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

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 then to the push from the U.S. elections, cryptocurrencies like Bitcoin have reached record valuations, increasingly affecting social and political landscapes.

Looking ahead, HTX Ventures has identified five key tracks that are expected to show exciting progress in 2024 and will be closely monitored in 2025. These tracks include the Bitcoin ecosystem, infrastructure (Infra), Meme, artificial intelligence (AI), and the TON ecosystem. This report provides an in-depth analysis of the current status, challenges, and future opportunities for each track, along with a macroeconomic context and market outlook.

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 mainly 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, a growth of 613,708 coins. Over the course of 12 months, the ETF holding ratio increased from 3.15% to 6.25%. ( as of December 4, 2024 )

A new market has officially opened, centered around Bitcoin as the core asset, with ETFs and US stocks as channels for capital inflow, utilizing US-listed companies represented by MSTR as vehicles to infinitely absorb US dollar liquidity. Therefore, the necessity for Bitcoin to further develop its ecosystem and improve capital utilization efficiency has become increasingly prominent, which will also 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 craze, 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 development. Various Layer 2 solutions have emerged on Bitcoin, including Spiderchain (, Botanix ), ZKRollup (, Nexio, and Critea ), EVM-compatible chains ( BOB and B Squared ), and sidechains ( Merlin ), among others. As of now, the total value locked ( TVL ) of Bitcoin Layer 2 has reached 3 billion USD, contributed by 19 projects. Assuming all Bitcoin Layer 2 projects are launched in the coming years, the total TVL is expected to grow by at least 2 to 4 times, reaching 6 billion to 12 billion USD.

Layer 1/Execution Layer

BRC-20, Ordinals, and Runes are the main new execution standards that emerged at the end of 2023. Although the overall market declined 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 failed 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. Due to the Bitcoin network not directly providing 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 year.

Security Layer

However, these interoperability solutions may pose a threat to the security of the underlying assets, as hacking incidents occur from time to time. In response, security solutions related to Bitcoin have started to emerge.

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

Bitcoin timestamp: Allows for the recording of data timestamps on the Bitcoin network, enhancing the credibility and immutability of the data.

Bitcoin Staking: Through economic incentives, allowing Bitcoin to provide security for other networks.

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 passes 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 such as ARC-20 and SRC-20, and the emergence of infrastructure like 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 shifted its attention to native BTCFi that can achieve decentralization and non-wrapped models, such as stablecoins.

Currently, through the cryptographic techniques of cautious log contracts (DLC) and adapter signatures (Adaptor Signature), developers can program financial contracts in Bitcoin scripts that rely on external events, ensuring the permissionless nature (permissionless) of stablecoin and lending projects during liquidation, and guaranteeing the permissionless nature of multi-party transaction operations through partially signed Bitcoin transactions (PSBT). However, this still involves game theory logic to some extent, which means preventing malicious behavior from 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 passes, 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 crypto industry. The combination of capital and technology has driven the rapid development of projects such as Layer 1, Layer 2, and middleware. The continuous upgrades 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 a certain trading platform; the continued 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 growth 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, which reduces costs for Layer 2 networks.
• A trading platform and TRON: Thanks to the development of Meme Coin and infrastructure projects like Pump.fun and SunPump, on-chain transactions are very active.
• Aptos and Sui: The applications in GameFi and DeFi are driving the growth of active users.

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 enhancing 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: Connects over 40 chains, significantly increasing cross-chain transaction volume.
• Cosmos: IBC upgrade, cross-chain performance improved by 50%.

modular public blockchain

Modular public chains provide 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: Attracting 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 the primary market this year, 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: Expands 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 efficiency and has received good development and market attention this year, with projects like EigenLayer and Satori securing tens of millions in investments from top capital.

Infrastructure continues to play a significant role in investment and financing this year. Layer 1, modular public chains, and infrastructure related to the Bitcoin ecosystem have all attracted capital. Layer 1 currently represents the most concentrated technological development and exploration in the encryption field, and this sector will still be a focus for resource and capital development in the future.

Meme

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

In 2024, the Meme track once again becomes a hotspot in the crypto market. As an ecological cornerstone, it not only promotes community consensus but also integrates with fields such as DeFi and GameFi to create new use cases. For example, a certain trading platform has successfully stimulated the vitality and activity of the ecosystem by vigorously promoting the innovation and development of Meme projects. From the Bome and Slerf at the beginning of the year to Pump.fun in the middle of the year, these projects demonstrate strong "lottery attributes" with their Bonding Curve pricing models and low market cap opening strategies, attracting widespread attention. In addition, the decentralized feature of Pump.fun, allowing "anyone to deploy Meme," has driven greater ecological prosperity, with over half of the Meme projects on a certain trading platform originating from Pump.fun, among which dozens of projects have a market value exceeding $1 billion. Public chains like SUI and TRON have also quickly followed the Meme strategy, further invigorating 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 using fiat currency, and 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 impact to the market or give rise to new Meme hotspots. For example, if the "Department of Government Efficiency" ( led by Elon Musk, abbreviated as "DOGE" ), gains attention, it may trigger another 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 huge price increase observed on a certain trading platform after the launch of Meme coins fully illustrates this trend, which may continue to drive the development of this sector in the future.

Meme Infrastructure

As market users demand fair distribution,