An increasingly clear direction remains: BTC and stablecoins.
Written by: ODIG Invest
Since mid-2025, the overall crypto market has shown high volatility and downward pressure, with major asset prices continuously retracing, trading volumes shrinking, and accompanied by insufficient investor confidence. As of yesterday, the global crypto market capitalization was approximately $3.33 trillion, down about 20-30% from the peak at the beginning of the year, with BTC's dominance stabilizing around 55% and volatility reaching as high as 40%, far exceeding that of 2024. Market sentiment is cautious.
On-chain data from CryptoQuant shows that exchange BTC reserves have decreased by about 8% since early August, and the USD value of reserves has dropped from about $300 billion to $250 billion in November. This indicates that investors are withdrawing funds from exchanges (shifting to self-custody or safe-haven assets), reinforcing sell signals.
Mainstream token prices briefly rebounded in the first half of 2025 but entered a correction phase starting in October, further declining in November, with the prices of the Top 50 tokens nearly falling back to levels seen after the FTX collapse in 2022.
To summarize the current state of the crypto market in 2025, this includes:
Mainstream tokens like SOL, ETH, and BTC have returned to prices from December 2024; the four-year cycle theory has failed, and industry participants need to adjust and adapt.
Explosion in the number of tokens: Over the past four years, most token issuance models have been low liquidity, high FDV models. Following the meme craze, the number has rapidly increased; currently, new projects are launched daily, with a massive supply in the market, and funding is becoming increasingly cautious. Unless new buyers continuously enter, it is insufficient to offset the large-scale unlocking of projects.
The market has entered a period of concept reuse: lack of innovation; a large number of non-essential technologies exist.
Difficulty in project implementation: Economic model incentives and regulatory effects are poor; many projects have not found product-market fit (PMF).
Weak airdrops: Airdropped tokens are immediately exchanged for stablecoins by users.
Significant increase in trading difficulty: For any asset worth trading and with sufficient liquidity, competition will be exceptionally fierce.
Tight funding chains: VC investment has shrunk, with total financing only accounting for about half of 2024, leading to tight funding chains for project teams.
Frequent internal industry issues: The "black swan" event on October 11; frequent hacker attacks (with losses exceeding $2 billion in the first half of the year); Layer 1 chain congestion events, etc.
DeFi yields have decreased: Compared to 2024, DeFi yields have fallen below 5%.
This resembles a structural adjustment, similar to 2018, but on a larger scale. It has almost put every market participant in difficulty, whether they are users, traders, meme enthusiasts, entrepreneurs, VCs, quantitative institutions, etc.
Especially after the "Black Friday" on October 11, many crypto traders and quantitative institutions have suffered losses, and concerns about institutional blow-ups remain. This event signifies that speculators, professional traders, and retail investors are all facing financial losses.
Meanwhile, the participation of traditional financial institutions is concentrated in BTC and payment, RWA, DAT strategies, etc., relatively disconnected from the altcoin market. Bitcoin spot ETFs performed strongly in October, with a net inflow of $3.4 billion, setting a historical record, but there was a large outflow of funds in early November, reflecting profit-taking behavior in the market at high price levels.
Currently, with the market expectations following the end of the government shutdown, official liquidity is expected to return. How will the crypto market perform in the last two months of 2025?
An increasingly clear direction remains: BTC and stablecoins.
(1) BTC: The macro liquidity cycle replaces the halving narrative
As market consensus gradually shifts, analysts believe that the global liquidity cycle, rather than merely the Bitcoin halving event, is the core driving force behind the bull-bear transition.
According to Arthur Hayes' recent core idea, "the four-year cycle is dead, and the liquidity cycle is eternal." He believes that the past three bull-bear cycles have closely aligned with the massive expansion of the dollar/RMB balance sheets and periods of low-interest credit easing. Currently, the accumulation of U.S. debt is growing exponentially, and to dilute the debt, the Standing Repo Facility (SRF) will become the government's main tool; an increase in SRF balances means a simultaneous expansion of global fiat currency. Under "invisible quantitative easing," the upward trend of BTC will not change.
He believes that the Standing Repo Facility (SRF) will become the government's main tool, with the current monetary market conditions persisting and the accumulation of national debt growing exponentially. The SRF balance will continuously rise as the lender of last resort. An increase in SRF balances means a simultaneous expansion of global fiat currency, which will reignite the Bitcoin bull market.
Raoul Pal's cycle theory also points out that the end of each crypto cycle stems from monetary tightening policies. Data shows that the total global debt has reached about $300 trillion, with approximately $10 trillion (mainly U.S. Treasury and corporate bonds) maturing soon. To avoid a surge in yields, large-scale liquidity injections are necessary. According to his model, every additional $1 trillion in liquidity could be associated with a 5-10% return on risk assets (stocks, cryptocurrencies). A refinancing scale of $10 trillion could inject $2-3 trillion in new funds into risk assets, thereby strongly driving up BTC.
All of the above ideas are under the dominance of the global central bank liquidity cycle, providing a long-term macro environment for the upward trend of scarce assets like BTC.
(2) Stablecoins: Moving towards financial infrastructure
Another main line for 2025 is stablecoins, whose value is not based on "speculative narratives," but rather on "real adoption."
Recent favorable policies have been announced: the U.S. Congress is pushing to grant the CFTC (Commodity Futures Trading Commission) greater jurisdiction over the cryptocurrency spot market. The CFTC is expected to introduce a policy early next year that may allow stablecoins to be used as tokenized collateral in the derivatives market. This will first be piloted in U.S. clearinghouses and accompanied by stricter regulations, opening the door for stablecoins to enter the core areas of traditional finance.
The scale of stablecoins is rapidly expanding, far exceeding market expectations. Major institutions in the U.S. have taken the lead in laying out plans to build a new payment network centered around stablecoins.
In the face of the explosion of real application scenarios, the value of stablecoins is "stably performing" in scenarios such as cross-border transfers, exchange rate risk control, and corporate settlement allocations.
Over the past year, it has achieved a balance between speed, cost, and compliance, initially forming a compliant, low-cost, traceable global funding channel, gradually becoming a financial settlement layer usable in the real world. As infrastructure, the status of stablecoins is being solidified through regulation and practical applications, providing stable liquidity for the entire crypto economy.
This also offers insights for entrepreneurs: startup teams need to consider "stablecoin native" business processes, target markets should focus on "stablecoin applicable populations," and based on this, find truly fitting products - market fit (PMF).
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