2025 Three Main Lines of Encryption: A More Efficient Market, Globalization of Stablecoins, Benefiting from Politics

Author: tunez (evm/acc)

Compiled by: Shenchao TechFlow

This year's cryptocurrency story revolves around three core themes:

The market is becoming efficient rapidly.

Stablecoins are rapidly globalizing.

Trump is playing 4D chess (or checkers)

Let's analyze these topics one by one.

The market is rapidly becoming efficient.

1a - Bitcoin and "Web3" are different things.

Historically, Bitcoin and other crypto markets have been interconnected through the flow of funds. After Bitcoin rises, profits flow into Ethereum, and then further into other parts of the market. Today, Bitcoin has a real influx of institutional funds. These institutions primarily purchase it due to Bitcoin's unique attributes (sovereignty, permissionless, limited supply), compared to more controlled currencies around the world. The driving force behind this Bitcoin bull market does not focus on other parts of the market.

Many people believe that this flow of funds will also go towards Ethereum, as it shares similar properties with Bitcoin. However, that has not been the case so far. While Ethereum is decentralized, its main differentiating feature is smart contracts. This gives Ethereum its intrinsic value based on its usage, not just its technical attributes. Institutions buy Ethereum, but not because it is decentralized like Bitcoin. They buy Ethereum (as well as Solana and others) because it is being used, just like they would buy growth stocks.

1b - The brand of Ethereum is weakening.

Ethereum's disappointing price performance has dampened the morale of the entire cryptocurrency sector, regardless of your support for Ethereum. This has also led to a general decline in prices (again, the impact of capital flow).

You can point out many reasons to explain its poor performance, but the most important one is actually the rise of Solana. Before Solana's success, people found it easier to think about the future development of Ethereum rather than its current situation.

The standards have been significantly raised, and the market is tired of waiting. Solana's surpassing is a very realistic possibility that everyone should consider.

1c - The average IQ of market participants has reached a historical high.

As the price of cryptocurrencies continues to fall, the market has become increasingly difficult, with more and more participants suffering losses and leaving. Those who remain have strong reasons to continue holding on.

On-chain data is now widely available. You can easily view the TPS (transactions per second), transaction fees, and application revenue for each chain. Many market participants do this regularly.

Source: Blockworks

In addition, market participants will actually dive deep into the blockchain. The current standard is that you either create a new experience or provide a better experience; otherwise, you will be labeled as a scam or a waste of resources. No amount of storytelling can change that.

When you combine these dynamics (the de-correlation of Bitcoin, the weakness of Ethereum, and the general intelligence of the market), you will find that the market no longer tolerates empty talk. This can be very confusing for those who do not have a real belief in the underlying technology being built. As prices drop, it becomes easier than ever to claim that the entire industry is a scam and to believe that everyone is secretly involved (especially those "evil" venture capital firms).

Stablecoins are rapidly globalizing.

Some quick data:

The usage of stablecoins reached an all-time high in 2025.

Source:

In the past 6 months, the average daily trading volume of stablecoins reached 20 billion US dollars.

Source:

Since the beginning of 2024, the total supply of stablecoins has increased by $100 billion.

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I do not define stablecoins as the "killer application" of cryptocurrencies, but rather see them as the first sustainable on-chain guiding mechanism for cryptocurrencies.

The traditional cryptocurrency incentive mechanism is driven by speculation. After prices rise, people chase these gains. There can be different arguments about the sustainability of this approach, but it has largely fueled the industry's growth to trillions of dollars.

There is a difference (and trade-offs) between getting into cryptocurrency through speculation and through stablecoins.

Speculation often leads people to explore this industry. Through speculation, you chase altcoins on centralized exchanges, and then somehow two years later, you find yourself buying NFTs on a testnet of a chain that hasn't even launched yet. You have such experiences because you keep chasing profits in stranger places.

By using stablecoins, you directly transfer value on the chain with stablecoins. The downside here is that there is not much reason to explore further gains beyond this mechanism, as you have never chased after profits. This is why, despite the rapid growth of stablecoin adoption recently, it has not translated into widespread speculative behavior in the crypto market.

Don't get me wrong, the adoption of stablecoins represents a sustainable growth of the on-chain economy. At some point, the world of stablecoins and the world of speculation will meet. But rather than having the stablecoin community (ordinary people) lower their standards to cater to the speculators (gamblers), we need to raise the standards by providing them with attractive and reasonable use cases, rather than just appealing to bettors. This is especially good because, as described in Theme One, the market is becoming more efficient.

Trump is playing "four-dimensional chess" (or checkers).

The Trump administration is good news for cryptocurrencies, as it means that reasonable regulations may (hopefully) be established. This will attract capital, builders, and users into the space.

At the same time, the Trump administration is bad news for cryptocurrencies, as its economic policies are both extreme and unpredictable. This brings uncertainty, lowers risk appetite, and harms everyone’s coins. Is Trump really playing "four-dimensional chess"? No one knows.

The best way to understand Trump and the market is to imagine him hosting a game of "Red Light, Green Light" from Squid Game.

This week you will see this dynamic at play. Trump announced that he would not take a hardline stance against China, and Bitcoin rose by 10%. While this is reassuring, it is impossible to predict what the next headline will be.

Summary

New Bitcoin buyers are unwilling to purchase Ethereum or altcoins, with Ethereum's uncertainty reaching an all-time high, and market participants becoming increasingly savvy. These factors are making the market more efficient, and prices are being affected almost everywhere in the short term.

The adoption and guidance of stablecoins will only increase. The on-chain economy is growing, and the industry has intrinsic value, with these individuals holding high standards for use cases.

Cryptocurrency will uniquely benefit from this government, but risk assets will be affected before Trump eases restrictions.

In short, the common theme behind these three macro crypto trends is short-term pain and long-term gain. It's easy to feel like things are dying, but I believe the reality is quite the opposite. The year 2025 is the healing year that cryptocurrency needs, and only then can we finally be ready to step onto the main stage.