitcoin will continue to rise while altcoins die, nor do I think Bitcoin will hit a cyclical top at this location.

So my conclusion is: BTC will continue to rise, and the increase will exceed 2024; for altcoins, my theme is still offensive, but I need to know when to turn defensive, but the defensive tendency will be lower than 2024.

risk

Risk of cyclical peaking

Predictions about cycle tops need to constantly correct themselves. While I don't think we are close to the top of the cycle, we must continue to reassess on a weekly basis. The top of a cycle is not necessarily an "event" but more like a spectrum that slowly approaches over time.

SBR redemption risk

As a new president takes office, everyone will be watching his actions. While Bitcoin is expected to see regulatory tailwinds, it would be a rather bearish event if the president completely forgot about it. Possible risks in my opinion include: SBR being forgotten; or more likely, SBR not happening, but being advanced in some other way.

In the latter case (replacing the SBR scheme), this could be an initially bearish but ultimately bullish event, as long as the scheme itself supports Bitcoin.

In summary: the emergence of a bullish signal means that the bull market will continue; the emergence of a bearish signal means that the plan must be reexamined - the bull market may continue, but the probability will be reduced.

supply risk

In 2024, we witnessed crazy macro conditions in the summer, with the stock market hitting all-time highs, but the cryptocurrency market was more down than up, due to repeated selling pressure from big supply players such as Mt. Gox, the German government, Grayscale GBTC, etc. continues to hit the market.

Supply risk can never be eliminated. There will always be someone holding a lot of Bitcoin - the UK government, Darknet Silk Road, FTX holdings, or any other entity. This is something you have to keep an eye on, but in my opinion, if all goes well, these events will be good bargain-hunting opportunities.

macro risk

A smaller number of rate cuts is still a rate cut, in my opinion. While this is "not that bullish", the fact is that as long as interest rates continue to fall, liquidity will improve.

Once again, the emergence of bullish signals means that the bull market will continue. Barring a rate hike or no rate cut, the macroeconomics should be positive for digital assets.

Topics and Tokens

Now comes the long-awaited part. But before listing specific themes and tokens, I want to emphasize again the idea I just said of "attack, but know when to switch to defense" - In this investment cycle, active portfolio management will beat passive portfolios manage.

Gone are the days of "buy and hold forever." Despite rising 10x in 2023, Solana's overall performance in 2024 is almost the same as Bitcoin; so-called leaders like TAO have not benefited from the AI ​​boom we have seen in recent months; and for meme tokens , now the dog doesn’t wear a hat anymore (WIF), the chill guy doesn’t chill anymore, the hippopotamus (MOODENG) seems to be at the end of its life...

Nothing on this list is likely to make you "buy and hold."

In addition, I also like to think about a question - who are the marginal buyers? In this market, there are basically 3 main marginal buyers -institutions (traditional financial players), funds (liquid funds/cryptocurrency native funds) and gamblers (contract traders, on-chain players, etc.).

A good narrative must be bought into by at least one of the parties. Let’s get right to the point.

Theme 1: AI

Yes, AI will still be a hot topic. As mentioned above, we have experienced several waves of AI, but if you read my paper on AI tokens (link here), I believe the next wave is coming.

• Macro level: Hype > Fundamentals > Practicality;
• Micro level: Reply guy > Infrastructure > Application/Avatar.

Buying and holding won't end well. GOAT was the one that started it all, but it's down 60% from its highs and will likely continue to underperform.

• Top picks: Applied technologies, Swarms, games, consumer-focused AI.

Things like ALCH (game development), Griffin (agent that helps control wallets), Digimon, and ai16z (the king of all AIs) are all top choices in my opinion, and there may be many more that I missed.

Topic 2: DeFi

This goes without saying. DeFi will continue to be a great narrative, however investing in DeFi is very difficult because there are really few tokens that will benefit from it. Even if they do benefit, they probably won't go up (just look at the LST track).

Frankly, this wouldn't be my first choice in terms of risk reward, but I think this will be a continued growth narrative into 2025.

• Top picks: AAVE / ENA / Morpho / Euler / USUAL;
• Secondary options: stablecoins/payment-related tokens.

Theme 3: Layer 1

I'm going to get a lot of hate for saying this, but I believe that Layer 1 trading opportunities are back. There is no doubt that HYPE has performed well, but SUI was actually disliked by many people when it was around $1, but it has risen to $2, and now it is $4. I think the market has been missing out on Layer 1 deals - it's one of those areas that no one is paying attention to, but there is huge opportunity (as evidenced by HYPE's 10x increase).

• Top picks: SUI/HYPE;
• Second choice: Abstract.

I didn't know how much I liked Monad and Berachain. But I'm really looking forward to Abstract, I think it could be a blockbuster.

Topic 4: NFT tokens and game tokens

I also really like this theme. I have been purchasing some gaming projects recently, and I think the NFT token space is also worthy of attention. PENGU has slowly picked up, Azuki will have ANIME, Doodles is also going to issue coins... I don't think NFTs will pick up, but I think their tokens will.

Game tokens are also fun, and Off-The-Grid has shown us what's possible to make a fun game. With the sector being so under-appreciated, I thought it would be wise to dig deeper and find the really interesting games that are about to launch their tokens.

• Top picks: PENGU / ANIME (Azuki) / Spellborne / Treeverse;
• Secondary options: PRIME / Off-The-Grid (if coins are issued) / Overworld.

Theme Five: Other Narratives

The following are on my watch list, I don't particularly like them, but they are fun.

• Data Token: Kaito/Arkm;
• meem token: I only like PEPE, the others... seem outdated;
• DePIN:PEAQ/HNT;
• Ordinals;
• Old copycat: XRP;
• Old DeFi: CRV/CVX.

2025 Forecast

This is really just fun, just something that I think sounds a little unbelievable, but not impossible.

• DePIN is implemented in a serious way by a serious company, possibly through acquisition;
• Binance lost market share as a top exchange, not to Hyperliquid, but to Bybit/OKX;
• As VR technology makes new progress, Metaverse tokens gain new life;
• ICOs are becoming popular again;
• Ethereum’s “on-chain season” will not happen;
• SUI prices reach double digits (at least $10);
• Ethereum’s staking returns are approved for inclusion in ETFs, leading to more staking yield products for other tokens, as well as yield aggregators like the ones we’ll see in 2021;
• A major artist uses NFTs and tokens to track and reward his/her fan base;
• Bitcoin reaches $200,000;
• More Layer 1 saw their CEO/founder leave after seeing Aptos;
• Base lost the on-chain competition and another Layer 1 took its place. Solana maintains her position.

Conclusion

The above roughly sums up my expectations for 2025. I expect the reality to differ significantly from my predictions, just as I have planned for 2024.

The best advice and inspiration is actually "stay flexible and enjoy the journey". Markets will continue to change, but that's just part of the game of life.

"No one can execute the same transaction twice. Because transactions are different, people are different."

Good luck to you and see you on the other side. If you make a life-changing profit along the way, remember to use it to change your life.