Why 2025 Could Bring Another Altcoin Bull Market

• The price of Bitcoin has surged more than 100% in 12 months, sparking renewed interest in crypto.
• Bitcoin’s four-year halving cycle causes prices to rise by reducing the supply of new coins.
• Altcoins could make gains as bitcoin investors diversify, but institutional changes could affect them.

Since the price of bitcoin surged more than 100% in the last 12 months, crypto is once again making headlines.

Enthusiasts who have been waiting for the bear market to end are preparing for what they hope will be another crypto bull market cycle in 2021.

Here’s why: Bitcoin’s four-year halving cycle, which cuts the rate of new coin creation in half, is at the heart of crypto’s boom and bust. Following the event, demand outstripped tight supply, causing prices to rise the following year. As Bitcoin holders reap the benefits of the rise, some of those gains trickle down to altcoins in a scenario that resembles the tide that lifts all boats.

So far, this cycle has repeated itself since Bitcoin’s inception in 2009. And unless something changes, investors expect a similar pattern to repeat itself this year. With the latest halving in April, expectations for a 2025 rally are high.

Below is a chart that shows how the price of Bitcoin has changed over time, overlaid with halving events.

Matthew Le Merle, CEO of Blockchain Coinvestors, says 14 years is enough time for crypto investors to trust a model. The historical context shows a cycle in which Bitcoin is the best performing asset for three years and the worst performing asset for three years.

The slight caveat is that bitcoin tends to slow down in the third year of the uptrend and altcoins (cryptos other than bitcoin) catch up to or even surpass it in percentage gains, which could make 2025 the year of altcoins.

The end of the latest crypto bull market caught many investors off guard following speculation that bitcoin could hit $100,000 or even $200,000 before entering a bear market. But those hopes were dashed after it only reached $70,000 before plunging about 74%. Altcoins followed shortly after. The boom was also marred by unprecedented investment scams and the non-fungible token bubble.

Bitcoin is now rebounding, as in previous cycles. Morningstar’s chart below shows bitcoin as the world’s best-performing asset on an annualized basis in three-year increments. Assets are listed in rows in order of performance, highest at the top and lowest at the bottom. In 2024, bitcoin finished the year up approximately 124%, making it the best performing asset for the second year of this cycle.

During each of these cycles, altcoins lagged bitcoin in the first two years and saw larger percentage gains in the third, according to data from Pantera Capital. The company refers to the Bitcoin to Altcoin transitions as phases one and two, where the first is led by the Bitcoin price surge and the second by altcoins. Once this happens, the crypto market crashes for the start of another bear market.

“Why then?” said Le Merle. “This is because after bitcoin goes up three years in a row, many bitcoiners have a lot of capital that they want to diversify, and they are willing to move some of their capital into altcoins.”

However, certain factors could hamper the two-phase transition. First, Bitcoin has much greater support due to a new crypto-friendly presidential administration, the addition of Bitcoin exchange-traded funds, institutional money, and the fact that companies and governments are considering it in their treasuries, said Le Merle. All of this could mean a stronger third year for Bitcoin. The downside, he added, is the law of diminishing returns, which simply suggests that the higher bitcoin goes, the harder it will be to achieve higher returns.

The composition of players in the cryptocurrency market has also changed.

“In blockchain and crypto, it was basically individuals and traders making personal decisions,” Le Merle said. But as institutional and professional investors increasingly handle crypto, he expects the weight of capital to shift toward top-tier crypto assets.

This means that altcoins with larger market caps could make a big comeback. At the same time, new offshoots with fewer use cases could be traded in speculative retail. But that doesn’t mean meme coins are disappearing. Quite the contrary, traders will always bet to make money quickly in all markets.

WendyO, the pseudonym of the crypto-influencer host of “The O Show” whose YouTube channel has nearly 230,000 subscribers, said this cycle is already looking very different than 2021 for several notable reasons.

First, decentralized finance protocols and NFTs, with digital artworks such as the Bored Ape Yacht Club collection, were very popular during the last bull market. This year, not so much – instead, traders are turning to meme coins, especially those related to anything related to AI.

The crazier and funnier a coin is, the higher it goes, said Adrian Zduńczyk, a licensed market technician, already witnessing a rise in coins with bizarre themes. He expects the 2021 crypto bull market to return with even stronger volume over the next six to seven months.

The popularity of meme coins comes from their easier accessibility and community-like structure. WendyO noted that in this segment of the market, venture capitalists are not getting ahead of earnings or coin offerings. There also aren’t as many founders making empty promises about use cases. So everyone knows what they’re getting into, which is like a fun gamble where you get in, win money, then get out before the money goes to zero, she said.

Second, in 2021, the Ethereum blockchain was very active in creating altcoins. This time, Solana’s blockchain has become a popular launchpad for meme coins because its transaction fees are cheaper. In December, 1.2 million new tokens were launched on the Solana chain, compared to just 172 in January 2024, according to Dune.

Below is a chart from CoinGecko demonstrating the number of new cryptocurrencies entering the market since 2021.

As for the new Trump administration, WendyO believes it is too early to get too enthusiastic about a cryptocurrency-friendly Washington before new policies become clear. Although she expects widespread support for digital assets, she worries that institutional investments will be favored over retail or decentralized means of transaction. If that happens, she believes it could bring a premature end to the bull market.

“We want to be able to transact 24/7/365. We don’t want to be accredited investors to participate in cryptocurrencies. If we want to buy bitcoin, we don’t want to have to go through BlackRock “, Wendy O said. “And that’s a very significant change that we’re seeing this cycle. Last cycle, we didn’t have a Bitcoin spot ETF, and we didn’t have an Ethereum spot ETF.”