Atka's 2025 Crypto predictions

Late 2024 exceeded expectations for the crypto industry, marking a year of remarkable growth and innovation, following a robust market consolidation in 2023.

As we step into 2025, the excitement is palpable. The bull market is back, bringing euphoria, fervor, and its fair share of controversies and drama.

Institutional players are doubling down on crypto, new narratives are gaining traction, and regulatory clarity is on the way.

2025 won’t be without its challenges (it never is), but the path ahead looks bright.

Enjoy the read!

1. Crypto markets catalysts

As we predicted back in January last year, US BTC ETFs were a massive catalyst, which led the BTC price to reach the symbolic $100k threshold. What is even more interesting is that BTC ETFs have shown impressive traction, hinting that institutional investors are craving BTC exposure:

Other BTC price catalysts are to be witnessed in 2025, including:

• More companies owning BTC and even adopting the same financial strategy as MicroStrategy, which is to raise funds through the sale of corporate bonds, in order to purchase BTC
• The future Trump Administration planning to turn BTC into a strategic reserve asset

As you see above, BTC is now partly owned by large companies, multi-billion dollar funds, and even countries. This trend is here to stay, and massive institutional adoption is, to a certain extent, priced-in.

It is very likely that risk-takers may shift their focus towards altcoins, like ETH, SOL, or else, offering a different value proposition than BTC, with higher growth potential. Consequently, we think BTC dominance may peak in 2025, signaling the last phase of this crypto bull market.

During this phase, as it occurred in every one of the last bull cycles, retail greed and speculation will drive prices way more than long-term rational investors, hence overhyped crypto x AI projects are bound to flourish, Memecoin scams, “risk-free” Ponzi schemes, etc. Don’t fall into the bull trap!

2. Narratives to look for in 2025

L1s to look for: Berachain, Monad, and a few overhyped L1s going live on mainnet in 2025

Berachain brings novel liquidity mechanisms as primitives, leveraging a complex 3-token model with the goal of fostering deep liquidity for all the apps built on top of it.

Monad aims to be as fast as Solana while being EVM-compatible.

Both raised significant amounts of money over the past few years and managed to create a very strong hype. Usually, such projects with strong communities launch at valuations reaching billions of dollars. It’s going to be fascinating to see how things unfold, and we predict those two ecosystems to be the fastest growing ones in 2025, challenging the established Ethereum rollups (Base, Optimism, Arbitrum) and Solana.

Data availability / Restaking

2024 was a year of important releases and growth for data availability and staking layers. Projects like Eigenlayer, Symbiotic or Celestia went live on mainnet and reached tens of billions of dollars in valuations. Plentiful teams worked on products leveraging these as base layers and raised hundreds of millions. The narrative around these projects has been very strong, and we believe 2025 is going to be a crucial year to prove the stickiness of these protocols. Let’s see what is really behind the hype!

DeFAI: AI agent managing funds

AI agents are revolutionizing DeFi - from simple trading bots to autonomous fund managers. Key innovators like Virtuals and daos.fun are leading development. Projections show 1m+ agents by 2025 managing billions in DeFi assets.

These AI systems analyze on-chain data, sentiment, and market patterns 24/7. Zero-employee funds run entirely by AI represent a paradigm shift. With DeFi TVL projected to reach $200bn+, we're still early in this experimental but transformative tech.

Like any other crypto bubbles (DeFi Summer in 2020, NFTs in 2021-2022), we can expect valuations associated with the tokens embodying these agents to grow to insane highs… before the market eventually rationalizes and 95% of them go to 0. This is typical and necessary to any innovation cycle within crypto: both professional and retail investors are either going to make absurd amounts of money or fall into one of the many scams or rugs that are inevitably going to happen.

As for the current hypecycle around Memecoins, which we find particularly boring to watch and are not participating in, some tokens are definitely going to reach billions in valuations because some influential figure will have tweeted the ticker, before crumbling down and losing 99% of its value when markets are not looking as bullish. Again, both retail and professional investors are going to make it or break it. We’re watching this from a distance.

3. New shiny narratives won’t overcome DeFi, the main crypto use case

Each year, crypto predictions like to embrace new narratives that are expected to drive the crypto markets on the way up (RWA, DePin, AI, Web3 Gaming, DeSo, DeSci…). This year is no different, and we’ve witnessed, unsurprisingly, a growing attention on AI (see above).

But, as boring as it gets, the most promising and advanced market segment remains DeFi.

Despite the market acceleration in November 2024, the release of several DeFi protocols the past year, the rise of new DeFi sub-segments (e.g. Restaking), and the increasing DeFi activity not only on Ethereum mainnet, but also on Layer-2s/3s (e.g. Base) and Solana, the Total Value Locked on DeFi protocols remains limited, and still below the ATH in 2022:

On the one hand, it is consistent with the fact that ETH has not crossed its former ATH yet; but on the other hand, it still does not reflect the maturity of DeFi, nor the interest from both retail and institutional players.

We believe that 2025 will be the year where DeFi skyrockets, with capital inflow coming from both sides of the spectrum: Consumer DeFi and TradFi.

Consumer DeFi has been the main driving force since the DeFi summer in 2020, fueled by protocols’ incentives (airdrops, liquidity mining, points converted into tokens…), improving UX/UI, or simply because retail users are increasingly concerned by centralization issues (remember the FTX drama).

2025 will accelerate this trend, moving Consumer DeFi towards “on-chain personal finance”, with now the ability to use multi-chain unified front-ends (e.g. Infinex, the “crypto everything app”) to monitor one’s portfolio, make on-chain trades, enjoy yield opportunities, and even spend profits into real-world products with crypto debit cards (e.g. Gnosis Pay):

In parallel, we believe that TradFi players will jump in heavily this year, thanks to improved infra and the release of institution-centric protocols, suited for their needs. For instance, Tenor is building on-chain lending order books, integrated with Uniswap and Morpho, designed to facilitate the lending and borrowing of tokens at fixed interest rates, which has been so far a missing block to onboard TradFi into DeFi.

RWA might this time be a great catalyst for the DeFi expansion, as well as a bridge between DeFi and TradFi: access to crypto-native yields for TradFi players, opportunity to invest into traditional finance products for DeFi users. The rise of tokenized Treasuries perfectly embodies this trend:

For reference, BlackRock’s BUIDL T-Bill on-chain fund is valued at c.$640m as of January 2025, representing only 3% of its off-chain T-Bill fund (c.$24bn).

4. ICO vibes: back to basics

The top crypto VCs were the big winners of the past crypto bull cycle. Multicoin and 1KX, for example, probably generated the best returns in the history of investment. However, at the end of that cycle, lots of crypto KOLs (key opinion leaders) blamed VCs' predatory behavior towards retail users/traders/investors.

VCs have been often accused of “dumping” their tokens to the retail traders, as soon as those tokens are listed on exchanges, limiting their involvement in the projects, and fostering panic market sell-offs. More and more project founders started promoting themselves as “non-VC backed”, as if it was a good thing.

As retail money is coming back to crypto, it is likely that project founders looking to raise money and grow their potential community of users would be tempted to bypass crypto VCs and focus on retail investors.

And retail investors may get tempted by those types of deals, as they see their potential returns diminish when investing in newly-listed Binance/Coinbase tokens.

We predict in 2025 a rebirth of the ICO-model, which drove the bull market back in 2016-2017, but this time with better UX and legitimate project curation, leading to fairer deals for retail.

One signal which tends to validate our take is the growth in volumes invested in crypto project funding platforms such as Fjord or Echo. Indeed, Echo, which launched in private beta last year, exceeded $20m of investments across carefully selected projects (some of them managing to raise millions of dollars in a couple of minutes). Most of those investments are side-deals at comparable investment terms as established VCs.

5. UX still s***

Hundreds of different wallets, dozens of chains, dozens of bridges, incompatible types of private key management, thousands of apps across all these platforms… The complexity of the crypto infrastructure is astonishing. This creates issues like fragmentation of liquidity of assets, incompatibility of assets across different protocols… eventually leading to inevitable confusion for newcomers.

Making products that are effectively usable by the very different types of users (professional fund managers, retail traders, casual investors…) is essential for this ecosystem to thrive.

Many initiatives and projects are trying to tackle this: custodian platforms, staking providers, account abstraction solutions… Yet, today the average user experience remains pretty terrible.

It feels like team building projects and products sometimes haven’t compounded the lessons from all the failures and successes that came before them. Take the airdrop of PENGU tokens for example, it’s been a complete pain to claim tokens when it should have been absolutely seamless… and the solutions did exist for it to go well.

The problem with UX is that there is never going to be a one-solution-fits-all. There are so many market segments, use cases and user personas that many different types of solutions are needed.

There are promising initiatives everywhere. Coinbase wants to blur the lines between their exchange and the Base chain they released last year, making it as easy as possible for users to go from one to the other. Interesting developments are also happening with account abstraction solutions, allowing app developers to directly integrate user wallets in a seamless way with a couple lines of code. When it’s properly done, users won’t even need to know they are interacting with a wallet anymore.

Forgotten Runes, with their Web3 game The Runiverse are getting close to offering a gaming experience similar to regular games, while allowing players to effectively be owners of their assets, in the form of NFTs: if the player just wants to let their account system handle the blockchain assets for them, the game will work just as well as if the player wants to connect its own wallet and manage its assets himself.

Though there is still a very long road ahead to create frictionless, meaningful experiences for every type of user.

6. Regulatory clarity on the way

With the MiCa (Market in Crypto-Assets) regulation now implemented, offering a stable environment in the European Union (even though DeFi has not been tackled yet), the main question remains whether the US will follow a similar pace with the new Administration.

In 2024, the SEC (US Regulator) doubled down on its “regulation by enforcement” approach, notably attacking Uniswap Labs, the largest decentralized exchange. The SEC approach was in line with the US global stance to regulate crypto projects on a case-by-case basis.

This may change in 2025 with a set of (more or less concrete) promises made by Donald Trump during the presidential campaign, including:

• Establishing a Federal reserve of BTC
• Setting up a “Bitcoin and Crypto advisory council dedicated to establishing clear rules” for the Crypto industry
• Making the US the “crypto capital of the world”
• Protecting the right to self-custody
• Removing SEC Chair Gensler (who announced his resignation in January 2025), the symbol of the crackdown on US-based crypto projects

In short, nothing really tangible yet, apart from the notable fact that Crypto is back on the agenda in the US.

2025 will be a pivotal year when it comes to regulatory clarity in the US:

• Option 1: the Bitcoin and Crypto advisory Council comes up with a roadmap to establish a clear regulation
• Option 2: the Trump Administration keeps the “case-by-case” approach, but with a 180° rotation vs. the past 4 years

Option 2 would be far less appealing, as US crypto companies would still be vulnerable to a change of stance, keeping in mind that Bitcoin and Crypto adoption might also be detrimental to the US Dollar hegemony.

If Option 1 is not pursued this year, there is little chance that the long-awaited regulatory stability in the US will be achieved until the next Administration, in 2029. The first 100 days of the Trump Administration will be interesting to follow, in order to assess how Crypto is important in the overall agenda.

7. #FutureofFrance is back?

French teams have been very active in the crypto space since its earliest days. Ledger is still the reference for hardware wallets, Kaiko is one of the leading crypto data providers, Kiln is one of the biggest staking providers for institutions, while Morpho has been one of the fastest growing DeFi protocols last year.

The DeFi Summer in 2020 marked a euphoric moment for many French projects. Leveraging a strong tradition in computer science research and development, a myriad of them managed to raise funds for very innovative projects. However, the subsequent bear market was brutal and only a handful of them managed to find a proper product-market-fit, leading to distrust from investors and users, sometimes fairly, sometimes not.

Yet, the French ecosystem remains vibrant. A new generation of French founders is coming, some of them coming straight from industry leaders (e.g. the “Ledger Mafia”).

Already, promising new projects like Adamik, Kakarot and Spiko (to name a few) are rising. As this momentum grows, it’s time to recognize the underappreciated strength of French founders in the global crypto ecosystem.

Let’s see how 2025 unfolds—it’s shaping up to be a thrilling year for crypto!