Market Update (January 5, 2025) – Memecoins Losing Ground to AI Agent Tokens in 2025: Dragonfly VC’s Forecast
Market Update (January 5, 2025) – The chances of a Solana exchange-traded fund (ETF) being listed in the United States in 2025 are now pegged at 77%, surpassing even some of the most optimistic forecasts, according to Matthew Sigel, the head of digital assets research at VanEck. Sigel expressed confidence in this projection, calling the estimate from cryptocurrency prediction platform Polymarket “underpriced” in a recent post on X (formerly Twitter). This shift in the outlook comes as cryptocurrency ETFs continue to gain traction in the U.S., fueled by growing optimism within the industry.
Sigel’s positive outlook for Solana’s ETF is in line with the broader expectations within the crypto sector, particularly following President-elect Donald Trump’s November election win. Trump has expressed his intention to make the U.S. the “world’s crypto capital,” which has contributed to speculation that more crypto ETFs will be approved by the U.S. Securities and Exchange Commission (SEC) in the near future.
Polymarket’s Predictions: Solana ETF Odds on the Rise
On Jan. 1, 2025, Polymarket—a popular cryptocurrency prediction platform—estimated that the likelihood of a Solana ETF listing in 2025 stood at approximately 77%. By Jan. 2, these odds increased to 84%. Polymarket’s platform allows users to trade contracts based on predicted events, with prices adjusting dynamically depending on the probability of those events happening. The current rise in prediction odds suggests growing confidence in the approval of a Solana ETF in the coming year.
Terraform Labs Co-Founder Pleads Not Guilty in U.S. Court
Do Kwon, co-founder of Terraform Labs, appeared in a U.S. court on Jan. 2, 2025, to plead not guilty to multiple charges related to the collapse of the Terra ecosystem. Kwon, who was extradited to the U.S. from Montenegro, is facing charges of securities fraud, wire fraud, money laundering, and commodities fraud in connection with the implosion of Terraform Labs’ algorithmic stablecoin project.
During his court appearance in Manhattan, Kwon agreed to remain in custody without bail. His legal team is preparing for a status conference scheduled for Jan. 8, where both the defense and prosecution will present evidence and discuss motions ahead of his trial. Kwon’s case has garnered significant attention due to the controversial nature of the Terra collapse, which led to substantial losses for investors worldwide.
Memecoins Losing Market Share to AI Agent Tokens: Dragonfly VC’s Prediction
In an analysis of the 2025 cryptocurrency market, Haseeb Qureshi, Managing Partner at Dragonfly Capital, predicts that AI agent tokens will continue to outperform memecoins. According to Qureshi, the growing interest in AI-based cryptocurrency projects marks a shift away from “financial nihilism” towards more optimistic, futuristic investments. However, he also cautioned that while the AI agent craze will likely persist throughout 2025, it will eventually lose steam by 2026.
AI agent tokens have surged in popularity within the crypto space as they offer tools like market price predictions and insights, often using machine learning algorithms. On the flip side, memecoins have struggled to maintain investor attention as AI tokens continue to gain market share. CoinMarketCap reported that in the last 24 hours, memecoin trading volume decreased by 21.5%, while AI and data token volumes grew by 7.95%.
China Tightens Regulations on Crypto Trading with New Forex Rules
China has introduced new rules under the State Administration of Foreign Exchange that will require banks to monitor and report risky cryptocurrency trading activities. The regulations are expected to further limit Chinese residents’ ability to purchase digital assets by making it more difficult to trade crypto across borders.
The new rules, which were reported on Dec. 31, 2024, mandate that banks track crypto trades based on the identity of the individuals or institutions involved, the source of their funds, and the frequency of their transactions. Experts suggest that this move signals China’s ongoing crackdown on crypto trading and could further hinder the growth of the cryptocurrency market within the country.
IRS Issues Temporary Relief on Crypto Cost-Basis Method Changes
In response to concerns over its previous ruling, the U.S. Internal Revenue Service (IRS) has issued temporary relief for investors holding cryptocurrency on centralized exchanges (CeFi). Originally, if crypto holders did not specify their preferred accounting method, exchanges were to default to the FIFO (First In, First Out) method for capital gains tax reporting. This method could lead to higher capital gains for many taxpayers.
However, Shehan Chandrasekera, head of tax strategy at Cointracker, noted that the IRS decision to delay the enforcement of this rule prevents potential “disastrous” tax implications for crypto traders during a bull market. The relief allows taxpayers more flexibility in choosing accounting methods that better reflect their investment strategies.
Bitcoin, Ether, and XRP Market Update: Winners and Losers
As of the end of the week, Bitcoin (BTC) is trading at $96,601, Ether (ETH) at $3,448, and XRP at $2.42, according to CoinMarketCap. The total cryptocurrency market capitalization stands at $3.40 trillion.
Among the top 100 cryptocurrencies, the biggest gainers of the week include DeXe (DEXE), which rose by 59.13%, SPX6900 (SPX), up by 55.02%, and Fartcoin (FARTCOIN), which surged by 41.76%. On the flip side, the biggest losers were Bitget Token (BGB), which dropped by 15.94%, Movement (MOVE), down 13.69%, and Hyperliquid (HYPE), falling 12.73%.
Ether’s Struggles in 2025: 10x Research CEO Offers Predictions
Markus Thielen, CEO of 10x Research, has raised concerns that Ether (ETH) might not be the best investment choice for 2025, predicting that it will likely underperform relative to Bitcoin (BTC). Thielen emphasized that while Ethereum’s volatility could offer some opportunities, the asset might fail to deliver significant returns in the upcoming bull market. He also pointed to a decline in the growth rate of active Ethereum validators, noting that it had decreased by 1% in the last 30 days, raising concerns about the network’s stability.
FUD of the Week: Cybertruck Explosion at Trump Hotel
In an unsettling development, Tesla CEO Elon Musk confirmed that an explosion involving a Tesla Cybertruck outside the Trump International Hotel in Las Vegas was caused by either a bomb or fireworks. The incident has raised suspicions of a terrorist attack, although authorities are still investigating. Seven people were wounded in the explosion, and the driver of the truck was killed. Investigators have not yet identified the driver but continue to search for further information.
UK’s Financial Conduct Authority Struggles with Illegal Crypto Ads
Despite warnings from the UK’s Financial Conduct Authority (FCA), illegal crypto ads continue to proliferate. A report by the Financial Times revealed that 54% of the alerts issued by the FCA between October 2023 and October 2024 led to illegal ads being taken down, but many of the offending promotions are still live. The FCA has not yet imposed fines on firms failing to comply with advertising regulations, signaling continued challenges in curbing illegal crypto promotions.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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