Introduction
Welcome to our analysis of the cryptocurrency market outlook for 2025!
In this article, we review the past year 2024 and assess what the year 2025 in crypto markets looks like.
In this article, we examine the general outlook of the cryptocurrency market as well as separately the three major cryptocurrencies (BTC, ETH, and SOL) and the two key trends of the cryptocurrency market in 2024 (memes and AI). Our perspective is primarily that of a crypto investor and trader. Therefore, the main focus of the analysis is specifically on price development and the relative valuations of the cryptocurrency market. In this article, we emphasize somewhat less the technical development of the crypto sector, relying on the assumption that the market generally would price these variables somewhat correctly (which of course is not given).
The cryptocurrency market experienced a sharp rise in 2024, and the industry was extensively reported on even by mainstream media. As a result, many new and novice crypto investors have entered the market over the past year. We take this into account and strive to keep our analysis as easy to understand as possible and requiring little prior knowledge. However, we also aim to provide useful insights for more experienced crypto veterans.
At the beginning of our analysis, we would like to remind the reader that the cryptocurrency market is inherently very dynamic and fast-moving. In the cryptocurrency market, especially at the peak of a bull market, even a quarter is often a long time, not to mention an entire year. In the history of cryptocurrencies, almost every calendar year has included events that were completely impossible to predict at the beginning of the year. For this reason, our analysis is not intended to be taken not so much as forecast but above all as an introduction on the basis of which it is appropriate to follow the cryptocurrency market in 2025.
Enjoy reading!
2025 Big Picture:
Two Good Years Behind Us
When evaluating the outlook for 2025, it is good first to recognize the starting points. The last two years have been extremely profitable in the cryptocurrency market. The price of the largest cryptocurrency, Bitcoin, has increased approximately sixfold during 2023 and 2024.
Such high returns in the cryptocurrency market are naturally closely linked to the strong bull market seen in the stock markets. The S&P 500 index rose by more than 50 percent during 2023–2024.
Right from the start, it is therefore necessary to state that we have already been living in a strong bull market for two years, and the valuations of risky assets have already risen quite high. When viewed on a monthly time frame, the Relative Strength Index (RSI) indicator, which expresses the strength of price movements, has risen to levels for both Bitcoin and the S&P 500 index that have often been seen near the end of the cycle.
High valuation levels mean that the "easy gains" from price increases have already realized, as the price declines experienced in the previous bear market have been recovered, and new all-time highs for Bitcoin have already been recorded.
When analyzing the cryptocurrency market, the so-called Halving cycle is often discussed, which revolves around Bitcoin’s block reward halving. It is reasonable to ask whether this cyclicality of cryptocurrency prices has anything to do with block rewards or whether Bitcoin’s price is just the ultimate expression of the cyclical nature of the financial markets in general.
However, since Bitcoin's price development has so far closely followed this four-year cycle, it is at least worth being aware of what has happened in previous cases in the years following block reward halvings (2013, 2017, and 2021).
- In 2013 and 2017, Bitcoin's bull market peaked, ending in a parabolic surge in the second half of the year, where the price chart turned almost vertical in the end (so-called blow-off top).
- The year 2021 differed from these in that, instead of a parabolic rise, a slowing price increase was seen in the spring (so-called rounded top), and in late 2021, Bitcoin's price revisited peak levels, narrowly making a new all-time high.
If history were to repeat itself, we would see significantly higher price levels in 2025 than at the end of 2024. In 2021, Bitcoin's price rose by about 50 percent from the beginning of the year to the peak. If this were naively projected onto 2025, a similar increase would indicate a price peak of around $140,000, which does not sound like an entirely impossible scenario this time either.
As in the past, the development of the cryptocurrency market in 2025 will likely follow the development of the stock market closely. Among market analysts, as usual, there have been a wide range of varying forecasts, from a bear market to the S&P index reaching 7,500 points (about +25%).
However, some consensus appears to be forming around the S&P 500 index ending up around 6,500 points, which is about eight percent higher than at the beginning of the year. If we use this assumption and estimate that Bitcoin's price, at this high relative valuation level, would move at 2–5 times the stock market growth, Bitcoin's price could end up 16–40 percent higher than at the beginning of the year. This would mean a price peak of around $110,000–135,000. Tis sounds like a fairly realistic hstarting point, considering that the lower end of this range was almost touched already in January 2025.
Some crypto analysts have projected significantly higher numbers. The rationale for these has primarily been indications of the new U.S. administration's clearly more positive stance on the crypto sector than its predecessor, which is expected to be reflected in more favorable regulation and, in an extreme case, the establishment of a strategic Bitcoin reserve by the U.S. government.
Our bacis assumption regarding these variables is that the increased crypto-friendliness of the new administration has already been largely priced into market valuations. Bitcoin's 37 percent increase in November, while the Nasdaq Composite index rose only six percent in the same period, includes, in our view, so much optimism specifically targeted at the cryptocurrency market that at the moment, that the primary risk is in unmet expectations. We are ready to be pleasantly surprised, but our starting assumption is that during 2025, the development of the cryptocurrency market will closely follow the stock market, and independent price surges were already seen in 2024.
Bitcoin: Still in the Lead
The year 2024 was extremely strong in the cryptocurrency market, and particularly strong for Bitcoin, the largest cryptocurrency. Bitcoin’s dollar price rose by about 120 percent over the year.
At the same time, Bitcoin dominance (Bitcoin's share of the total cryptocurrency market capitalization) clearly increased. This change indicates that Bitcoin’s price rose faster than the rest of the cryptocurrency market.
Bitcoin’s 120 percent price increase in 2024 consisted of two distinct surges. The first catalyst was the approval of BTC ETF funds in January, which enabled Bitcoin investing through traditional securities markets. Soon after the approval of ETF funds, Bitcoin’s price began a strong upward trend, making a new all-time high of about $74,000 in March 2024.
The early-year price surge was followed by an eight-month consolidation, which ended with the U.S. presidential election in November 2024. The election victory of Donald Trump, who had positioned himself as a pro-crypto candidate, immediately lifted Bitcoin's price to a new all-time high, and the bull rally culminated in about $109,000 in December 2024. In the final months of 2024, Bitcoin's price thus broke the magical $100,000 mark, and its total market capitalization exceeded that of silver.
The key theme of 2024 was Bitcoin’s institutionalization. BTC ETF funds accumulated about five percent of all Bitcoin during the year. In addition to these, a significant Bitcoin institution emerged in the form of the publicly traded company Strategy (formerly MicroStrategy), which has acquired about two percent of all Bitcoin using funds raised through convertible bonds. Thanks to Bitcoin’s explosive price increase, the company was even added to the Nasdaq 100 index. Additionally, Bitcoin gained even some political weight when then-presidential candidate Donald Trump expressed strong support during his campaign for more favorable cryptocurrency regulations.
Bitcoin’s narrative is currently strongly centered around being a store of value and “digital gold.” Alternative use cases for Bitcoin, such as the Ordinals protocol that gained attention in 2023 and the Runes protocol launched in spring 2024, have received significantly less attention at the beginning of 2025. We see the possibility that projects of this kind could regain attention if NFTs (non-fungible tokens) make a broader comeback in the crypto space. However, at the moment, we see no signs of this.
It strongly appears that Bitcoin is increasingly achieving institutional-level acceptance and continuing its rise as the digital counterpart to traditional gold. 2025 looks promising for Bitcoin, and we believe it has a strong chance to continue its price increase, provided that the overall investment environment remains favorable for risky asset classes. Even in less favorable market conditions, Bitcoin has historically held its value better than altcoins, making it a preferred choice for more cautious crypto investors.
The biggest risks for Bitcoin in 2025 are primarily its dependence on stock market performance and overall market risk appetite. Additionally, the current price already reflects considerable positive expectations regarding the U.S. administration’s regulatory stance, and potential disappointments in this regard could negatively impact Bitcoin’s valuation.
Another risk related to Bitcoin is the possibility that, as in 2017 and 2021, we could see an alt-season at the end of the bull market, where altcoins would significantly outperform Bitcoin, leaving Bitcoin investors trailing behind the overall crypto market performance.
This scenario would be most plausible if we saw monetary policy shift more clearly towards stimulus measures. On the other hand, many have questioned whether we will see a strong alt-season like previous cycles since an increasing portion of crypto investing now occurs through BTC ETFs. These institutional capital flows do not necessarily rotate into altcoins as seamlessly as the gains of crypto-native investors who have historically driven alt-season rallies.
Thus, we do not assume a full-scale alt-season as the base case, but it is worth staying alert as the year progresses and being ready to seize the opportunity if it arises. This can be monitored through Bitcoin dominance, where altcoins outperforming Bitcoin would be reflected in a decline in Bitcoin dominance.
Ethereum: Decline Continues
In our previous annual review, we began our Ethereum analysis with the following words:
"If Bitcoin was the strong performer of 2023, we give the weakest performance label to Ethereum’s native token, Ether."
By changing the year, the same description applies to 2024 as well. While both Bitcoin’s price and the total cryptocurrency market value (TOTAL) increased by more than 100% during the year, Ether’s price rose by only about 45%.
Even though a 45% annual return on an investment sounds quite respectable, in the crypto market, all price developments must be evaluated relative to the market’s general performance. Since Ethereum is a smaller-cap asset than Bitcoin, it is considered inherently higher risk asset. Therefore, its minimum return expectation in a bull market should be to outperform Bitcoin, which did not happen in 2024.
Using relative valuations, we can also see that Ether weakened by tens of percentage points against both Bitcoin and its clear challenger, Solana (SOL).
A major disappointment in 2024 was that the ETH ETFs launched in mid-2024 failed to act as a catalyst for Ethereum’s price. After Ether’s weak 2023, many viewed it as undervalued and expected ETF approvals to be as bullish for ETH as they were for Bitcoin. That did not happen, and as seen in the chart, the ETF approvals in May 2024 caused only a short-lived bounce in the ETH/BTC ratio before continuing its downtrend.
Many analysts associate Ethereum’s relative weakness in 2023–2024 with an identity crisis in the Ethereum protocol. Ethereum’s value proposition and competitive advantage have somewhat blurred in recent years, particularly with the rise of Solana as a competitor.
Ethereum aims to be the leading smart contract platform, but loses in user experience compared to Solana.
Ethereum’s native token, Ether, has been branded as "ultrasound money", emphasizing its deflationary nature. However, due to low usage of the Ethereum Layer-1 network, Ether has actually been inflationary for most of 2024. Part of this low Layer-1 network usage is due to increased adoption of Layer-2 solutions, which benefits Ethereum users but does not necessarily translate into benefit for Ether token holders.
Ethereum’s biggest setback has been losing its position as the go-to platform for speculative retail investors and the innovation that speculative activity drives. The 2024 meme coin boom and Pump.fun’s success demonstrated that Solana has now taken over as the main playground for retail investors experimenting with the wildest and craziest crypto ideas.
Ethereum’s theoretical strength compared to competitors has been its focus on decentralization. However, it remains unclear whether this is enough to sustain Ethereum’s dominance in the competition between smart contract platforms.
As 2025 begins, it appears that this year may become a “make or break” year for Ethereum. While 2023’s weak performance could have been dismissed simply as mean reversion after a strong 2022 bear market performance, a second consecutive weak year raises greater concerns.
If Ethereum does not show a turnaround in 2025, and the year becomes its third consecutive underperformance, there is a risk that it may never recover its former position. Activity, users, and developers tend to follow price performance, and lagging behind the market can become self-reinforcing.
From an investor’s perspective, Ethereum currently appears unappealing. However, at the start of 2025, we recommend keeping an eye open for possible reversals.
We are not saying that positive catalysts will necessarily emerge, but if they do, Ethereum’s currently low relative valuation presents significant upside potential.
One positive catalyst for Ethereum could be a slowdown in Solana’s momentum, which we will discuss in the next section.
Solana: What Next?
In our previous annual review, we titled the section on Solana’s native token SOL as follows:
“The Comeback of 2023: SOL +900%.”
In 2023, SOL recovered from its 2022 collapse, with its price increasing approximately tenfold.
The year 2024 for Solana appears primarily as a year of consolidation. After a catastrophic 2022 and a strong recovery in 2023, in 2024 Solana solidified its place as one of the major players in the crypto world.
Solana also established itself as the blockchain for “lighter” retail use. Pump.fun and the meme coin casino it triggered were examples of use cases where Solana’s high transaction capacity and low costs were fully utilized. In meme coin trading, where the investment horizon is measured in days or hours, it appears that users prioritize ease, fun, and low costs over the network’s level of decentralization or resistance to nation-state censorship—values emphasized by Bitcoin and Ethereum proponents.
After the approval of Ethereum ETFs, several ETF issuers also submitted applications for SOL ETFs. One of the interesting variables in 2025 will be the review and potential approval of these applications.
In January 2025, Solana also received a somewhat unexpected endorsement when, just before Donald Trump’s inauguration, a meme coin named TRUMP was launched on the Solana blockchain. A “presidential meme coin blockchain” was not exactly the milestone we were expecting, but the fact that TRUMP coin was launched on Solana illustrates how Solana has cemented its dominance in the meme coin segment.
How does SOL look as an investment at the beginning of 2025?
The past year 2024 was strong for SOL, with the price increasing by nearly 90% in USD terms. Analysts generally agree that Solana will remain the leading Layer-1 blockchain, while Ethereum continues to lose ground.
Despite these seemingly strong fundamentals, we see some dark clouds over SOL’s potential returns, a view that may slightly differ from the consensus.
First, it is important to note that while SOL’s 90% return appears strong, it was still significantly lower than Bitcoin’s 120% increase. This means that in 2024, SOL investors were not rewarded for holding a higher-risk asset compared to Bitcoin.
Throughout 2024, the SOL/BTC ratio mainly moved sideways. A closer look reveals that each peak was slightly lower than the previous one.
To Solana’s credit, it did at one point set a new all-time high in 2024. However, the highest closing price of 2024 remained below the 2021 peak, whereas Bitcoin's highest closing price was over 50% higher than its 2021 high.
When comparing SOL to Bitcoin, it is fair to note that 2024 was a Bitcoin-driven year, and the vast majority of altcoins underperformed Bitcoin. When we compare SOL to the broader altcoin market, the conclusions are less clear. For most of the year, SOL’s price appeared to outperform the altcoin market, especially during the long sideways movement from spring to late autumn. However, a short-lived alt-season after the U.S. presidential election erased this relative outperformance.
Some analysts have drawn parallels between ETH/BTC and SOL/BTC trends. Looking at the ETH/BTC ratio, we see:
- A strong rally in the first bull market
- A sharp decline in the first bear market
- A second rally in the next bull market, which failed to make a new all time.-high
- A slow fade, where in the third bull market, ETH/BTC failed to rise further and instead declined
So far, the SOL/BTC ratio has followed ETH/BTC almost identically with a one-cycle delay. It is too early to declare that SOL must follow ETH in the fourth phase, but this possibility should be kept in mind as a potential scenario.
This analysis highlights that despite a strong 2023 and a solid 2024, we are not fully convinced that SOL will outperform the overall crypto market in 2025.
- In a bull market, SOL will likely underperform smaller altcoins.
- In a bear market, SOL will almost certainly underperform Bitcoin.
- It remains uncertain whether SOL can even outperform Bitcoin in a bull market.
Our confidence in SOL’s upside potential would increase significantly if we saw the SOL/BTC ratio break above the 0.0027 level reached in November. Until then, we remain cautious about SOL’s return potential.
The Trends of 2024: Memes and AI
As evident from the previous sections of our analysis, 2024 was a Bitcoin-driven year. The dominance of capital flows into Bitcoin meant that there was relatively less liquidity available for altcoins, and only a few altcoin categories managed to significantly outperform Bitcoin in 2024.
Among the altcoin categories, we highlight two noteworthy trends:
- Meme coins
- AI-related tokens
Meme coins tend to thrive when crypto-native investors have generated significant profits and are looking to move further out on the risk curve. The bull market that started in early 2023 created this kind of environment, particularly for Solana investors. With SOL’s price increasing tenfold in 2023, a meme coin boom naturally followed in Solana’s ecosystem in 2024.
Meme coin themes ranged from political humor (Jeo Boden) to TikTok trends (Chill Guy). The ease of launching meme coins via Pump.fun, combined with the convenience of purchasing them through Moonshot, and TikTok’s rise as a meme distribution platform, illustrate how meme coins are increasingly expanding beyond the on-chain world into broader social phenomena.
The ultimate climax of the meme boom was, of course, the launch of the TRUMP coin in January 2025.
Summary
This concludes our analysis of the most important events of 2024 and the outlook for 2025. Of course, 2024 saw many smaller twists and temporary sector-specific rallies, but we hope this analysis has helped readers grasp the bigger picture of the cryptocurrency market.
We enter 2025 after two years of a bull market. Our base expectation is that the bull market peak has not yet been reached and that Bitcoin will likely set new all-time highs.
The big question mark is whether 2025 will see an "alt-season" similar to 2017 and 2021, where altcoins collectively outperform Bitcoin.
Another emerging view among crypto analysts is that the massive increase in the number of tokens has fragmented the market, making it impossible for liquidity to lift all altcoins collectively. Instead of a broad alt-season, we may see “category seasons”, where specific sectors outperform at different times.
It is also important to recognize that there are larger uncertainties surrounding 2025 beyond just the cryptocurrency market. The geopolitical situation remains difficult to predict, and there are still significant uncertainties regarding the economic and foreign policy of the new U.S. administration, as well as their immediate consequences. As these uncertainties become clearer, the markets will react to them in ways that are still difficult to foresee at this stage.
Regardless of one’s personal optimism or pessimism, one thing is clear: 2025 is unlikely to be boring.
Follow the market closely, and we will keep you updated through Kvarn Pulse, our Kvarn X Pro reports, and social media channels!
Kvarn X wishes you a successful crypto investing year in 2025!
