2025 Altcoin Outlook: Discover the 'Hidden Gems' with High Potential [Kang Min-seung's Altcoin Now]

Trump 2nd Term, Expectations for Pro-Crypto Policies Rising

"Focus on AI Agents, Bitcoin DeFi, DePIN, DeSci"

Overall Crypto Market, Declining Trading Volume

Long-term Bullish Sentiment Continues

Image=ChatGPT

With the inauguration of U.S. President-elect Donald Trump just a week away, the virtual asset (cryptocurrency) market is showing short-term weakness. However, long-term optimism persists due to expectations that the U.S. will pursue pro-crypto policies. Experts believe that fields such as DeFAI (DeFi+AI, AI DeFi investment), Bitcoin DeFi, DePIN, and DeSci are likely to grow this year.

The leading altcoin Ethereum (ETH) is trading at $3,163, down 2.18% from the previous day on the Binance USDT market as of 18:40 on the 13th (477,600 KRW on Upbit). Many altcoins have seen double-digit declines over the past week, giving back much of this year's gains.

At the same time, Bitcoin (BTC) dominance (the proportion of Bitcoin's market cap in the total virtual asset market cap) is rising at 58.41%, up from 56.78% on the 5th. The rise in dominance as Bitcoin's price falls suggests that the altcoin market may soon show weakness.

"Bitcoin Surged 120% Last Year, Attracting Funds…Bitcoin DeFi Also Expected to Grow Rapidly"

The amount of Bitcoin deposited in Layer 2 networks continues to increase. / Image=Bitcoin Layers

First, there is an analysis that the possibility of significant growth in Bitcoin-based decentralized finance (DeFi) projects has increased following Bitcoin's sharp rise. Recently, Forbes Digital Assets predicted that "Bitcoin DeFi will be a major growth driver in the cryptocurrency market by 2025."

In particular, the Bitcoin restaking platform Babylon Labs is gaining popularity by raising about 57,000 BTC. Several projects, including Babylon Labs, are set to issue tokens (TGE) within the first quarter, drawing more attention. Additionally, the total value locked (TVL) in Bitcoin DeFi, including Fractal Bitcoin (FB), BitLayer (BTR), BuildOnBitcoin (BOB), and Mezo (MEZO), is also growing significantly.

Web3 consulting firm Dispred stated, "In the Bitcoin ecosystem, restaking projects like Babylon, Lombard, Solv (SOLV), Pstake (PSTAKE), and Bedrock are gaining popularity," adding, "In the long term, as service accessibility improves, the Runes and Ordinals (ORDI) ecosystems will regain attention."

Meanwhile, restaking refers to the investment method of staking Bitcoin that has already been staked. Runes is a platform that helps users issue their own tokens (BRC-20) on the Bitcoin blockchain. Ordinals assists in issuing non-fungible tokens (NFTs) on the Bitcoin blockchain.

"Complex DeFi, Now AI Generates Profits…DeFAI on the Rise"

Recently, DeFAI (DeFi+AI, AI DeFi investment) projects that utilize 'AI agents' for DeFi investment are on the rise. 'AI agent' refers to an artificial intelligence (AI) system that performs various tasks independently without human intervention. AI agents assist in managing investors' DeFi portfolios, staking, and liquidity. For example, if a user commands 'Invest a total of $500 in the liquidity pool offering the best current interest rate,' the AI agent executes it.

Representative DeFAI Projects / Image=IOSG Ventures

Representative DeFAI-related projects include ai16z (AI16Z), Velvet Unicorn (VU), and the representative AI agent of Virtual Protocol (VIRTUAL), aixbt (AIXBT). Cryptocurrency analyst Hitesh stated, "DeFAI's market cap is currently below $1 billion but is expected to grow to $10 billion in the coming months."

"DePIN Reducing Infrastructure Costs, Expected to Grow 100-1000 Times Over the Next Decade"

Decentralized physical infrastructure projects (DePIN) are also expected to show steep growth. DePIN is evaluated as being able to significantly reduce various infrastructure costs using Web3 technology.

Classification of Major DePIN Projects / Image=Messari Report

Cryptocurrency analysis firm Messari recently reported, "The final market size of DePIN is expected to approach $1 trillion, but it currently occupies less than 0.1% of the future market value," adding, "DePIN is just beginning, with the potential to grow 100 to 1000 times over the next decade." According to the report, there were over 350 projects in the DePIN market as of last year, with a market cap of about $50 billion.

Messari analyzed that Helium (HNT), Dawn Protocol (DAWN), Filecoin (FIL), Ionet (IO), Daylight (GRID), Glow (GLOW), Worldcoin (WLD), and Animal (ANML) are leading DePIN's growth.

Dispred predicted, "In the DePIN field, models that collect meaningful data through sensors and integrate it with token economics, like Hivemapper (HONEY), will be promising," adding, "'Open hardware' DePIN projects, where users provide idle resources like mobile, PC, and graphics cards and receive rewards, will grow further."

"Emerging Field 'DeSci' Attracting Industry Leaders' Attention…Launching Its Own Tokens"

Recently, the decentralized science (DeSci) field is also gaining attention. DeSci refers to projects that support funding, research creation, and data sharing in scientific research using Web3 technologies like tokenization. According to AI-based Web3 search platform Kaito, interest in DeSci has surged 2600% this year. Previously, crypto leaders like Ethereum co-founder Vitalik Buterin and former Binance CEO Changpeng Zhao have highly evaluated the potential of the DeSci field.

DeSci Tokens by Market Cap / Image=CoinMarketCap

First, BioProtocol (BIO) is a DeSci project focused on biological research. BioProtocol currently operates seven bio decentralized autonomous organizations (DAOs). This year, research related to COVID-19, rare diseases, and more will be added. Recently, BioProtocol launched several proprietary intellectual property (IP) tokens, including Alzheimer's (CLAW), Hemp Fiber (HEPY), Ovarian Aging (OVARIA), and Cryopreservation (CRYORAT). These tokens can be traded on platforms like Bio Launchpad and CoW Swap.

Additionally, ResearchHub, a decentralized scientific research platform funded by Coinbase CEO Brian Armstrong, is also gaining attention. ResearchHub has introduced reward mechanisms for researchers' paper publication, review, and discussion through ResearchCoin (RSC). Recently, ResearchHub announced plans to collaborate with AI agents.

Analyst Lucas Rupert Malmstrom stated, "The number of DeSci tokens is currently very small, and there are limited DeSci tokens that can become large blue chips," adding, "The original early bio DAO tokens are likely to rise significantly in the future."

Malstrom, a family office providing financial management services to ultra-high-net-worth individuals, is investing in seven bio DAO tokens, including VitaDAO (VITA), Aethir (ATH), Grow (GROW), and Neuron (NEURON).

Last Year's 'Worst Performance' Ethereum Layer 2…This Year's Outlook

Last year, the weakness of Ethereum Layer 2 projects was prominent. Sui (SUI) and Solana (SOL) emerged as 'Ethereum killers,' attracting funds to these DeFi (decentralized finance) networks, and competing projects like Hyperliquid (HYPE) became highly popular. Layer 2 refers to networks that implement devices to process data outside the blockchain, reducing fees and increasing processing speed.

Most Ethereum Layer 2s remain in the 'Stage 0' phase. Delays in development stages are causing delays in security improvements / Image=El2Bit Capture

In fact, Arbitrum (ARB), the number one Ethereum Layer 2 network by market share, fell 54% last year. Blast (BLAST), which attracted significant interest by paying interest just for holding assets in the Layer 2 network, plummeted 85% last year. Polygon (MATIC) fell 54%, and Optimism (OP) also fell 53%.

Transactions processed on the Base network continue to increase. / Image=BaseScan

On the other hand, this year, DeFi based on 'Base,' a Layer 2 network launched by Coinbase, is expected to grow. A Dispred official stated, "Last year, Ethereum Layer 2 projects were merely competing for liquidity and failed to form an attractive ecosystem, resulting in poor performance," but "this year, DeFi based on Base is expected to be promising, with projects like Aerodrome (AERO) and Morpho (MORPHO) drawing attention."

Interest is also focused on DeFi projects related to the Trump family. World Liberty Finance (WLFI), supported by President-elect Donald Trump's family, holds tokens such as Aave (AAVE), Chainlink (LINK), Etena (ENA), and Ondo Finance (ONDO).

"Overall Crypto Market, Declining Volatility and Trading Volume…Whale Investors Holding and Observing"

Recently, market experts have analyzed that while 'big hand' whale investors are maintaining a wait-and-see stance, trading by individual and small-scale investors has increased somewhat. Recently, as the overall cryptocurrency market's trading volume has decreased, volatility has slightly decreased, and the average loss of investors has expanded. Experts are predicting the possibility of a long-term bullish trend despite the recent market weakness.

On the 10th, cryptocurrency data analysis firm Santiment reported in a research report, "The buying trend of whales holding between 10,000 and 100,000 Bitcoin appears to have stopped since the 18th of last month," adding, "In particular, the trading activity of these whales has decreased by 14% over the past two weeks. Whales are holding their holdings strongly while observing." On the other hand, during the same period, individual investors' trading volume increased by 22%, and the number of small wallets also recorded an increase.

Recently, cryptocurrency trading volume has generally shown a declining trend. / Image=Santiment Report

Despite several positive factors, the overall cryptocurrency market's trading volume is decreasing. Santiment stated, "The daily average trading volume of the top 10 cryptocurrencies by market cap has decreased by an average of 13% over the past two weeks," adding, "During the same period, Ethereum trading volume plummeted by 17%, and meme coin trading volume has shown a significant decline since mid-last month." According to the report, Binance and Coinbase spot trading volumes have decreased by 15% and 12%, respectively.

There are also observations that 'defensive selling' to manage risk in recent volatile markets has increased. Alex Kuptsikevich, a senior market analyst at FXPro, stated, "In the recent downturn, the leading altcoin Ethereum has given back all of this year's gains and retreated below the $3,360 level," adding, "The altcoin market remains strong, but investors have become cautious and are opting for profit-taking (realizing profits)."

On the other hand, there are also predictions that the altcoin market is likely to continue a long-term bullish trend. Renowned cryptocurrency strategist Michael van de Poppe stated, "The cryptocurrency market has continued to be bullish since Donald Trump won the U.S. presidential election last November, but the upward momentum has quickly reversed due to FUD (fear, uncertainty, doubt) about Tether (USDT) being delisted in Europe, a surge in U.S. Treasury yields, and a strong dollar," he diagnosed.

The strategist emphasized, "(Despite the recent decline) the cryptocurrency market has returned to levels from six months ago, but there is no signal that the bull market has ended yet," adding, "The current altcoin prices are very undervalued considering the long bull market that will unfold over the next 2-5 years," and "Investors are advised to maintain their current investment positions and hold altcoins."

Meanwhile, on-chain indicators suggest that the risk for additional purchases or new investment entries is decreasing. Santiment predicted, "Some professional traders have expressed concerns that a downturn similar to 2018 and 2022 could return," but "the MVRV indicators of many altcoins, including Ethereum (ETH) and Cardano (ADA), are entering the 'opportunity zone.'" MVRV is the ratio of the current market cap to the realized market cap, indicating whether the current price is overvalued or undervalued.

Santiment stated, "Recently, the average loss of investors is increasing. The risk of adding more coins or opening new positions is lower than usual," adding, "If the bleeding in the cryptocurrency market increases further, the possibility of a price rebound will become higher." It is explained that the recent 'blood in the streets' period can also act as an opportunity.

Kang Min-seung, Bloomingbit Reporter minriver@bloomingbit.io