HTX Ventures 2024 Crypto Market Review and 2025 Outlook: 5 Key Tracks with Bright Developments

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 thriving bull market, and then the influence of the U.S. elections, cryptocurrencies like Bitcoin have reached record valuations, increasingly impacting social and political landscapes.

Looking to the future, HTX Ventures has identified five key tracks that are expected to show exciting progress in 2024, which 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 of 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 most of the current crypto market liquidity is primarily concentrated in the Bitcoin ecosystem, and it continues to grow.

The Bitcoin spot ETF has accumulated 5.3% of the total existing Bitcoin supply, with the 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's 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 U.S. stocks as the channels for capital inflow, utilizing U.S. listed companies represented by MSTR as the vehicle to infinitely absorb U.S. 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 hype around Bitcoin ETF concepts, the trading volume and token prices of earlier Bitcoin Layer 2 projects ( such as the Lightning Network, Stacks, and Liquid Network ) have surged significantly. These older Layer 2 projects have also witnessed further technological advancements. 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 locked value ( TVL ) of Bitcoin Layer 2 has reached $3 billion, contributed by 19 projects. Assuming all Bitcoin Layer 2 projects launch 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 the main new execution standards that emerged at the end of 2023. Although the overall market declined in the second quarter, activity on the BTC Layer 1 continued to grow steadily. However, while the Bitcoin market saw a recovery in the third quarter, this momentum failed to be sustained.

Other Bitcoin Infrastructure

With the increasing adoption of Bitcoin, 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. As 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. We anticipate that more interoperability solutions, including Xlink, Atomiq, and Auran, will 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 of 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 data availability layer (DA layer ), the potential use value of Bitcoin is further released. Nubit is a key player in the Bitcoin DA field. 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 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 like ARC-20 and SRC-20, and the emergence of infrastructure such as Bitcoin Layer 2, Bitcoin Restaking and LST, and Bitcoin cross-chain bridges, the entire ecosystem has developed rapidly. Subsequently, after the Bitcoin conference in July 2024, the market turned its attention to native BTCFi that can achieve decentralization and non-wrapping 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 depend on external events, ensuring the permissionlessness (permissionless) of stablecoins and lending projects during settlement, and guarantee the permissionlessness of multi-party transaction operations through partially signed Bitcoin transactions (PSBT). However, this still involves game theory logic to some extent, which aims to prevent malicious behavior by increasing the cost of wrongdoing to project parties, rather than achieving complete decentralization from the smart contract layer. The stablecoin project Shell Finance, which is about to launch its mainnet, adopts this kind of 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 achieve completely 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 be significantly increased.

With the dual support of the macro market and infrastructure, we believe that Bitcoin will experience a further surge in market demand over 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, along with the improvement of 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 Restaking mechanisms; and multiple Bitcoin Layer 2 projects attempting to combine Bitcoin's security with high-performance scaling solutions have all contributed to the flourishing development 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, reducing costs for Layer 2 networks.
• Solana and TRON: Benefiting from the development of Meme Coins and certain infrastructure projects, on-chain transactions are very active.
• Aptos and Sui: Applications in GameFi and DeFi are driving active user growth.

Layer 2

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

• zkSync and StarkNet: Continuous iterative 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 chain

Modular public chains offer high performance and flexibility, attracting diverse applications.

• Celestia: Supports multiple modular execution layers, becoming 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 a new emerging hotspot in the primary market this year, with several related projects such as Babylon, Taro, BounceBit, Corn, etc. completing financing this year, mainly bringing smart contract and scaling capabilities 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 has received good development and market attention this year, with projects like EigenLayer and Satori receiving tens of millions in investment from top capital.

Investment and Financing Events

Infrastructure remains a key focus in investment and financing this year. Layer 1, modular public chains, and infrastructure related to the Bitcoin ecosystem have all attracted capital interest. Layer 1 currently represents the most concentrated technological development and exploration in the encryption field, and this track will continue to be a domain where development resources and capital are concentrated in the future.

Meme

After the implementation of the encryption easing policy, an important entry point for retail investor funds.

In 2024, the Meme track once again becomes a hotspot in the crypto market. As an ecological bridgehead, it not only promotes community consensus but also integrates with areas such as DeFi and GameFi, creating new use cases. For example, Solana has successfully stimulated the activity and vitality 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 certain projects in the middle of the year, these projects showcase strong "lottery attributes" with their Bonding Curve pricing model and low market cap opening strategies, attracting wide attention. Moreover, the decentralized characteristic of "anyone can deploy Meme" in some projects has propelled greater ecological prosperity, with over half of the Solana Meme projects originating from such platforms, among which several projects have a market cap exceeding $1 billion. Public chains like SUI and TRON have also swiftly 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 some platforms allows users to purchase Meme assets using 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, 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 significant price increases seen on certain 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 user demand for fair issuance in the market further increases, there has been a high level of market attention and participation in the Meme fair launch track this year. Infrastructure projects, such as certain issuance platforms, have become leading cash flow projects this year, injecting new momentum into the development of Meme.

A Meme Project Issuance Platform

This platform is built