The core investment themes worth following in the encryption field in 2025: Decentralized Finance and AI

Author: hitesh.eth

Compiled by: Deep Tide TechFlow

Pure dry goods, no false hopes.

Before you start reading, I hope you can temporarily set aside any preconceptions and take a few minutes to carefully look at what I'm about to share.

From a macro perspective, the investment themes of Web3 can be divided into two categories: underlying infrastructure (infra) and application scenarios (apps).

Investments can essentially be divided into two types: one may seem unremarkable in the short term, but could potentially bring substantial returns in the long run; the other may be exciting in the short term, but ultimately worthless.

Most cryptocurrency investors enter this market in pursuit of quick and substantial returns, and are willing to take corresponding risks.

Therefore, people are more inclined to choose cyclical investments - these types of investments are usually short-term and only effective during specific bull market cycles.

2025 will be the 'year of regulation' in the cryptocurrency field.

The United States and other major economies plan to introduce relevant regulations domestically. The introduction of these regulations will not only enhance the trust of traditional investors, especially the older generation, but also screen out a few truly promising cryptocurrencies - only projects with solid fundamentals and stable cash flow support can stand out.

We can foresee that the market will usher in a new wave of traditional investors. These investors hold "old money" and will step into the cryptocurrency field for the first time.

They will not blindly invest just because of market speculation, but will carefully study projects, read reports and data carefully, and only make investment decisions in logical situations.

Against this backdrop, decentralized finance (DeFi) will become an investment theme favored by traditional investors, as will be the first-layer protocol (L1) of blockchain.

However, due to the lower market cap of DeFi projects, there is greater room for growth, and they are highly aligned with fundamentals and data. This year, some DeFi projects have generated over $100 million in revenue, which undoubtedly attracts the attention of traditional investors.

Traditional investors have huge amounts of capital, and sufficient capital is the key to healthy market growth. Don't forget that many institutional investors are also dominated by traditional investors.

It can be foreseen that DeFi will eventually become one of the important layout directions for top institutional investors.

BlackRock has started collaborating with DeFi projects, and this trend is gradually forming.

DeFi is not a cyclical investment; it is more like a long-term investment, just like how investors used to view BTC and ETH.

The long-term potential of AAVE may be considered to be on par with ETH.

When you invest in blue-chip DeFi projects, you can focus on long-term development;

And when you choose to invest in a brand new DeFi native project, you can consider short-term returns, which may also bring returns several times or even higher.

In a crypto market dominated by DeFi, many emerging projects will continue to emerge, while some established projects will also regain attention. You will see a surge in prices surrounding these projects.

In the DeFi field, many blue-chip applications such as Uniswap are planning to transform into underlying infrastructure projects. This transformation will further enhance the value potential of tokens, and some projects may announce adjustments to the fee mechanism next year, so you need to be prepared for this.

These changes will inject strong momentum into the narrative of DeFi's development.

I expect DeFi to dominate at least the next two quarters, just like the performance of AI this year.

As for AI, I believe that 2025 will be a year when AI receives widespread criticism in popular culture due to its rapid and uncontrolled expansion.

"Responsible AI" discussions will become the focus.

Market activities around encrypted AI infrastructure, AI agents, and Initial Agentic Offerings may enter an adjustment period due to the narrative of 'responsible AI'.

However, before that, I anticipate that AI intelligences will go through a bubble-like growth.

There are already 13,000 intelligent bodies in the market, and I expect this number to grow to at least 100,000.

Subsequently, we may enter a bubble phase and burst the following year.

The specific quarter in which this occurs will depend on the timing of AI regulatory events.

Regulations will also generate interest in privacy infrastructure, so major projects involving confidential DeFi, privacy computing, privacy storage, and privacy reasoning will receive more attention, which will also be reflected in their asset performance (PA).

The Meme market will continue to be active.

Although regulatory authorities may not support it, people will always find a way to get in because complete blocking is impossible.

Speculators will continue to look for opportunities among the 100,000 new coins added every day.

However, some established memes, such as DOGE and PEPE, may attract more serious investor attention.

Even if you don't like memes, you should consider allocating a portion of your investment exposure to them.

2025 will also be the year when mobile Web3 wallets and super apps emerge.

Recently, a Web3 wallet company named Exodus went public on NASDAQ with a valuation of 12 billion U.S. dollars, which may fuel a speculative frenzy next year for tokens related to Web3 wallets with strong revenue performance.

AI and DeFi will be the two major core narratives next year:

• DeFi is expected to take the lead;
• AI intelligent agents may enter a bubble phase;
• Meme speculation will attract more people to participate;
• Privacy and DePIN (Decentralized Physical Infrastructure Network) will emerge in a certain quarter;

Web3 wallets will receive more attention and drive mainstream adoption through more convenient user guidance and better user experience.

That's all I have to share.

Please note that I am neither an astrologer nor an expert in the cryptocurrency field. I am just an ordinary person with some random thoughts about the market, so don't take my views too seriously.