Pixels

Jack Kubinec

This is a segment from the Lightspeed newsletter. To read full editions, <a href="https://blockworks.co/newsletter/lightspeed">subscribe</a>.



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A curious filing landed on the SEC’s database Friday.&nbsp;



Volatility Shares filed for a Solana futures ETF, which would issue securities that track the price movements of underlying SOL futures contracts trading on a CFTC-registered exchange. There’s a catch though: No such SOL futures contracts exist. ETF analysts nevertheless said the filing bodes well for spot Solana ETFs’ chances of <a href="https://blockworks.co/news/bitwise-ceo-solana-ncredible-emerging-asset">being approved</a> sometime in 2025.&nbsp;



“Many believe that with Paul Atkins <a href="https://blockworks.co/news/trump-nominates-new-sec-chair">as SEC chair</a>, a wider range of products will be possible. This filing appears to be a bet on that,” Bitwise CEO Hunter Horsley said in a direct message.



<a href="https://blockworks.co/news/volatility-shares-eth-futures-etf">Volatility Shares</a> is a leveraged ETF specialist based in Palm Beach Gardens, FL. The smallish firm has arguably still helped shift the overton window for regulators: Grayscale <a href="https://cointelegraph.com/news/grayscale-lawyers-sec-approval-volatility-shares-etf-lawsuit">argued</a> in 2023 that Volatility Shares’ leveraged bitcoin futures ETF was riskier than Grayscale’s proposed spot bitcoin ETF, so Grayscale’s product should be approved.&nbsp;



Now, Volatility Shares is offering another nonconsensus product in a Solana ETF space that is currently built on making bets. Its Solana futures ETF would give some investors exposure to 2x or the inverse of the daily price change of SOL futures. SOL futures contracts don’t currently trade (bitcoin and ether both have futures trading on the CME), but Bloomberg analyst Eric Balchunas said the filing is probably a good sign that SOL futures are “on the way.”&nbsp;



Regulators could be more likely to approve spot ETFs if they see “a healthy market that&#8217;s liquid enough for SOL to trade,” <a href="https://blockworks.co/news/lightspeed-newsletter-sol-strategies-rebrand">Sol Strategies CEO</a> Leah Wald said, noting that bitcoin and ether ETFs were only approved by the SEC after CME futures began trading.



Conventional wisdom used to hold that futures were a needed <a href="https://blockworks.co/news/us-spot-crypto-etf-approvals-outlook">prerequisite</a> for crypto ETFs, but that math seemingly changed with the possibility that a Trump electoral victory would end Gary Gensler’s tenure as SEC chair. At least five firms have <a href="https://blockworks.co/news/grayscale-sol-etf-filing">already filed</a> for spot SOL ETFs over the past six months despite the lack of futures.



Still, a futures market likely wouldn’t hurt the spot SOL ETFs’ approval odds.



“Alright, I’ve seen enough…Registering formal prediction,” Nate Geraci, president of The ETF Store, wrote on X. “Spot solana ETFs will be approved in 2025.”



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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Solana gets a leveraged ETF filing for non-existent futures

Ben Strack

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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Fund issuers continue to dream up crypto ETFs they hope to launch in 2025.&nbsp;



We recently <a href="https://blockworks.co/news/mstr-and-bitcoin-standard-etf-filing">highlighted</a> Bitwise’s filing for a Bitcoin Standard Corporations ETF to invest in those with at least 1,000 BTC.&nbsp;



Related, Strive Asset Management <a href="https://www.sec.gov/Archives/edgar/data/1592900/000159290024002726/strivebitcoinbondetf485a.htm">filed</a> last Thursday for a Bitcoin Bond ETF that would seek exposure to convertible securities issued <a href="https://blockworks.co/news/microstrategy-btc-purchase-recap">by MicroStrategy</a> and others expected to use a big portion of proceeds to buy BTC.&nbsp;



REX Advisers then shared <a href="https://www.sec.gov/Archives/edgar/data/1771146/000199937124015836/rex_485apos-122724.htm#:~:text=REX%20Bitcoin%20Corporate%20Treasury%20Convertible%20Bond%20ETF's%20(the%20%E2%80%9CFund%E2%80%9D,bitcoin%20in%20their%20corporate%20treasury.">plans</a> to launch a Bitcoin Corporate Treasury Convertible Bond ETF that (you guessed it) would invest in convertible bonds issued by companies holding the largest crypto asset.



ProShares also plotted three bitcoin-related funds. A so-called S&amp;P 500 Bitcoin ETF would take a long position in S&amp;P 500 stocks and a short US dollar/long bitcoin position. The latter piece is done via bitcoin futures as a way “to currency hedge the US dollar exposure of the S&amp;P 500 stocks position,” a company filing notes.



Two other planned products similarly aim to replicate the performance of bitcoin-denominated investments in Nasdaq 100 stocks and gold.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">ProShares files for S&amp;P 500, Nasdaq-100, &amp; gold ETFs denominated in btc… Basically a long position in underlying stocks or gold &amp; then a short usd/long btc position using btc futures. I’m calling these btc hedged ETFs. Bitcoin is starting to eat tradfi. <a href="https://t.co/6gsThIWvFT">pic.twitter.com/6gsThIWvFT</a>&mdash; Nate Geraci (@NateGeraci) <a href="https://twitter.com/NateGeraci/status/1872816010908320094?ref_src=twsrc%5Etfw">December 28, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Perhaps more interestingly, Volatility Shares <a href="https://www.sec.gov/Archives/edgar/data/1884021/000121390024113152/ea0225648-01_485apos.htm">filed</a> for an ETF that would invest in solana futures contracts “that trade only on an exchange registered with the Commodity Futures Trading Commission.” These do not yet exist.&nbsp;&nbsp;



The company did not immediately return my request for comment.&nbsp;



Volatility Shares, which offers leveraged BTC and ETH futures ETFs, is also the firm that <a href="https://blockworks.co/news/volatility-shares-eth-futures-etf">revived the effort</a> to launch ether futures funds in mid-2023. Though it ditched those plans when many others followed suit by re-filing for similar products, some credited the firm as being crucial to <a href="https://blockworks.co/news/sec-consider-ether-futures-etfs">achieving approval</a> of those (and ultimately <a href="https://blockworks.co/news/sec-approves-ether-etf-proposals">spot ETH</a>) products.&nbsp;&nbsp;



Several firms — <a href="https://blockworks.co/news/lightspeed-newsletter-spot-solana-etf-filing">VanEck</a>, <a href="https://blockworks.co/podcast/lightspeed/f1b64556-a070-11ef-be46-37ac229013df">21Shares</a>, <a href="https://blockworks.co/news/canary-capital-sol-etf-filing">Canary Capital</a>, <a href="https://blockworks.co/news/bitwise-ceo-solana-ncredible-emerging-asset">Bitwise</a> and <a href="https://blockworks.co/news/grayscale-sol-etf-filing">Grayscale</a> — have active filings for spot solana ETFs.&nbsp;



It remains uncertain whether the SEC will deviate from its <a href="https://blockworks.co/news/us-spot-crypto-etf-approvals-outlook">precedent</a> of requiring a regulated futures market — such as those available for BTC and ETH but not for solana — before approving other spot crypto funds.



One thing’s for sure (as <a href="https://x.com/EricBalchunas/status/1872836779243700683">stated</a> on X by Bloomberg Intelligence’s Eric Balchunas): “Damn. ETF issuers don’t sleep (or take the week [between] xmas and new years off).”It’s probably a sign there’s plenty more filings to come in the new year.



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Crypto ETF filers hard at work for the holidays

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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There was no shortage of crypto price <a href="https://blockworks.co/news/2025-crypto-industry-predictions">predictions</a> this year, particularly (it seemed) in November and December after the election. Some had been <a href="https://blockworks.co/news/btc-price-levels-to-watch">eyeing</a> the $125,000 level for BTC at the end of 2024, while others did warn of a <a href="https://blockworks.co/news/crypto-market-holiday-pullbacks">pullback</a>.



Where we stood at 2:10 pm ET Monday: BTC at ~$94,300 and ETH at ~$3,400.



Bitcoin has dropped roughly 12% since rising above $108,000 on Dec. 17. Ether was trading higher than the $4,000 mark that day, but has fallen 15% since.



21Shares research strategist Matt Mena attributed this in part to the more hawkish vibes from the Fed heading into 2025. The forecast of two rate cuts next year (instead of three) “dampened market sentiment and is a key factor behind the recent downturn in prices for BTC, ETH and other risk assets,” he argued.&nbsp;&nbsp;



Mena also noted that the six-month high in the 10-year Treasury yield further diminishes the appeal of crypto assets, as investors shift toward safer and more predictable returns.



Then there’re those who are locking in gains realized over the year, Mena said. At the same time, others are employing tax-loss harvesting strategies — selling assets that have declined in value to offset capital gains and reduce taxable <a href="https://blockworks.co/news/irs-new-form-crypto-accountants">income</a>.



He and other analysts have called this a “healthy” correction, typical for bitcoin after a significant run-up. If BTC can stay above $85,000, the 21Shares exec told me he thinks it will sustain the uptrend seen in recent months. Otherwise, we could see accelerated selling and further price declines.&nbsp;



“The next major psychological price level to watch is $110,000,” Mena added. “Once bitcoin breaks through this resistance, we could see a swift surge to $120,000, with the potential to target $150,000 by the summer as momentum builds.”



Sergei Gorev, head of risk at YouHodler, predicts the corrective sentiment in the crypto market to persist into 2025. He cited the historical correlation between BTC and the declining M2 money supply as a key factor.



But Galaxy’s Alex Thorn wrote in a Friday research note that he expects BTC to ultimately reach 20% of gold’s market capitalization in 2025 (it’s currently slightly more than 10%).



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeVUeG6rMBFCWBhadnMnqQbdOziE-js4YT4n3xAyqjRnfEbSLOlUdVl3R0uKJKZoH0eQcUqkme4CmpT3TKIKHlDlB2WBUbGBx3CI4mTq4MaVltYQjMI8kZDTlUC2G-6uNdtD7e5?key=iWDKfoDTfKflPburT4vWpoTj" alt=""/></figure>



Thorn thinks BTC will cross $150,000 in the year’s first half — as well as a “test or best” of $185,000 in Q4.“A combination of institutional, <a href="https://blockworks.co/news/company-treasuries-btc-reserve-asset">corporate</a> and <a href="https://blockworks.co/news/brazil-bill-for-national-bitcoin-reserve">nation state adoption</a> will propel bitcoin to new heights in 2025,” the Galaxy research head wrote. “Throughout its existence, bitcoin has appreciated faster than all other asset classes, particularly the S&amp;P 500 and gold, and that trend will continue in 2025.”



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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(Almost) end-of-year price update, outlook

Jason Yanowitz

Dear Blockworks Community,



Since launching in December 2017, our mission has been to build the world’s best source of crypto insights and information for investors and professionals. We’re here because we believe crypto improves the world by broadening access to assets, increasing transparency, and reducing financial friction.



This market moves in extreme cycles, but if you zoom out, you’ll see that every year more and more value moves onchain.



This trend will continue for decades, and as it does, the number of investors, founders, developers, and professionals building in crypto will grow by orders of magnitude. These participants will all need access to information to make investments, build companies, and scale protocols. This dynamic will continue to fuel a massive market for crypto data, research, and high-quality insights.



From day one, we built Blockworks to provide this information. And as the industry has grown, so have we.



<h2 class="wp-block-heading">Our business is simple</h2>



Our media channels give professionals and investors the essential news and insights they need to make informed decisions. Our&nbsp;<a href="https://blockworks.co/events" target="_blank" rel="noreferrer noopener">events</a> create the connections that move the industry forward—bringing together executives, founders, investors, and developers to shape the future of crypto. Our&nbsp;<a href="https://www.blockworksresearch.com/" target="_blank" rel="noreferrer noopener">data and research</a> provides professional investors with the tools and alpha they need to make smarter investment decisions. And our newly formed&nbsp;<a href="https://www.blockworksresearch.com/advisory" target="_blank" rel="noreferrer noopener">advisory business</a> helps protocols build better, stronger businesses.



We make money through ads and sponsorships, event tickets, advisory services, and access to our proprietary research and data platform.



While it might look simple in theory, execution is everything—and execution in both media and software is tough. Social media and AI are reshaping how people consume news, putting pressure on those who can’t adapt. In the past few years, many of our competitors have either folded or been forced to sell due to these pressures. Meanwhile, if you’re building software products without a robust distribution funnel, that means you’re often forced to spend more than you make to acquire customers. In turn, you become reliant on VC dollars. We refer to this internally as the “VC hamster wheel.” We avoid both these pitfalls by owning the distribution layer and by staying profitable.



<h2 class="wp-block-heading">Default Alive</h2>



Folks at Blockworks are sick of this story, but I’ll tell it again.



Three months into starting Blockworks, Mike and I met with a successful entrepreneur at his office in New York. We wanted his advice. How could we compete with the incumbents (CoinDesk, Cointelegraph), the upstarts (The Block, Decrypt), and the institutions (Bloomberg, WSJ)? At the time, this felt impossible.



He gave us one piece of advice that resonated: In an industry as volatile and as vicious as crypto, sometimes all you need to do is survive.



This became, and continues to be, a foundational principle for Blockworks.



We have run Blockworks differently than many of our competitors. Instead of chasing every last ounce of growth, we have intentionally made decisions that sacrificed all-out growth to stay “default alive.”



The culmination of many of these decisions put Blockworks in our best position yet as we headed into 2024. But we still had to execute.



Thanks to the best team we’ve ever had,&nbsp;2024 was our most successful year yet:



<ol class="wp-block-list">
<li>Advertising and Sponsorships: We hit all-time highs for advertising and sponsorships on both an annual and quarterly basis; Q4 2024 was our best quarter ever.</li>



<li>ARR: Our ARR is also at an all-time high, and we now have more than 100 enterprises, funds, and financial institutions who use the&nbsp;<a href="https://www.blockworksresearch.com/" target="_blank" rel="noreferrer noopener">Blockworks Research</a>&nbsp;platform.</li>



<li>House of Brands: We believe the future of media lies in dedicated niche brands, each serving a unique audience. We now have five strong brands under our umbrella—each with their own podcast, newsletter, telegram community, and soon, in-person activations.</li>



<li>Podcasts: We published 672 podcast episodes, which were listened to more than 15 million times across YouTube, Spotify, Apple, and other podcasting platforms. Our <a href="https://blockworks.co/podcasts">podcast network</a> is the largest in the industry, and I believe now one of the top 3 financial podcast networks in the world.</li>



<li>Newsletters: As the value of a page view decreases, the value of a newsletter subscriber increases. Our <a href="https://blockworks.co/newsletter">newsletters</a> grew to nearly 200,000 subscribers.</li>



<li>Reporting: Our newsroom published <a href="https://blockworks.co/news">2,230 stories</a> that reached readers in all 195 countries, cementing Blockworks as the go-to resource for crypto news. Following the acquisitions of two other crypto media publications, we are proud that we remain independent.</li>



<li>Events: Hosted two of the leading industry conferences with <a href="https://blockworks.co/event/permissionless-iii" target="_blank" rel="noreferrer noopener">Permissionless</a> and <a href="https://blockworks.co/event/digital-asset-summit-2024-london" target="_blank" rel="noreferrer noopener">DAS London</a>.</li>



<li>Research:&nbsp;Our research team published 159 research reports and is now seen as the leading analyst team in crypto.</li>



<li>Data: “Improve the data, improve the industry.” We shipped massive improvements to our data platform, and we now cover user metrics, financials, and token data for more than 30 of the industry’s leading protocols and applications.</li>



<li>Advisory:&nbsp;We launched Blockworks Advisory to help protocols sidestep common pitfalls and accelerate their path to success</li>



<li>Acquisitions: Building upon our House of Brands strategy, we acquired and integrated both&nbsp;<a href="https://blockworks.co/news/blockworks-acquires-the-drop">The Drop</a>&nbsp;and&nbsp;<a href="https://blockworks.co/news/blockworks-acquisition-the-breakdown">The Breakdown</a>&nbsp;into the Blockworks family, strengthening our editorial and insights capabilities.</li>
</ol>



<h2 class="wp-block-heading">Our Competitive Advantage</h2>



Our data platform is fueled by the reach of our media channels; our reporting is fueled by our proprietary data and research.



This media-data flywheel is the synergy that keeps us ahead of our competitors.



No other media outlet has our depth of onchain and financial data, and no other research or data platform has our distribution capabilities.



<h2 class="wp-block-heading">Looking Ahead to 2025</h2>



In 2025, you will see us:



<ul class="wp-block-list">
<li>Become crypto’s defacto data and research platform</li>



<li>Double down on our House of Brands strategy, scaling each property and adding new ones. This means growing podcasts, newsletters, and communities, as well as adding in-person components to each brand</li>



<li>Turn Blockworks into a talent destination for podcasters, writers, reporters, and researchers. This means finding talent early, building brands around them, and designing the incentives to retain them. It also means investing in journalism at a time when others are divesting</li>



<li>Host three of the industry’s best conferences: DAS New York and DAS London for institutions; Permissionless for developers and builders</li>



<li>More tightly integrate our media and events with our research and data</li>



<li>Help more protocols scale via our advisory business</li>
</ul>



<h2 class="wp-block-heading">The Little Moments: Day After Day</h2>



As we look back over the past seven years, building Blockworks has been less about the big moments in time—less about the product launches, the huge hires, and the exciting fundraise. It’s been more about putting one foot in front of the other, day after day after day while making sound decisions that optimize for sustainable, long-term oriented growth.



That’s how we survived Covid and made it through both the 2018-2019 and 2022-2023 bear markets. It’s also how we were ready to thrive in this new bull market. And that’s how we’ll continue to build the best crypto media and information brand and platform in the world.



<h2 class="wp-block-heading">Thank You</h2>



We couldn’t do this without our customers, employees, readers, and listeners. Your support powers our mission every day. As we move into 2025 and beyond, we are more excited than ever about the future of crypto—and our role in it.



Jason and Mike



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

2024 Reflections

Donovan Choy

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/research">subscribe</a>.



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<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfbS8A6ezthyyEW2S-jKhIn51HU9VqCggiJ-pP3zgfzCEKT8aX1nUL9bKSdjZPvnfVVBFUhV0GfLuBUVQa2Hh3mCBnFsoItWkU_ya4eF9J8AtW0L3MkE-fjVgx9ez0i-_57S4C9?key=LCc_ReB50QZAdLzrgPrUVBTN" alt=""/></figure>



The <a href="https://blockworks.co/news/ai-agent-crypto-innovation">AI agent frenzy</a> was <a href="https://blockworks.co/news/lightspeed-newsletter-ai-bot-goat-memecoin">kickstarted</a> by GOAT. GOAT is a Solana memecoin that spawned <a href="https://blockworks.co/news/0xresearch-newsletter-goatse-memecoin">from an experiment</a> by creator Andy Ayrey when he pitted two Claude AI models in an endless debate. GOAT still sits today at a comfortable $404 million market cap, but no longer <a href="https://blockworks.co/news/ai-new-favorite-memecoin">dominates</a> the mindshare it once did.



First to copy GOAT’s success was the AI agent <a href="https://app.virtuals.io/virtuals/68">Luna</a> (LUNA). It’s a busty anime girl chatbot that streams 24/7 on social media — need I say more? Chat with her, tip her with her own LUNA token (why does anyone do that?), or be like A16z-backed <a href="https://blockworks.co/news/story-protocol-ritual-ai-provenance">Story Protocol</a>: <a href="https://x.com/StoryProtocol/status/1870152680045215759">Hire</a> Luna for social media marketing.



The Luna virtual companion was launched on <a href="https://blockworks.co/news/crypto-welcomes-ai-overlords">Virtuals Protocol</a>, an “AI Agent launchpad” on Base that is the most recognizable brand name in this meta right now.



Formerly the PathDAO gaming guild, Virtuals took pump.fun’s <a href="https://blockworks.co/news/lightspeed-newsletter-pumpdotfun-record-highs">successful formula</a> and applied it to AI agents. Launch an agent token, hit a <a href="https://whitepaper.virtuals.io/developer-documents/agent-creation#id-2.-bonding-curve-graduation-and-liquidity-provision">target market cap</a> on a bonding curve, and pair the agent&#8217;s token in a liquidity pool on Uniswap.&nbsp;



What Virtuals did differently, however — and what has gotten investor-types bullish on its token — was tying its native VIRTUALS token to the cost of launching agents and running inferences, as well as pairing it with agent tokens in a Uniswap liquidity pair (rather than SOL).



Within the Virtuals ecosystem, Luna faces competition for speculative capital from other similarly looking chatbots like <a href="https://app.virtuals.io/virtuals/2059">Airene</a>, or more “utility-based” agents like <a href="https://x.com/aixbt_agent">aixbt</a>, an agent that scrapes troves of social media data to surface trading alpha (aixbt is incidentally bullish on everything).



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><a href="https://twitter.com/search?q=%24AIXBT&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$AIXBT</a> is now a $1 billion market cap project based on mindshare, and it still wouldn&#39;t be overpriced.<a href="https://twitter.com/aixbt_agent?ref_src=twsrc%5Etfw">@aixbt_agent</a> has undeniably become the most influential entity in all crypto right now. From <a href="https://twitter.com/cookiedotfun?ref_src=twsrc%5Etfw">@cookiedotfun</a> to <a href="https://twitter.com/_kaitoai?ref_src=twsrc%5Etfw">@_kaitoai</a>, the signs are everywhere—this is a movement, not just… <a href="https://t.co/G4qAorXSVb">https://t.co/G4qAorXSVb</a> <a href="https://t.co/rg075ZYPTn">pic.twitter.com/rg075ZYPTn</a>&mdash; Diamond Hands Dig 👾 💎 (@DiamondHandsDig) <a href="https://twitter.com/DiamondHandsDig/status/1873263131428073903?ref_src=twsrc%5Etfw">December 29, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Just as agents face competition, so too do the picks-and-shovels of agents. Besides Virtuals, a myriad of AI agent launchpads already exist, such as vvaifu.fun, Creator.Bid, MyShell.ai, <a href="https://x.com/jyu_eth/status/1873462146249752915">Zentients</a> and more.



Then we have the AI agent “frameworks.” These are simply code libraries that make it easy for devs to customize their agents and integrate them into the virtual Wild West.



The leading agent framework is <a href="https://blockworks.co/news/stanford-lab-ai16z-partnership">ai16z’s “Eliza,”</a> but there’s also Virtual’s <a href="https://game-lite.virtuals.io/">G.A.M.E</a> (Generative Autonomous Multimodal Entities), the Python-based ZerePy, the Solana-focused RIG, and more. And of course, each one of these frameworks has its own token that speculators are furiously aping into.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdNpAQz9ubgupjqpLyvNJY1AvFjOM6MgtRgc8aGj0xFuB5ALIGShG1B1UxDbd98BKURyVjS63ByvZT-NRzuvW4FPCzh0T_4_Vx4jWiXIw49jV1WgMUKDDf_mg4GZKmvIm3-TTL6XQ?key=LCc_ReB50QZAdLzrgPrUVBTN" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://x.com/MessariCrypto/status/1872658008863592946">Messari</a></figcaption></figure>



Finally, we have the AI investment DAOs. The idea is simple: Deposit SOL/ETH and receive a DAO token that lets you share in the “hedge fund’s” upside.



Ai16z was the first investment DAO to launch on Solana, now with an AUM of $23.4 million. People apparently really trust the investor acumen of AI agents. Presently, its native AI16Z token is <a href="https://www.daos.fun/HeLp6NuQkmYB4pYWo2zYs22mESHXPQYzXbB8n4V98jwC">valued</a> at an astounding $1.4 billion market cap.



Daos.world and VaderAI are two upcoming AI investment platforms on Base that have gained steam in the past week. At least <a href="https://x.com/NickDGarcia/status/1873389504796483613">six funds</a> have already emerged on both platforms, with about a collective million in capital raised.



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Making sense of the AI agent meta

David Canellis

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



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Our internet is quickly being filled with automated slop.



Blockchains are destined for the same treatment.



It’s actually been happening for years. Take active address counts: In an entirely humanly-operated onchain world, active addresses would reflect the number of real users on any particular network.



That’s obviously not the case, as Blockworks Research and the 0xResearch newsletter <a href="https://blockworks.co/news/0xresearch-newsletter-evaluating-blockchain-metrics">have already shown</a>.&nbsp;



Bots, spammers, airdrop farmers and other code-controlled entities commonly wield thousands — and even tens of thousands — of addresses. By the raw numbers, those players tend to drown out individual users.



The active addresses metric really only says one thing about a network: how cheap it is to use (which makes spamming a breeze).&nbsp;



Take that logic one step further and questions arise over how much of DEX volumes on chains like Solana and Base are the result of wash trading.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd4WktoyexaZFX4UsOJCMJsHpO0DqLL_lhjyUKE09W7Iu3WgUhC-k0SP-OoCAm-bwgYFuwvs8h7ZpBJVLVHRJEYS1ZXKCtDz0E7-AjSDv4VpS01-tNNeBMpvb4G5-X6E_VSYwMxkQ?key=HMbX2nZD-YkMWlQzbf4VU4IX" alt=""/><figcaption class="wp-element-caption">Pump.fun’s cumulative active address count has swelled by ~4.5 million since the start of November</figcaption></figure>



Still, while Web2 struggles with its own transition into an AI-generated wasteland (check the <a href="https://www.404media.co/ai-generated-christmas-music/">mangled</a> robot Christmas tunes that targeted unaware YouTube users this year), crypto is taking a more holistic approach.



Embrace the slop. Make your own and tokenize it. Trade it.



Pump.fun arguably was the first to perfect that roadmap. Virtuals Protocol wants to run it back by allowing users to create their own AI agents complete with their own tokens.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcS2UfMmnXur4hk1Do7dcBT5u_FmYk8LsA5o9dGyeWOgiceOPqyGZAwHs8hD2KpXW4EYpTM2BHYEFCIyshCGDXoo41cdZHgYwMfQtCxKOj44Fy_xZd1gXRZ36w4W7WvJy2CJDLKag?key=HMbX2nZD-YkMWlQzbf4VU4IX" alt=""/></figure>



Almost 300 AI agents are now on Virtual Protocol’s leaderboard. More than 12,600 token pairs have been <a href="https://dune.com/0xludic/virtuals-overview">created</a> overall.



For now, Virtuals is still small relative to Pump.fun. We’ve had almost a full year of the latter, with daily volumes going from under $1 million to as much as $5.6 billion in November.



Virtuals’ AI agent launchpad has only been live since October, and its volume topped out at $24.5 million at the end of November.



For what it’s worth, Virtuals’ cumulative daily active address count has skyrocketed from under 1,000 to 96,000 since the launchpad went live.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe2-Lw0fGdjBbyegRa_pO8M4hMqGheUANvjGciAIrdg15Sdj86GPy1SWMIGOiWUvXXDk3lKYvuuSxeD1AGflx80TOkA2MhwaRvfYamF9PhtuFU8VNC9wItk5ezS94qA5C5Chj0E0Q?key=HMbX2nZD-YkMWlQzbf4VU4IX" alt=""/><figcaption class="wp-element-caption">Virtuals’ volume is back on the rise alongside its native token VIRTUAL — up 125% in the past month</figcaption></figure>



Of course, active address counts say very little about adoption from real users. Who knows how many of those new active addresses interacting with Virtuals were carbon-based lifeforms.



Where crypto is headed, I’m not sure it even matters.



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Crypto is welcoming its new AI overlords

This is a segment from the Lightspeed newsletter. To read full editions, <a href="https://blockworks.co/newsletter/lightspeed">subscribe</a>.



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The inaugural Solana AI hackathon concluded on Monday.



Over 400 projects threw their respective hats in the ring for a <a href="https://x.com/Lightspeedpodhq/status/1871549515226140995">contest</a> offering cash prizes but more importantly the prospect of potentially-lucrative attention to so-called AI agents, which are currently flooding crypto social feeds.&nbsp;



Multiple entrants already have tokens trading at millions of dollars-worth of market cap, and agent copilots for crypto trading as well as AI agent “swarms” were buzzy categories.&nbsp;



Winners of the hackathon, organized by SendAI, will be announced around Jan. 10, SendAI co-founder and CEO Yash Agarwal told me. A list of entrants and relevant details is expected to be <a href="http://solanaaihackathon.com">posted</a> later today.&nbsp;



<a href="https://blockworks.co/news/solana-based-reflect-wins-radar-hackathon">Hackathons are common</a> in Solanaland, but what makes this one unique is the number of contestant tokens already trading. The total market capitalization of Solana AI agent hackathon tokens has crossed $200 million, Agarwal told me. That’s roughly the size of Solana DeFi protocol Orca’s native token.



One such project is FXN, a so-called AI swarm whose native token briefly touched $70 million in market cap after launching around Dec. 11. It currently has roughly $44 million in market cap, according to DEX Screener.&nbsp;



FXN is a protocol that lets multiple AI agents work together to accomplish more than what a single agent is capable of, according to a white paper dated Oct. 3, 2024. The white paper gives a sample use case of a group of agents essentially operating as a social media marketing firm to create and promote social content.



AI agents tied to crypto tokens exploded in popularity after an unhinged social media chatbot with a token <a href="https://blockworks.co/news/lightspeed-newsletter-ai-bot-goat-memecoin">went viral in October</a>. The number of entrants in a hackathon announced just two weeks before it began underscores how much competition for mindshare there is among crypto AI projects.



Many projects share a “similar focus” of creating an “intelligent interface for the Solana ecosystem,” Potatoe, the anonymous lead developer of a hackathon project called Project Plutus, told me.&nbsp;



Users don’t need AI bots who execute actions that they could do themselves, which is why Project Plutus built an AI companion that watches charts and can trade while users are away, they added.



There do appear to be a lot of trading-focused agents based on an initial list that was shared with me by the hackathon’s organizers. 



“The Solana AI Hackathon underscores how on-chain trading and DeFi are emerging as key verticals for AI agents. These use cases will likely drive innovation in Q1 and Q2 2025,” the X threader 0xJeff <a href="https://x.com/Defi0xJeff/status/1871558607294329276">wrote</a>.



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‘Agents’ swarm inaugural Solana AI hackathon

Casey Wagner

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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After several drafts and 44,000 comments, the IRS’s new <a href="https://www.irs.gov/newsroom/irs-updates-draft-version-of-form-1099-da-digital-asset-proceeds-from-broker-transactions-requests-comments-on-form-planned-for-2025">1099-DA</a> form is here.&nbsp;



Or it will be on Jan. 1, 2026, at least — but starting in 2025, brokers are going to have to keep track of some new information.&nbsp;



You may remember that the term “brokers” — and how tax regulators would define them — caused quite a stir back in 2023. Earlier drafts of the 1099-DA form included a section to identify the “broker type,” but this has since been removed.&nbsp;



In doing so, the IRS essentially punted this issue down the line: They know they will have to issue rules around DeFi actors eventually, but they need more time.&nbsp;



Beginning in 2025, “custodial brokers” will have to report gross proceeds, and then in 2026, they will have to report cost basis for certain transactions. These actors are exchanges (think Coinbase) that act more or less like traditional equities brokers; they hold assets on behalf of clients and provide a trading platform.&nbsp;



Decentralized exchanges and NFT marketplaces are not exempt, but they will probably have to rethink how they collect data in 2025 in order to meet the reporting requirements.&nbsp;



For accountants working with crypto-holding clients, the 1099-DA form is going to be an adjustment, IRS officials said on a recent <a href="https://www.webcaster4.com/Player/Index?webcastId=51630&amp;g=b15de5ee-84aa-4fb9-8ef0-56492b4f426c&amp;uid=7137697&amp;sid=">webinar</a>. Taxpayers who received 1099-DA forms will have details of their transaction history for the past year, but the custodial broker may not automatically calculate and input the cost basis information.&nbsp;



“When you get that 1099-DA, and it only has gross proceeds, hopefully you will know the next questions to ask your clients to be able to fill in that information,” Seth Wilks, executive director of digital asset strategy and development at the IRS, said.&nbsp;



The hope is the new system will help educate taxpayers about what transactions are taxable and make compliance easier. Fingers crossed that it’s a smooth transition, but we do not envy you, CPAs.



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New year, new tax form 

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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Holiday celebrations transpired the last few days. But the week was also marked by MicroStrategy becoming part of the Nasdaq 100.&nbsp;



While some thought this would offer the company’s stock price a short-term lift, that so far hasn’t been the case. As of 1 pm ET, MSTR’s share price was down 22% since the market opened on Dec. 16 (after the index inclusion <a href="https://blockworks.co/news/will-mstr-enter-nasdaq-100">news</a> late the prior Friday).



End-of-year profit-taking (MSTR is up ~380% in 2024) and recent declines in BTC price are likely contributors to MicroStrategy’s latest price dip.



But the bigger picture? Significance of MSTR’s inclusion in the index, analysts note, stems from the massive funds that allocate to the Nasdaq 100 constituents — namely Invesco’s QQQ, an ETF that manages $325 billion in assets. “More to the point, it’s acceptance,” Dan Weiskopf, co-portfolio manager of Amplify’s BLOK ETF, <a href="https://blockworks.co/news/2025-crypto-stocks-to-watch">told me</a> last week. “It’s institutional adoption. It’s an example of [Michael Saylor’s] <a href="https://blockworks.co/news/microstrategy-mstr-stock-btc-performance">strategy</a> <a href="https://blockworks.co/news/bitcoin-salesmen-michael-saylor-larry-fink">working</a>, candidly.”



The question for 2025 is whether MSTR could also land itself in the S&amp;P 500. Bigger than QQQ, the SPDR S&amp;P 500 ETF (SPY) — with $636 billion in assets — invests in the companies within that index.



Weiskopf called this possibility within the next year “a reach,” but believes it’s inevitable.&nbsp;



Benchmark’s Mark Palmer noted that while MicroStrategy easily meets the minimum market cap and trading volume, it needs positive earnings for the most recent quarter and combined positive earnings for its last four quarters.



MSTR’s plan to adopt new FASB guidance on how BTC on balance sheets is accounted for would position it to begin reporting positive earnings as soon as Q1, Palmer added.



People are clearly noticing the trend of more companies <a href="https://blockworks.co/news/company-treasuries-btc-reserve-asset">holding BTC</a> as a treasury asset. Just ask asset manager Bitwise, which yesterday <a href="https://www.sec.gov/Archives/edgar/data/1928561/000121390024112714/ea0225863-02_485apos.htm">proposed</a> a Bitcoin Standard Corporations ETF.



The planned offering would invest in companies with market caps above $100 million that hold at least 1,000 BTC in their corporate treasury.



MSTR obviously fits that criteria (444,262 BTC). So too do a bunch of the <a href="https://blockworks.co/news/btc-miners-spending-strategies">bigger bitcoin miners</a>, like Marathon Digital (44,394 BTC as of Dec. 18), Hut 8 (10,096 BTC), Riot Platforms (17,429 BTC) and CleanSpark (9,297 BTC).



Elsewhere, Metaplanet <a href="https://contents.xj-storage.jp/xcontents/33500/83ccb67f/4ee2/4f76/a2c8/dbeaed64901f/140120241223542705.pdf">revealed</a> a buy of roughly 620 BTC on Monday, bringing its total holdings to about 1,762 BTC. 



Others — like KULR Technology Group, with an initial <a href="https://x.com/KULRTech/status/1872315740470329785">buy</a> of 217 BTC yesterday — are working their way up.



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MSTR check-in, ‘Bitcoin Standard’ ETF filing

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/research">subscribe</a>.



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<h2 class="wp-block-heading">Pendle</h2>



Pendle exists because crypto wants to speculate.&nbsp;



In Pendle’s short history, the team has constantly reiterated its yield trading product using narratives from stablecoins and infamous “DeFi 2.0” (<a href="https://blockworks.co/news/defi-future-nirvana-hack-risk">Olympus DAO</a>) in the 2021 bull, to liquid staking tokens, real-world assets on Arbitrum, and liquid restaking during the prolonged bear.



It wasn’t until the points meta blew up in early 2024 that Pendle struck gold, with its TVL shooting up from the multi-million to multi-billion dollar range. Pendle’s Principle Tokens (PT) and Yield Token (YT) yield mechanisms remain an indispensable tool for anyone looking to perform any form of leveraged points or fixed yield farms.



<h2 class="wp-block-heading">Fluid</h2>



<a href="https://blockworks.co/news/defi-superapp-competitor-to-aave-uniswap">Fluid</a> is a picture-perfect example of what innovation looks like. Fluid took many of DeFi’s successful primitives, such as Uniswap v3’s concentrated liquidity and Aave’s utilization rate curves, then redesigned traditional AMM liquidity provisioning from the ground up.&nbsp;



With its “smart debt” and “smart collateral” mechanisms, Fluid enables deep multi-million dollar DEX <a href="https://fluid.instadapp.io/stats/1/dex">liquidity pools</a> that are, technically speaking, $0 in TVL. This capital efficiency was an ingenious combination of users’ debt from lending protocols and AMM liquidity pools.



<h2 class="wp-block-heading">Ethena</h2>



Stablecoins are some of the hardest sectors to compete in. That makes USDe’s $6 billion market cap achievement very impressive — all within the span of a year.



Previous stablecoins built along the spectrum of centralization (<a href="https://blockworks.co/news/tether-prints-100-billionth-usdt">USDT</a>) vs. scalability (<a href="https://blockworks.co/news/maker-meeting-stablecoin-dai-demand">DAI</a>). <a href="https://blockworks.co/news/lightspeed-newsletter-ethena-solana-integration">Ethena</a> instead put together a series of impressive business development deals with CEXs and designed USDe, a scalable stablecoin that exploited the arbitrage in CEX-DEX perps funding rates and delivered yield to users.



<h2 class="wp-block-heading">GEODNET</h2>



For GPS technology to work well at centimeter-level accuracy, traditional companies deploy thousands of real-time kinematic (RTK) networks, like base stations and mobile rovers, globally.



Using crypto token incentives, GEODNET sought to scale the deployment of RTK networks. Based on November data, GEODNET has already deployed at least 10,000 stations across 140 countries, surpassing the 5,000 stations put together from traditional providers Trimble and Hexagon.



Notably, GEODNET has found a significant cost advantage. Deploying a base station with GEODNET is about $700, or 97% cheaper than legacy costs of $25,000. If that’s not innovation, I don’t know what is.&nbsp;



For more, see Blockworks Research’s free <a href="https://app.blockworksresearch.com/research/geodnet-enabling-ubiquitous-autonomy">report</a> on GEODNET.



<h2 class="wp-block-heading">Virtuals</h2>



Virtuals is the premier “picks and shovel” play of the recent <a href="https://blockworks.co/news/ai-agent-crypto-innovation">AI agent frenzy</a>.&nbsp;



It’s an AI agent factory that lets anyone spawn a tokenized AI agent. Similar to pump.fun, the agent’s native token is bonded to a DEX liquidity pool (Uniswap v2) once the criteria of a $420k market cap is met.



Built on Base, Virtuals has spawned at least <a href="https://dune.com/hashed_official/fun-virtuals-io">12,000</a> AI agents since its inception, including the wildly popular anime bot <a href="https://x.com/luna_virtuals">Luna</a>, which runs 24/7 and can be tipped with the agent’s respective token.



Virtual’s innovation comes from a combination of many different pieces including LLM models, crypto wallets, innovative value accretive tokenomics, NFTs and IPFS for data storage. 



For more, see this comprehensive post from <a href="https://www.chainofthought.xyz/p/virtuals-protocol-tokenising-ai-agents">Chainofthought</a>.



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Crypto’s greatest app innovations in 2024

Katherine Ross

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire" target="_blank" rel="noreferrer noopener">subscribe</a>.



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We’ve written about some pretty bullish calls on Empire (some of which you’ll find below). Why not keep that trend going?&nbsp;



So far this year, crypto venture capital looked a lot like a roller coaster. Third-quarter activity was slightly down, PitchBook’s Robert Le told me, but that could be associated with the summer lull.&nbsp;



“There was a lot of momentum and positive sentiment at the beginning of the year, and then … around the summer time … there was a slowdown in investments. And I think the thing with … the crypto native VCs who are supposed to … only invest in crypto, they really slowed down their investments. They didn&#8217;t really pick up their investments, even the ones that have, you know, a lot of dry powder in their funds,” Le said.



After the election, however, it seems activity has picked back up. Unfortunately, though, we don’t have the data yet to back up that observation. But Le thinks that, based on anecdotal evidence, we could see an uptick in this final quarter.&nbsp;



Now here’s the really juicy part: Le thinks we could be in for quite a year in venture activity. His prediction is that we could see over $18 billion in venture investments, with “multiple $5 billion quarters.”



Let’s just put that figure in perspective: 2023 overall saw roughly $9 or so billion. This year’s shaping up to look like it’ll land something around $11 billion, if not slightly over. Of those totals, we saw between $2 billion and $2.5 billion per quarter, Le added.&nbsp;



And part of that is going to come from the generalist VC firms, which he expects to come back to crypto next year.&nbsp;



As for some specific areas prime for investment, Le thinks that the crypto x AI narrative will stay hot after taking off earlier this year.&nbsp;



He admitted that he initially thought the crypto x AI narrative was just a mishmash of buzzwords. But the use cases this year have convinced him that there are real business applications there.&nbsp;



“As the AI ecosystem grows bigger … some of the glaring issues you see in AI become more obvious. And when that happens, you&#8217;re going to see opportunistic crypto companies come in and say, ‘Look [this is the] crypto answer to this AI” problem, Le said.



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Crypto venture capital could hit more than $18B in 2025

This is a segment from the Lightspeed newsletter. To read full editions, <a href="https://blockworks.co/newsletter/lightspeed">subscribe</a>.



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Roughly a month ago, SOL set a <a href="https://blockworks.co/news/solana-sets-all-time-high-of-263">new all-time high</a> at $263.&nbsp;



Since then, it’s been down-only for the asset, which retraced all the way below $190.&nbsp;



The 25% slide knocked Solana down a couple of rungs on the cryptocurrency leaderboard. SOL is now the sixth-largest cryptoasset by market capitalization, trailing bitcoin, ethereum, tether, ripple and BNB. Some have pointed to the flashy new exchange Hyperliquid as a SOL competitor, but other market watchers say Solana is likely to keep running after a slight drawdown.



For context, all cryptos have had a rough week after the most recent FOMC meeting somehow left investors feeling <a href="https://blockworks.co/news/market-reaction-to-fed-rate-cut">bearish despite another rate cut</a>.



Still, of all the major tokens experiencing a Santa slide, SOL showed “particular weakness,” FalconX head of research David Lawant wrote on Friday. Memecoins like SHIB and DOGE performed even worse, perhaps indicating that the more volatile the crypto, the harder it fell. While SOL is far from a memecoin, it is certainly higher-beta than BTC or ETH. That hasn’t stopped XRP and BNB from rallying past Solana however.&nbsp;



Solana investors may partly be pricing in a $2.1 billion SOL token unlock that’s <a href="https://solana.messari.io/token-unlocks">slated</a> for March 1, 2025 and could put downward pressure on the asset if the unlocked tokens are sold.&nbsp;



SOL’s price may also be struggling due to a newfound competitor in Hyperliquid peeling away some investors, Quai Network co-founder Alan Orwick said. Hyperliquid is a decentralized-ish layer-1 and crypto exchange focused on perpetual futures trading. Its HYPE token airdrop earlier this month was <a href="https://blockworks.co/news/hyperliquid-most-valuable-airdrop">one of the largest</a> in crypto history. HYPE is already the 25th-largest crypto token by market cap.&nbsp;



Because Hyperliquid is very fast, some have started <a href="https://x.com/0xSisyphus/status/1870304736580149330">calling</a> it a better version of speed-focused Solana — although its momentum has stalled somewhat in recent days amid speculation that North Korean hackers are <a href="https://blockworks.co/news/hyperliquid-security-fuels-decentralization-concerns">plotting an exploit</a> of the blockchain.



Orwick added that a pro-crypto Trump administration and potential SOL ETF approval could be bullish for the asset next year.&nbsp;



Plus, there are always memecoins.



The launchpad and major driver of Solana onchain activity pump.fun “probably won’t get shut down by the Feds until 2028,” CFX Labs co-founder and CEO Nick Chicago said. “Wouldn’t be surprised to get major brands doing memes.”



Chicago was bullish for anecdotal reasons as well: His mother-in-law, who typically buys cryptos at the very top, “has not deployed yet.”



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SOL’s market cap slips amid bearish December

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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Stocks traded sideways — stalling their pre-Christmas rally — and cryptos dipped Thursday, making one of the final trading days of the year a relatively quiet one.&nbsp;



The S&amp;P 500 was down 0.06% and the Nasdaq Composite gained 0.02% at 2 pm ET. Bitcoin and ether were down 3% and 3.8%, respectively, over the past 24 hours at that time.&nbsp;



The post-holiday moves came as investors unpacked one of the only economic data reports of the week: initial jobless claims.&nbsp;



There were 210,000 first-time filers for the week ended Dec. 21, marking a slight decrease from the week prior and coming in lower than median expectation of 224,000. Continuing claims, however, came in at 1.9 million, slightly higher than the anticipated 1.88 million.&nbsp;



The mixed report did not budge odds of an interest rate cut from the Fed next month. Fed funds futures markets on Thursday called for a 91% chance central bankers hold rates on Jan. 29, per <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">data</a> from CME Group.&nbsp;&nbsp;



“One factor that pressures equities is the behavior of the fixed income market,” Pepperstone research strategist Quasar Elizundia said. “The continued rise in bond yields, driven by the reassessment of less restrictive monetary policy expectations, creates some concern.”&nbsp;



Stocks are going to face additional headwinds, Elizundia added, given that investors seem certain interest rates in 2025 will not fall as much as previously anticipated.



On the crypto front, the real market-movers in 2025 are likely to revolve around <a href="https://blockworks.co/news/sec-potential-shift-enforcement-actions">regulatory</a> <a href="https://blockworks.co/news/republican-nominees-for-house-committees">news</a>. New <a href="https://blockworks.co/news/sec-chair-nominee-crypto-past">leadership</a> at the SEC and CFTC, combined with a Republican-majority Congress and campaign promises from President-elect Donald Trump, could set the stage for a <a href="https://blockworks.co/news/crypto-new-age-in-2025">breakout</a> in the first half of the new year.&nbsp;



Still, though, it would be foolish to count out the role macroeconomic conditions and monetary policy have on crypto prices, so we’d suggest keeping an eye on just about everything (or at least your inbox) next year.&nbsp;



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2024’s market ends on a sleepy note

Felix Jauvin

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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I sit reflecting on the year and what has transpired, especially in relation to the recent FOMC meeting that surprised hawkish and <a href="https://blockworks.co/news/market-reaction-to-fed-rate-cut">shocked markets</a>. Over one year it felt like we’ve been through five different versions of the Fed.&nbsp;



In the winter of 2024, the Fed got spooked by surprisingly elevated inflation prints in the first quarter. This led them to reverse their dovish inclinations they had set up in the fall of 2023. Then, in June, the FOMC surprised the market with a <a href="https://blockworks.co/news/forward-guidance-newsletter-economy-doing-fine">hawkish dot plot</a> that implied hardly any cuts in 2024.&nbsp;



Then, a <a href="https://blockworks.co/news/july-disappointing-jobs-report">concerning</a> jobs report in August flipped the entire narrative on its head. The Fed became concerned about a growth scare and losing the labor market, and once again flipped dovish, climaxing in a September <a href="https://blockworks.co/news/on-the-margin-newsletter-interest-rate-cut">cut of 50bps</a> to kick off the rate-cutting cycle. We’ve now had 100bps of cuts and the Fed has once again flipped hawkish. The outlook for 2025 is uncertain, with a forecast of only two cuts occurring next year.&nbsp;



If that all sounded like a rollercoaster of confusion, trust your instinct —&nbsp;it was.



Now, with January priced for a pause and no meeting in February, I’m once again expecting another flip-flop as we head into the new year. Additionally, I see the potential for more cuts than what is currently expected in 2025 to be priced in during the first quarter.



So as we head into the new year, I give you my parting thoughts: Expect to continue hearing the noise of flip-flops in the distance.&nbsp;



Enjoy the holidays and see you in 2025!



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Recapping the Fed flip-flop of 2024

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Predicting the top of a crypto market cycle is as much an art as it is a science.



There’s your Uber driver inquiring about the latest dog coin, a noticeable increase in dodgy celebrity crypto projects, or that cousin you see once a year at Thanksgiving sliding into your DMs for crypto advice.



Here are five tools crypto investors turn to when they dust off the crystal ball every four years. It goes without saying that none of this historical data is a definite guarantee for the future.



<h2 class="wp-block-heading">Bitcoin halving</h2>



Any discussion about crypto cycles is not complete without reference to the quadrennial <a href="https://blockworks.co/tag/bitcoin-halving">Bitcoin halving</a> event.&nbsp;



Every approximate four years, the Bitcoin network halves its reward emissions. The latest halving saw network <a href="https://blockworks.co/news/bitcoin-halving-2024-occurs">emissions halved</a> from 6.25 to 3.125 BTC.



The halving is the centerpiece of crypto cycles because it has come to be a signal for the beginning of greed and speculation in crypto markets. Importantly, each cycle has tended to peak around 12-18 months after the halving:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeHtI8s_95DPGmqFCu6ki_ExsTs9o0XaJDbPUE4JJkQ2fyu188P1k1rfUTmNZNfwFqYzlVs5IAsWSYVTPHoQZZEOdZ_NoaSeJ_h2y_2pJraNAoJfSx1fe0WHgH3ORweP05XRWZX_A?key=4g3ijPe9gvLQaFQj29sadueS" alt=""/></figure>



We are eight months into the latest halving in April 2024, and if history is a reliable indicator, the 2024 cycle still has ways to go.



<h2 class="wp-block-heading">Google search for ‘bitcoin’</h2>



Hardly a week goes by in the crypto bull market without this chart surfacing on Twitter. It’s a brain-dead simple indicator: Retail wants to keep up to date, and bitcoin is the go-to Google keyword for doing so.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcezM_gtS1XOmDLiifWWWt2tapiH7M11h3cXcuw3gyLiMXdPBqluHbItviYOfOZyki5xljqnXfClQYr2Iq8X57SNPT7WfuDa_sje1r1zju4EK-cyO7jTQoFF6YSuhJj736SQJL9KA?key=4g3ijPe9gvLQaFQj29sadueS" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://trends.google.com/trends/explore?date=today%205-y&amp;geo=US&amp;q=bitcoin&amp;hl=en">GoogleTrends</a></figcaption></figure>



The last peak in bitcoin search interest was in mid-May 2021, about six months before the price of bitcoin actually did top out.



<h2 class="wp-block-heading">Pi Cycle Top indicator</h2>



The Pi Cycle Top is a quantitative measure of bitcoin’s price on two moving averages: 111-day and 350-day (multiplied by two).



Subscribers to the Pi Cycle Top indicator believe the cycle top is in when the former crosses the latter. This has happened with fair accuracy in <a href="https://blockworks.co/news/bitcoin-bull-market-drawdowns">past</a> bull cycles in 2013, 2017 and 2021.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeMXSWepM9-uTUrN5sK05Jp7YdoTjMzzBj1oy_OUR1oyNBfVrAlg9s6vhX4A52GHtYO2PxNPt4CAclhF1lcWCS9hdtHdVhvQGbxySuIOPuzZwGe3A3bNO-M6iVQlZpUsqZhFFii?key=4g3ijPe9gvLQaFQj29sadueS" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://x.com/CryptoCon_/status/1866949795924832640">CryptoCon</a></figcaption></figure>



The indicator rests on a key premise: The end of a bull market is near when everyone and their mom is thinking of getting their hands on the orange coin. This market euphoria drives prices to unsustainable levels above “normal” growth trends, which causes bitcoin prices in the short term to significantly deviate from the long term.



<h2 class="wp-block-heading">App Store rankings</h2>



Premise: First-timers are using Coinbase rather than Uniswap to ape into cryptocurrencies. Implication: When Coinbase ranks highly on App Store rankings, the top of the cycle is near.



Simple enough?



It’s a nifty qualitative measure of crypto sentiment, and there are whole Telegram groups dedicated to just tracking it. In the last week, Coinbase has ranged from 66th to 135th.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdJvgZqCACVMSaSnhs-ZLOKXVR1Lm9enWBl8vU0X6vYAfRgpmX2qM0iPkajfAx6HqziOfDVhWBuz24wubNA6RzECDrc2kmbf_UsZIs-oaeWBVC0FYUw5HMpSy_5vaDz4QS2rz8_?key=4g3ijPe9gvLQaFQj29sadueS" alt=""/></figure>



With Solana in the limelight again, a popular derivative of this measure has been the Phantom Wallet ranking. The prevailing idea is similar: Retail loves Solana memecoins, so they’re all downloading Phantom on their phones to trade them.



The big assumption with this measure is that crypto investing is still largely untouched by the mainstream, and with every cycle comes a new wave of retail investors that have never installed centralized exchange apps. If crypto is already “mainstream,” this measure loses its relevance.



<h2 class="wp-block-heading">ETH:BTC ratio</h2>



Ah, the revered ETH:BTC ratio that podcasters and investors cannot help constantly obsessing over.



Here’s the idea: Investors buy bitcoin in the early innings of the crypto cycle. Unsatisfied with profits from the orange coin, they soon “rotate” into riskier altcoins, which spikes the ETH:BTC ratio.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfP_e-3uAEuXj9WCvHpHzfS0bk2qNkZRsZkHbMniv0O96r2MnHhU1ML7l61zkGFcE_o6WA_sXxwfQAGpCg2jf3iQB7V6AHr9iCkjJIgZFXr4Ims5JBRGWQ_xpeSX2wI-f4q6Ul4Vw?key=4g3ijPe9gvLQaFQj29sadueS" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://www.tradingview.com/symbols/ETHBTC/">TradingView</a></figcaption></figure>



With ETH’s sentiment currently in the <a href="https://blockworks-research.beehiiv.com/p/sentiment-ethereum-tracking-price">gutter</a>, ETH:BTC has become a measure of questionable value this cycle. ETH:BTC is currently at a depressing low of 0.034. For context, ETH:BTC peaked at 0.075 in 2022, and 0.0109 in 2018.



If history repeats itself, expect markets to crash when ETH:BTC nears its tops.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



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The art of predicting the top of a crypto cycle

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



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We all know it’s lame to live in the past.&nbsp;



It’s cringe when middle-aged dadbros bring up their high school football “careers,” and we shake our heads when our moms drone on about their college semesters abroad in Europe (it’s always Italy).



But now it’s my turn.



Lighting Network was the best thing that has ever happened to Bitcoin — until it wasn’t.



A refresher: Lightning is a proposed layer-2 solution for enabling super fast (almost instant) and cheap BTC transfers.&nbsp;



Usually, it takes about an hour on average for bitcoin transfers to be fully confirmed. Standard practice says that a transaction is only settled when it’s six blocks deep in the chain, and blocks arrive every 10 minutes or so.



Instead, Lightning Network allows two users to open a payments channel between them, and only the first and last transaction in that channel actually makes it to the Bitcoin blockchain.&nbsp;



Everything else in between then becomes just a matter for the two parties — so no need to wait for any confirmations at all, beyond the offchain tallies displayed by the Lightning app being used.



Anyone who’d entered crypto in the past three years might only really know Lightning from El Salvador’s monumental adoption of bitcoin as legal tender in September 2021.



The official government Chivo app and other payment processors like OpenNode used Lightning as their backbone. This meant many regular Salvadorans were suddenly converted into Lightning users, even if they didn’t fully know it.



The <a href="https://www.coindesk.com/layer2/2022/09/15/one-year-of-bitcoin-in-el-salvador-the-bad-the-good-and-the-ugly">rollout</a> was not without problems. And while Lightning <a href="https://bitcoinvisuals.com/lightning">capacity</a> had been on the rise in the leadup to El Salvador’s adoption, the amount of bitcoin bouncing around channels still jumped almost 40% in the following three months, from under 2,400 BTC to 3,300 BTC.



These days, there’s closer to 5,000 BTC ($500 million with BTC at $100k), but growth has stagnated in the past two and a half years.&nbsp;



The real kicker is that Lightning was so much more fun and relevant when there was less than 1,000 BTC on the network. When silly micropayment gimmicks ran free.



Between late 2018 and early 2019, a <a href="https://bitcoinmagazine.com/business/playing-layer-2-satoshis-games-brings-lightning-next-level">proliferation</a> of experimental apps captured imaginations. There were Miniclip-style gaming portals like Satoshi’s Games, as well as a Mario clone “Super Bro” that transformed every in-game coin into a collectible sat.



Those were great. But none held a candle (or even a <a href="https://www.coindesk.com/markets/2019/02/05/bitcoins-lightning-torch-explained-what-it-is-and-why-it-matters">Lightning Torch</a>) to two in particular:&nbsp;



<ul class="wp-block-list">
<li>Pollo.feed, which <a href="https://thenextweb.com/news/feed-chickens-using-bitcoin-blockchain">allowed</a> you to feed actual live chickens remotely for just a few sats while you watched via livestream. Magic internet money was instantly physical.</li>



<li>Satoshi’s World would let you traverse Google Earth, tagging it with whatever nonsense graffiti you’d like — and visible for all the other digital travelers to see (I <a href="https://thenextweb.com/news/bitcoin-graffiti-amsterdam">tagged</a> Amsterdam Central Station with “LONG BITCOIN, SHORT THE BANKERS”).</li>
</ul>



It’s okay that Bitcoin is more serious these days. But it’s also not.



The internet was absolutely better when we were all doing dumb stuff on the Lightning Network. Sadly, we’ll probably never make it back.&nbsp;



Now, who’s ready to hear about that time I hit a full-court touchdown?



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Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



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