The allocation value of BTC in institutional investment portfolios has been further reflected, while the performance of ETH and some altcoin ecosystems has diverged. Although ETH implemented transaction fee optimization in March 2024, it still needs to promote more innovation in the increasingly competitive public chain ecosystem. At the same time, the activity of the MEME coin market has fallen after a rapid rise, and the market risk appetite has cooled down.
BTC market dominance rises, market tilt is obvious
BTCs market dominance has steadily increased over the past year. After Trumps victory in November 2024, the markets expectations for BTC as a potential strategic reserve asset increased, pushing the price of BTC close to $100,000. However, as the December FOMC meeting clearly maintained a relatively tight monetary policy, the markets expectations for liquidity easing cooled, and investor sentiment gradually became cautious.
The core logic of the market lies in the adjustment of capital flows. Recently, funds have gradually flowed to relatively low-risk assets, and BTC has shown relative stability due to its higher market recognition and liquidity. In contrast, the altcoin market has been affected by greater volatility, and the trading activity of some high-risk assets has declined. This capital rotation trend reflects the asset allocation tendency of market participants in the face of tightening liquidity.
The ETH ecosystem seeks optimization in competition, and institutional demand remains to be released
ETH implemented transaction fee optimization in March 2024 to improve network efficiency and user experience. However, despite the reduction in transaction costs, ETH still faces competitive pressure in some application scenarios. Solana and other public chains have achieved growth in some areas with lower transaction costs and faster settlement speeds, and ETHs Layer 2 solution is gradually being promoted to meet these challenges.
The launch of ETH ETF has attracted some institutional attention, but its market impact still needs to be observed. Compared with BTC ETF, the market demand for ETH ETF is still relatively limited, mainly because its functional attributes as a smart contract platform are different from the value storage attributes of BTC. In the future, the institutional adoption of ETH may rely more on the further maturity of the DeFi ecosystem and the widespread application of Layer 2 solutions.
MEME coin market activity declines, investors adjust risk preferences
In 2024, Pump.fun, as a decentralized token issuance platform, promoted the activity of the MEME coin market, and Solana and its DEX platform Raydium also benefited in the process. However, as market sentiment changed, the speculative demand in the MEME coin market cooled down, and the daily issuance of new tokens on the Pump.fun platform decreased from the peak period.
Adjustments in the MEME coin market may be related to changes in the overall risk appetite of the market. In the early stages, MEME coins attracted a large amount of short-term capital inflows and boosted trading activity in the Solana ecosystem. As the prices of some highly volatile assets fell, market speculation weakened, and some investors began to re-evaluate their holdings. This trend is particularly evident in the meme coin market, where the inflow of funds to new projects has slowed recently, and some trading volume has been concentrated on more mature projects.
Large holders adjust their strategies, and fund rotation affects market structure
Recent data shows that the number of large addresses holding more than 10,000 SOL has decreased, which may indicate that some early investors are adjusting their holdings. In contrast, BTCs market share remains stable, and some funds may be rotating from more volatile assets to asset classes with more long-term allocation value.
This trend is also consistent with the characteristics of the market cycle. In the early growth stage, funds tend to flow into high-volatility assets to obtain higher short-term returns. During the market adjustment period, investors tend to reduce high-risk exposure and turn to more stable assets. The increase in BTCs market share and the outflow of funds from the Solana ecosystem reflect this market style shift.
Macroeconomic policies, liquidity environment and market confidence will become key variables
The future evolution of the market will still be affected by the combined influence of macroeconomic policies, liquidity environment and market sentiment. A core variable in the current market is the cryptocurrency regulatory policy that the US government may introduce. The market generally expects that the new government may promote a clearer regulatory framework.
The direction of the Federal Reserves monetary policy remains the focus of market attention. Although the market has certain expectations for liquidity easing in the first half of 2025, there is still uncertainty about the pace of policy adjustments. If the liquidity environment tightens, the market may face greater funding pressure, and the relative stability of mainstream assets such as BTC may further increase.
Some of the above views come from Matrix on Target. Contact us to obtain the full report of Matrix on Target.
Disclaimer: The market is risky and investment should be cautious. This article does not constitute investment advice. Digital asset trading can be extremely risky and unstable. Investment decisions should be made after carefully considering personal circumstances and consulting financial professionals. Matrixport is not responsible for any investment decisions based on the information provided in this content.
