HTX Ventures 2024 Crypto Market Review and 2025 Outlook: 5 Promising Tracks of Development

The year 2024 is a milestone year for the crypto industry. From the approval of Bitcoin and Ethereum ETFs at the beginning of the year, to the booming bull market, and the influence of the U.S. elections, cryptocurrencies like Bitcoin have reached record valuations, increasingly impacting social and political landscapes.

Looking ahead, there are five major tracks that show exciting progress in 2024 worth closely monitoring in 2025. These tracks include the Bitcoin ecosystem, infrastructure (Infra), Meme, artificial intelligence (AI), and the TON ecosystem.

Bitcoin Ecosystem

market dominance

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

The Bitcoin spot ETF has accumulated 5.3% of the total existing Bitcoin supply, with the position increasing from 629,900 coins at the beginning of the year to 1,243,608 coins, an increase of 613,708 coins. Over 12 months, the ETF's holdings ratio has risen from 3.15% to 6.25%.

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

Layer 2

In the past three years, a total of 77 Bitcoin Layer 2 projects have been launched or completed financing. In the first half of 2024, driven by the hype surrounding Bitcoin ETF concepts, the trading volume and token prices of earlier Bitcoin Layer 2 projects (such as Lightning Network, Stacks, and Liquid Network) have surged significantly. These older Layer 2 projects have also witnessed further technological advancements. Various Layer 2 solutions have emerged on Bitcoin, including Spiderchain, ZKRollup, EVM-compatible chains, and sidechains. As of now, the total value locked (TVL) in Bitcoin Layer 2 has reached $3 billion, contributed by 19 projects. Assuming all Bitcoin Layer 2 projects are launched in the coming years, the total TVL is expected to grow at least 2 to 4 times, reaching between $6 billion and $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 downturn in the second quarter, activity on BTC Layer 1 continued to grow steadily. However, while the Bitcoin market showed signs of recovery in the third quarter, this growth momentum was not sustained.

other Bitcoin infrastructure

With the increase in Bitcoin's utilization, other infrastructures, including interoperability solutions and security layers, have also begun 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. We expect more interoperability solutions, including Xlink, Atomiq, and Auran, 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 address this, security solutions related to Bitcoin have begun to emerge.

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

• Bitcoin timestamp: Allows the recording of data timestamps on the Bitcoin network, enhancing the credibility and immutability of the 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 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 is passed through OP_CAT is the 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, and the rise of infrastructure such as Bitcoin Layer 2, Bitcoin Restaking and LST, and Bitcoin cross-chain bridges, the entire ecosystem has developed rapidly. Subsequently, after the Bitcoin conference in July 2024, the market turned its attention to native BTCFi that can achieve decentralization and non-wrapping models, such as stablecoins.

Currently, through cryptographic techniques such as Discreet Log Contracts (DLC) and Adaptor Signature, developers can program financial contracts in Bitcoin scripts that rely on external events, ensuring permissionless liquidation of stablecoins and lending projects, and guaranteeing permissionless multi-party transactional 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 layer. The stablecoin project Shell Finance, which is about to launch its mainnet, adopts this solution.

What can truly change the status quo is OP_CAT. As long as OP_CAT can pass, developers will be able to use sCrypt and other Bitcoin-native high-level programming languages 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 be converted to ZK Rollup, and the total scale of BTCFi is expected to increase significantly.

With the dual support of the macro market and infrastructure, we believe that Bitcoin will experience a further surge in market demand in the next two years.

Infrastructure (Infra)

In 2024, infrastructure remains 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 upgrade and construction of the Ethereum ecosystem, as well as the 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 enhancing network security and capital efficiency through the Restaking mechanism; and multiple Bitcoin Layer 2 projects attempting to combine Bitcoin's security with high-performance scaling solutions all contribute to the vigorous development in 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 fees on Layer 2 networks.
• Solana and TRON: Thanks to the development of Meme Coins and infrastructure projects like Pump.fun and SunPump, on-chain transactions are very active.
• Aptos and Sui: Applications in GameFi and DeFi drive active user growth.

Layer 2

Layer 2 continues to be the key path for scalability, with ZK Rollup and Optimistic Rollup each developing.

• zkSync and StarkNet: Continuous iterative upgrades significantly enhance 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 have made new breakthroughs in interoperability.

• LayerZero: Connecting over 40 chains, significantly increasing cross-chain transaction volume.
• Cosmos: IBC upgrade improves cross-chain performance 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, becoming a benchmark project 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 hotspot in this year's primary market, with several related projects such as Babylon, Taro, BounceBit, and Corn completing financing this year, mainly bringing smart contract and scalability features 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 enhanced capital efficiency, and this year it has also received good development and market attention, with projects like EigenLayer and Satori receiving tens of millions in investment from leading capital.

investment and financing event

Infrastructure remains a key player in investment and financing this year. 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 sector will continue to be a focus for development resources and capital in the future.

Meme

Important retail funding entrance after the implementation of 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 integrates with fields like DeFi and GameFi, creating 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 beginning of the year with Bome and Slerf to the mid-year Pump.fun, these projects showcase strong "lottery attributes" with Bonding Curve price curves and low market cap opening models, attracting widespread attention. In addition, the decentralized feature of Pump.fun, which allows "anyone to deploy Memes," has driven greater ecological prosperity, with currently over half of Solana Meme projects originating from Pump.fun, among which dozens of projects have surpassed a market cap of $1 billion. Public chains like SUI and TRON have also quickly followed suit with Meme strategies, further energizing 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 with fiat currency, while the post-election political-related 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, possibly giving rise to new Meme hotspots. For example, if the "Department of Government Efficiency" led by Musk, abbreviated as "DOGE", gains attention, it may once again trigger a surge in Dogecoin.

As the crypto market environment becomes more relaxed, it is expected that more retail investors will enter the market, and Meme projects will become an important channel for capital inflow. The significant price increases observed each time a trading platform launches a Meme coin fully demonstrate this trend, which is likely to continue driving the development of this sector in the future.

Meme Infrastructure

With the further increase in market users' demand for fair issuance, this year has seen extremely high 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.

Pump.fun

Pump.fun is a Meme project issuance platform built on Solana. By providing simple and intuitive creation tools and strong community support, it adopts a fair distribution model and has designed a mechanism for automatically adding liquidity to DEXs, combined with Solana's successful market operation and community management.