As a crypto enthusiast since 2016 and also a financial market analyst since 2009, it took me many years to understand the concept of narratives in crypto markets. In my first post on Hackernoon, I would like to share my viewpoint on what I see developing as the next crypto narrative in 2025 markets.
Narratives?
Yes, narratives, the most important driver of crypto markets.
In fact, narratives exist as long as financial markets exist. You can go back in history and see narratives at work. Probably THE most important proof of narratives being a dominant dynamic in financial markets are:
- in 1999/2000 - During the dotcom hype in 1999/2000, literally every stock representing an internet company surged in value. The outlook for a profitable product/market combination was irrelevant.
- in the 70s - literally each and every gold stock was pushed higher even exploration companies that had no solid property or resource.
Narratives drive financial markets.
Narratives are the main driver in crypto markets. Crypto narratives in recent years:
- DeFi in 2020.
- Altcoin narrative in 2021 - all alts up (bad news: this won’t occur again, bi-furcation among altcoins is here to stay).
- NFT narrative in 2021.
- AI & Big Data tokens in 2023.
- Interoperability tokens in 2023.
- Meme tokens in Feb/March 2024.
Admittedly, our theory goes against the established idea that fundamental analysis in crypto matters. I believe it did only partially matter in the past, in fact I believe it hardly mattered at all. Here are illustrations to back up this theory:
- The NFT hype in 2021 - what was created with NFTs in terms of real value in the real world? Similarly, valuations of crypto projects like Decentraland (), in hindsight, were inflated beyond imagination.
- The DeFi hype in 2020 - how many DeFi projects deliver value in the real world of finance, beyond crypto trading?
Here is the ‘good news’ for value investors - I personally believe that 2025 will mark a structural shift in this. The narrative that might play out will be about value creation more than any other crypto narrative in the past.
With all this in mind, the question is which narrative is developing in 2024 and grow big in 2025?
Crypto market cycles
Before answering the aforementioned question, I believe I need to introduce one more concept: the timeline.
The timeline is likely one of the ‘best kept secrets’ in markets. It is also one of the toughest to crack and understand, especially how not to use the timeline.
The point is this: financial markets are highly asymmetric. I made this point clear in what I started calling , a concept I defined back in 2020, when I saw the DeFi narrative playing out while being sidelined.
(Note - This investing principle is meant to be a variation to the 80/20 Pareto rule. I know I know, I was not born with the most fancy and easy to pronounce last name which is the Investing Principle called after my own name will never become established. Remember this: financial markets, especially crypto markets, are highly asymmetric. Keep this in mind throughout your career; it's crucial information for every investor.
You know you've had your 's**t moment' as a market participant when you see a big bullish move unfolding but fail to act. That's when you start reflecting, trying to gain wisdom from the experience. You might not have gotten richer financially, but you hope to gain intellectual wealth instead.
So, the key take-away of the timeline is this - there a few time periods in which big moves tend to happen. All you need to do is this:
- Identify those short periods in time which drive most of the price action.
- Don’t overthink this concept as most of the time there is no intense price action (risk: you get confused by timeline analysis).
In order to avoid the risk associated with the 2nd point mentioned above, I apply the Fibonacci retracement principle to the timeline. I try not to openly talk about it as I consider it to some degree proprietary. Recently, I explained this concept in a where I applied the Fibonacci retracement to a timeline on the silver chart (which I normally never do in the public domain).
For instance, the period February/March of 2024 brought intense price action. There was a timeline driver behind this.
If we zoom out, we see that the period January 11th, 2023, till March 13th, 2024 was characterized by a larger bull run in crypto markets, though highly bi-furcated (no broad participation like in the 2021 altcoin narrative).
With all this in mind, we believe that the 2025 narrative will be confirmed once the 50% Fibonacci retracement on Bitcoin’s timeline will bring constructive price action on Bitcoins chart. To be more precise, the period October 20th till 28th, 2024, should confirm a bullish reversal pattern on Bitcoin’s chart. If this condition is fulfilled, we know with a very high level of certainty that 2025 will bring at least one narrative in crypto markets.
Easy, no?
Institutions enter the crypto space
The big evolution in crypto is the entrance of institutional players in the crypto universe.
This trend started back in 2017. In fact, I personally was on record, back in 2018, predicting significant participation in crypto among institutional players. Those writings are still available in the archives of my blog.
It did not happen though - institutions were afraid of entering what was an ultra volatile market characterized by a lack of regulation. That’s changing in 2024.
In fact, there are a few hyper important evolutions lately that finally will bring institutions ‘en masse’ to the crypto market:
- Lower volatility levels of Bitcoin and Ethereum.
- The SEC’s relentless effort to bring down crypto projects - they are not really succeeding - this raises confidence.
- Blackrock the space.
Here is some evidence of institutions entering the crypto space:
- (March 2024)
- (July 2024)
- (August 2024)
There are many more developments that confirm that the institutional wave in crypto is here to stay but this is the point:
Institutions will prefer value add crypto projects so this might be the first time in crypto’s history that fundamental analysis will matter.
Equally important, institutions entering the crypto market act as a fundamental driver, not just a timing indicator. Let that sink in.
Which crypto projects will be part of the institutional wave?
The next question that comes up in a natural way is the crypto projects and cryptocurrencies that will be favored in what we believe will be next big narrative in crypto?
We believe that institutions will favor to invest in crypto projects and cryptocurrencies alike that either have ties with institutions from a utility perspective and/or can offer a real world value.
One segment that comes to mind is RWA (real-world assets).
Another segment that comes to mind are blue-chip tokens like Ethereum, Solana, XRP.
I know am beating a dead horse, but I continue to be fascinated by XRP (pardon my informal language here). I was so in 2018, in 2019, got shocked by the SEC case during my X-mas dinner in 2020. But now that the SEC/Ripple case seems to be , I continue to be very enthusiastic as explained in great detail in my based on extensive chart analysis. As I think about XRP, I believe it has everything it takes to be one of the future leaders - ties with institutions, enablement of RWA use cases, credibility built up through the SEC/Ripple lawsuit. With the introduction of their stablecoin, they should cope with the counterargument which is XRP’s volatile price swings.
From a different perspective, one other Hackernooner wrote this XRP SWOT recently. Now, we can adjust the SWOT to account for the recent regulatory changes. Suddenly, the XRP picture becomes pretty bright, if you ask me.
Ultimately, if you want to hit ‘the next Solana’ (a rise of 8x similar to what Solana did between mid-2023 and mid-2024), you need to look at laggards today that meet the characteristics to be part of the next narrative in crypto.
More importantly, it will be key for crypto enthusiasts to look for crypto projects in the ecosystems of those blue-chips (so, the Solana ecosystem, Ethereum’s ecosystem, XRP’s ecosystem) to understand which tokens are picked up by institutions in the next phase of crypto’s secular bull market.
One other cryptocurrency project we propose to watch closely: ONDO.
Take-aways
To conclude, I believe that the insights shared in my first Hackernoon article are crystal clear:
- The crypto bull market is here to stay.
- Bi-furcation is here to stay.
- Narratives are here to stay.
- Everything is lined up for the next narrative to be one dominated by institutions.
IF materialized, crypto enthusiasts need to be empathetic and try to think from the perspective of an institution. An institution won’t be interested in meme coins and also not in most small cap tokens. They like the 100x idea but cannot justify this type of risk to their clients. Think, for instance, as a pension fund, will their risk department allow to take positions in small cap cryptocurrencies because one of their analysts believe it will 100x? Of course not.
A well respected institution will look into blue-chip names combined with crypto projects that can drive utility. RWA comes to mind.
We believe the picture is clear. Do you agree?
