Worthwhile investment themes in the encryption space in 2025

Author: hitesh.eth

Compilation: Deep Tide TechFlow

Pure dry goods, no false hope.

Before you start reading, I hope you can temporarily set aside any preconceptions and take a few minutes to carefully read what I’m about to share.

From a macro perspective, the investment themes of Web3 can be divided into two categories: underlying infrastructure (infra) and application scenarios (apps).

Investments can be classified into two types: one that may seem dull and unremarkable in the short term but can bring substantial returns in the long run, and another that may be exciting in the short term but ultimately worthless.

Most cryptocurrency investors enter this market in pursuit of quick and substantial gains, and are willing to take the corresponding risks.

Therefore, people tend to prefer cyclical investments - these types of investments are usually short-term and only effective during specific bull market cycles.

2025 will become the “year of regulation” in the cryptocurrency field.

The United States, as well as a number of other major economies, plan to introduce regulations within their countries. The introduction of these regulations will not only strengthen the trust of traditional investors, especially the older generation, but will also screen out a small number of cryptocurrencies with real potential – only those with solid fundamentals and stable cash flow will stand out.

We can expect a new wave of traditional investors in the market. These investors have “old money” in their hands and will be venturing into the cryptocurrency space for the first time.

They don’t invest blindly just because of market speculation, but they will carefully study the project, read the reports and data carefully, and only make investment decisions if they are logical.

Against this backdrop, decentralized finance (DeFi) will be a popular investment theme for traditional investors, along with blockchain Layer 1 protocols (L1).

However, due to the lower market cap of DeFi projects, they have greater growth potential and are highly aligned with fundamentals and data. This year, some DeFi projects have already generated over $100 million in revenue, which undoubtedly attracts the attention of traditional investors.

Traditional investors have huge amount of funds, and sufficient funds are the key to healthy market growth. Don’t forget, many institutional investors are also dominated by traditional investors.

It is foreseeable that DeFi will eventually become one of the important layout directions for top institutional investors.

BlackRock has begun to collaborate with DeFi projects, and this trend is gradually taking shape.

DeFi is not a cyclical investment; It’s more of a long-term investment, just like investors used to look at BTC and ETH.

The long-term potential of AAVE may be considered comparable to ETH.

When you invest in blue-chip DeFi projects, you can focus on long-term growth;

And when you choose to invest in a brand new DeFi native project, you can consider short-term returns, which may also bring several times or even higher returns.

In a DeFi-dominated crypto market, many new projects will emerge one after another, while some established projects will regain traction. You’ll see a wave of price increases around these items.

In the DeFi field, many blue chip applications (such as Uniswap) are planning to transform into underlying infrastructure projects. This transformation will further enhance the value potential of tokens, and some projects may announce adjustments to the fee mechanism next year, so you need to be prepared for this.

These changes will give a strong impetus to the narrative of DeFi’s development.

I expect DeFi to dominate at least two quarters of next year, just as AI has done this year.

As for AI, I think 2025 will be the year when AI receives widespread criticism in popular culture due to its rapid and uncontrolled expansion.

The discussion of “responsible AI” will be in focus.

Market activities around encrypted AI infrastructure, AI agents, and Initial Agentic Offerings (IAOs) may enter an adjustment period due to the narrative of ‘responsible AI’.

But before that, I expect AI agents to go through a bubble-like growth.

There are already 13,000 agents on the market today, and I expect that number to grow to at least 100,000.

Later, we may enter a bubble phase and burst in the following year.

The specific quarter in which this occurs will depend on the timing of AI regulatory events.

Regulation will also generate interest in privacy infrastructure, so some major projects involving confidential DeFi, privacy computing, privacy storage, and privacy inference will receive more attention, and this attention will also be reflected in their asset performance (PA).

Meme market will continue to be active.

Although regulatory agencies may not support it, people will always find ways to enter, because complete prohibition is impossible.

Speculators will continue to search for opportunities among the 100,000 new coins added every day.

However, some established memes, such as DOGE and PEPE, may attract more serious investor attention.

Even if you don’t like memes, you should consider setting aside some investment exposure for them.

2025 will also be the year when mobile Web3 wallets and super apps emerge.

Recently, a Web3 wallet company called Exodus went public on the NASDAQ at a valuation of $1.2 billion, which could fuel a speculative boom in tokens associated with Web3 wallets with strong revenue performance next year.

AI and DeFi will be the two core narratives of the next year:

DeFi is expected to dominate;

AI agents may enter the bubble phase;

Meme speculation will attract more people to participate;

Privacy and DePIN (Decentralized Physical Infrastructure Networks) will make their mark in one quarter;

Web3 wallets will receive more attention and drive mainstream adoption through more user-friendly guidance and better user experience.

That’s all I have to share.

Please note that I am neither an astrologer nor an expert in the cryptocurrency field. I am just an ordinary person with some random thoughts about the market, so don’t take my views too seriously.