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

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

Looking ahead, five major tracks that show exciting progress in 2024 are 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 the current crypto market's liquidity is primarily concentrated in the Bitcoin ecosystem, and it continues to grow.

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

A new market centered around Bitcoin as the core asset, with ETFs and US stocks as channels for capital inflow, and listed companies as vehicles, has officially opened up to infinitely absorb US dollar liquidity. Therefore, the necessity for Bitcoin to further develop its ecosystem and improve capital utilization efficiency is becoming increasingly prominent, and this will be achieved 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 Bitcoin ETF concept boom, the trading volume and token prices of previously launched Bitcoin Layer 2 projects have surged significantly. These older Layer 2 projects have also witnessed further technological development. Various Layer 2 solutions have emerged on Bitcoin, including Spiderchain, ZKRollup, EVM-compatible chains, sidechains, and more. As of now, the total locked value (TVL) of 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 $6 billion to $12 billion.

Layer 1/Execution Layer

BRC-20, Ordinals, and Runes are major new execution standards that emerged at the end of 2023. Despite an overall market decline in the second quarter, activity on BTC Layer 1 continued to grow steadily. However, although the Bitcoin market showed signs of recovery in the third quarter, this growth momentum was unable to sustain.

Other Bitcoin Infrastructure

As the utilization of Bitcoin increases, 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. More interoperability solutions, including Xlink, Atomiq, and Auran, are expected to be launched in the coming year.

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 this end, 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 recording 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 has been further unlocked. 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 goes through OP_CAT is 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 such as ARC-20 and SRC-20, along with the emergence of Bitcoin Layer 2, Bitcoin Restaking and LST, and Bitcoin cross-chain bridges, the entire ecosystem has rapidly developed. Subsequently, after the Bitcoin conference in July 2024, the market's attention shifted to native BTCFi that can achieve decentralization and non-wrapped models, such as stablecoins.

Currently, through cryptographic techniques such as Discreet Log Contracts (DLC) and Adaptor Signatures, developers can program financial contracts in Bitcoin scripts that depend on external events, ensuring the permissionless nature of stablecoin and lending projects during settlement, and guaranteeing the permissionless nature of multi-party transactions through Partially Signed Bitcoin Transactions (PSBT). However, this still involves game theory logic to some extent, which is to prevent malicious behavior by project parties by increasing the cost of wrongdoing, rather than achieving complete decentralization from the smart contract level. 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 is approved, developers will be able to use sCrypt and other Bitcoin native high-level programming languages to implement 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 the popular high-level programming language TypeScript 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, it is believed 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 various Bitcoin Layer 2 projects attempting to combine the security of Bitcoin with high-performance scaling solutions have all contributed to the vigorous growth of 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 for Layer 2 networks.
• Solana and TRON: Benefiting from the development of Meme Coins and some infrastructure projects, on-chain transactions are very active.
• Aptos and Sui: Applications in the GameFi and DeFi sectors drive active user growth.

Layer 2

Layer 2 continues to be a key path for scalability, with ZK Rollup and Optimistic Rollup each having their own developments.

• zkSync and StarkNet: Continuous iteration and 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 achieved new breakthroughs in interoperability.

• LayerZero: Connecting over 40 chains, cross-chain transaction volume has significantly increased.
• Cosmos: IBC upgrade, cross-chain performance improved 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 and becomes 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, primarily 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 improved capital utilization efficiency, and this year it has also gained good development and market attention, including projects like EigenLayer and Satori, which have received tens of millions in investment from top capital this year.

financing event

Infrastructure still occupies an important position in this year's investment and financing. Layer 1, modular public chains, and infrastructure related to the Bitcoin ecosystem have all received capital favor. Layer 1 currently represents the most concentrated technological development and exploration in the encryption field, and this track will continue to be a field concentrated with development resources and capital in the future.

Meme

Important retail funding entry after the implementation of the encryption easing policy

In 2024, the Meme sector once again became 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 some projects at the beginning of the year to certain platforms in the middle of the year, these projects have demonstrated strong "lottery attributes" through Bonding Curve pricing and low market cap opening models, attracting widespread attention. In addition, the decentralized characteristic of "anyone can deploy Meme" on some platforms has driven greater ecological prosperity, with over half of Solana's Meme projects originating from these platforms, among which dozens have a market cap exceeding $1 billion. Other public chains have also quickly followed the Meme strategy, 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 some platforms 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 encryption policies and related governance trends will bring potential news impacts to the market, possibly fostering new Meme hotspots. For example, if a specific policy gains attention, it may trigger another surge in certain cryptocurrencies.

As the environment of the crypto market 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 in some exchanges after the launch of Meme coins fully illustrate this trend, which may continue to drive the development of this sector in the future.

Meme Infrastructure

As the demand for fair issuance among market users continues to grow, this year has seen high market attention and participation in the Meme fair launch track. Infrastructure projects have become the top cash flow projects this year, injecting new momentum into the development of Meme.

These platforms are Meme project issuance platforms built on certain public chains. By providing simple and intuitive creation tools and strong community support, they adopt a fair distribution model and have designed a mechanism to automatically add liquidity to DEXs. Coupled with the successful market operations, community operations, and low transaction costs of the underlying public chains, these platforms have been recognized by the market as soon as they were launched, successfully incubating several well-known Meme projects.

At the same time, the success of these platforms has attracted numerous other projects to imitate them, resulting in similar copies appearing on multiple chains. Overall,