In Q4, the crypto market capitalization increased to around $3.4 trillion, a 41% increase vs Q3 2024.
Nearly the entire increase happened within the two weeks following the United States Presidential election. Since then, the Trump administration has announced crypto-positive initiatives, most importantly:
- The crypto working group at the SEC, CFTC, and the Treasury to make clear rules on market structure (i.e., utility vs. security tokens)
- Preparation of stablecoin regulation
- The establishment of the Bitcoin Strategic Reserve and Digital Asset Stockpile
Several initiatives have already been implemented, such as rescinding SAB 121 (inability to custody digital assets by banks), pardoning Ross Ulbricht, and overturning sanctions on Tornado Cash. On January 17th, just days before inauguration, President Donald J Trump launched his own meme coin $TRUMP, clearly demonstrating support of digital assets (albeit the implications of the to-date 70% decline on retail traders and potential conflict of interest can be debated).
Overall, 2024 was a great year for investors. The S&P 500 was up 24%, Bonds yielded 5%, Fixed income 10%, Bitcoin 120%, and Cryptomarketcap 95%.
Coinbase and Robinhood had record quarters in Q4, growing YoY by 133% and 115%, respectively. Interestingly, nearly 80% of Coinbase’s trading volume during this period was driven by institutions.
When comparing Q4 2024 results to Q4 2021 (previous bull market peak), we see that the overall total trading volume was down 20%, and in Q4 2021, the total retail trading volume was nearly 2x of Q4 2024.
Our conclusion: the current market is still driven mainly by institutions. Retail has yet to meaningfully enter the picture.
With that in mind, let’s now dive into our overall market thesis for 2025.
RockawayX’s positioning: cohesively powering each level of the on-chain stack
We build and operate the essential infrastructure for the global digital financial system, similar to how TCP/IP and DNS underpinned the internet revolution.
As such, our investment strategy is built around providing rails for the new system, just like Citadel has been doing for traditional finance:
Infrastructure
We are engineers ensuring the uptime, security, and scalability of major blockchain networks.
Solvers
We deploy on-chain algorithmic trading strategies, capturing value in decentralized order flow (especially in cross-chain transactions), and enabling efficient markets.
Liquidity Provision
We bootstrap capital formation by providing deep liquidity to protocols for TVL growth.
The RockawayX 2025 outlook
We believe that, especially for crypto, 2025 will be another year of financial market outperformance.
Three systemic tailwinds will help support the inflow of three types of users, having four major implications on the market going forward.
Systemic tailwinds
1. Technological advancement of blockchains.
Blockchains are faster, more scalable, and easier to use. The number of active addresses across blockchains grew 6.5x last year, from 23 million in Dec 2023 to 150 million in Dec 2024. Throughput of blockchains increased as well; for example, the throughput of Ethereum and its L2s increased 3.6x from 60 transactions per second to 220 transactions per second over the same period.
2. Regulatory improvements.
Digital assets are now a recognized asset class with approved ETFs, an improved regulatory environment (e.g., stablecoin regulation, market structure regulation), and an upcoming new wave of IPOs (e.g., Circle, eToro, Gemini, Kraken, Blockchain.com, Bullish, and BitGo).
3. Macroeconomic situation.
Although uncertain in the short term, interest rates in the US and China should decrease mid-term, with increased liquidity and devaluation of base currencies driving up M2 monetary supply, which has always shown a positive correlation with the prices of digital assets.
User types
1. Institutions.
Blackrock, Hamilton Lane, Fidelity, PayPal, Stripe, and other financial institutions adopted digital assets last year. This trend will continue. We believe they will adopt blockchains as their backend; support stablecoins for payments and intracompany transfers; offer native digital asset custody, trading, and staking; and continue to launch tokenized funds. Consumer-focused companies (not only Sony) will launch L2s on Ethereum using an existing L2 developer framework (e.g., OPStack).
2. Retail users.
Applications like Moonshot, Vector, Telegram, and Phantom already allow for easy onboarding of new retail users on-chain. This inflow will continue with consumer-focused applications like meme coin trading, gaming, and DePIN. Even with 150 million active addresses in Web3, we’re still far from the Web2 number of users (e.g., Facebook’s 2bn daily active users).
3. AI agents.
No bank will open a bank account to AI agents. Blockchains are natural infrastructure rails on which AI agents can transact value: send money (i.e., stablecoins), trade, invest, and even tokenize themselves. The market for blockchain users is much larger than the 5 billion internet users — it is hundreds of billions of AI agents transacting among themselves and with humans on-chain.
Implications on-chain
1. Growth of stablecoins.
Last year, the total market cap of stablecoins grew 84% from $130bn to $220bn. More users on-chain will grow the amount of stablecoins issued (soon to reach $1tn+), stablecoin transactions, and the types of stablecoins (e.g., collateralized, yield-generating).
2. DEX trading.
Trading on decentralized exchanges (DEX) directly on-chain represents just 20% of spot trading and 5% of futures trading on centralized exchanges. More users on-chain means more activity on-chain, including more trading on DEXs. This will grow the valuation of main DEXs (e.g., Hyperliquid), new types of DEXs (e.g., CLOBs), and different aggregators of DEXs. More trading on-chain will also improve capital efficiency because users will be able to use collateral on one DEX to generate yield on another lending protocol.
3. Yield on-chain.
More on-chain users will require more yield-generating sources. We expect new protocols that fill this need to flourish. For example, protocols that provide real-world assets (“RWA”) like insurance exposure or protocols operating directly on-chain that provide yields from re-staking or undercollateralized lending.
4. Cross-chain activity.
Ethereum already has 59 rollups (“L2s”), and more will be created this year. Solana will have new deployments of its Virtual Machine on other chains (e.g., Eclipse, Atlas). New L1s will be launched (MegaETH, Monad), and some applications will become L1s themselves (e.g., Hyperliquid’s HyperEVM). This multi-blockchain fragmentation will require solvers and bridges to hide complexity away from the user.
Market update
The US election and Trump’s market impact
On Tuesday, November 5th, 2024, Donald Trump won the US election in a decisive victory to become the 47th President of the United States. Crypto markets celebrated as BTC rallied 37% in Q4 to break $100k.
Besides BTC, the biggest winners were alts; specifically, DeFi (AAVE), DOGE, and XRP, which rallied 137%, 85%, and 300%, respectively. The new Trump administration’s pro-crypto stance is expected to provide a clear regulatory framework benefiting DeFi, memes, RWA, and AI tokens.
Despite the celebrations of crypto enthusiasts, we are not calling for an “alt season” like those experienced in past cycles.
TOTAL3, a metric used by analysts to measure the total market cap of all non-BTC/ETH assets, gave back 50% of its post-election move into YE (as did $DOGE). Crypto still offers the best risk-adjusted returns, but it’s no longer a case where rising tide lifts all boats, making asset selection critical to generate returns.
AI agent — the striking new category continues
Since our previous (privately shared with our investors) market update, the cumulative market cap of AI Agents is up 40% ($5bn to $7bn), even after the recent market sell-off. The category continues to dominate the narrative mindshare as Nvidia CEO Jensen Huang claims that “AI Agents Likely to Be a Multitrillion-Dollar Opportunity”.
AI Agents can autonomously execute tasks on users’ behalf and can be categorized based on the type of the tasks they’re performing:
Influencers/Celebrities
AI agents act as users on social networks (e.g., TikTok, X). They can interact with all their followers simultaneously and even give humans work and pay them in stablecoins.
Examples: Luna, Zerebro.
Market Insights
AI agents provide market alpha based on fundamental or technical analysis, on-chain activity, and sentiment.
Examples: aixbt, Moby.
Traders
AI agents trade autonomously, continuously self-learning from past performance.
Example: Vader.ai.
Workers
AI agents execute transactions for the user, simplifying tasks such as bridging, swapping, optimizing DeFi strategies, and more. They can also deploy and audit smart contracts, allowing users to interact with crypto via natural language.
Examples: Griffain, Wayfinder.
We have invested in multiple projects within the vertical:
Virtuals: A Platform that allows anyone to launch and tokenize autonomous agents with a couple of clicks. Since November, more than 16,000 agents have been launched, and the most popular agent, “aixbt,” was trading at more than a $700m valuation at its all-time high.
Almanak: Focuses on the creation and training of AI Agents in DeFi that optimise and improve their strategies.
ElizaOS: Framework and “operating system” for programming AI Agents.
Vader.ai: On-chain funds run by AI Agents that invest in other AI Agents.
Solana continues to be the blockchain with the most meaningful metrics
In Q4 2024 and January 2025, Solana outran all the other L1 blockchains and L2 rollups and established itself as the clear market leader in the most meaningful metrics.
Let’s review them.
Applications on Solana generated $28.4m in daily revenue ($10.3bn annualized) during the last week of January, reaching a 75% market share. For comparison, Ethereum reached $4m in daily revenue (10% market share), BNB $3.11m (8%), and Base $2m (5%).
In terms of real economic value (REV), which measures the network’s transaction demand and value capture on user activity (fees + tips paid to transact), Solana achieves $28.7m in daily network REV (74% market share).
Ethereum achieves $6.5m (17% market share), Tron $1.72m (4%), and Base $0.44m (1%).
Solana attracted more than 75% of all the tokens ever launched on all blockchains, surpassing all other networks by a wide margin.
Since Oct. 6th, Solana has consistently achieved weekly DEX volumes larger than any other chain. In the weeks of TRUMP and MELANIA meme coin launches, Solana reached weekly DEX volumes ($97.5bn), nearly double the volume of all other chains combined ($50bn).
With the new Solana client, Firedancer, scheduled to launch later in 2025, Solana will increase the network’s throughput to a theoretical maximum of 1m, further outrunning other projects in the scalability race.
You can see how smoothly it is running on our bare metal servers below:
https://firedancer.rockawayx.com/
Stellar results of Coinbase and Robinhood
Coinbase reported a strong Q4 2024 with revenue reaching $2.3bn (vs. $1.88bn expected), up 133% YoY. This growth was driven by a 172% QoQ surge in transaction revenue to $1.56bn (which more than doubled from last year) and a 15% rise in subscription and services revenue to $641m. Trading revenue accounted for 68% of the total revenue. Net income was $1.3bn, boosted by $476m from crypto asset investments. Consumer trading volume rose 224% from the same period a year ago, while institutional trading volume increased 176%. For the entirety of 2024, Coinbase generated $6.6bn in revenue, up 111% from 2023.
In Q4 2024, Coinbase reported consumer revenue at about 20.5% of total revenue, which is still far from 45.3% in Q1 2021 (middle of the last bull market). This indicates that the current bull market is primarily driven by institutional capital, with additional upside potential as retail participation re-engages.
Robinhood’s results were similarly impressive. Robinhood reported Q4 2024 revenue at $1.01bn, up 115% YoY. Transaction-based revenues increased over 200% to $672m, with crypto revenue jumping over 700% to $358m. Cryptocurrency trading revenue accounted for 35.4% of Robinhood’s total revenue. Net income was $378m, and diluted earnings per share were $0.43, reflecting strong growth in crypto trading and retail investor engagement.
Other Noteworthy Market Developments
- Microstrategy more than doubles its Bitcoin holdings by 244,607 to 447,470 at year end — Read
- Tesla Bitcoin holdings rise $600m in value — Read
- Bitwise, Canary Capital, 21Shares, WisdomTree and CoinShares apply for XRP ETFs — Read
- Average trading volume rises 128.2% QoQ to $200.7bn — Read
- Crypto venture funding hits $3.5bn (45% rise QoQ) in Q4 — Read
- Global crypto mobile wallet users reaches record 36 million — Read
- Breakout crypto app Polymarket became the primary wagering tool on the 2024 elections — Read
- Tether adds $23bn in issuance in Q4, to bring 2024 issuance to $45bn — Read
A defining year for crypto growth
As we move deeper into 2025, the cryptocurrency market stands at a pivotal moment. Institutional adoption continues to surge, retail engagement is on the horizon, and the industry has cemented itself on the global political stage
RockawayX remains committed to building, investing in, and supporting the key infrastructure that will define the future of on-chain finance. Whether through liquidity provision, market-making, or powering decentralized networks, our focus remains on long-term value creation in this evolving ecosystem.
The year ahead promises continued volatility, yet with it, immense opportunity. As the digital asset landscape matures, strategic positioning and market selection will be more critical than ever.
The value of digital asset investments may fall as well as rise, and you may get back less than you originally invested. It is therefore important that you understand the risks involved before investing. This report represents RockawayX’s view at a point in time, and information included has been sourced from third parties, such as companies in RockawayX-managed portfolios. While these sources are considered reliable, RockawayX has not independently verified this information and makes no warranties regarding its current accuracy or suitability for specific situations. We may also take the opposite view/position from that stated in this report. This is because our view may change as facts or circumstances change.
This material constitutes general advice only and not personal financial product, tax, legal, or investment advice, and does not take into account the specific investment objectives, financial situation or individual needs of any particular person. We recommend consulting with your own professional advisers on these topics. Any mention of securities or digital assets is for illustration only and does not imply a recommendation or constitute an offer of investment advisory services. Furthermore, this material is not intended for use by current or prospective investors and should not be used as the basis for any investment decisions regarding funds managed by RockawayX. Any potential investment in RockawayX funds would be subject to documentation such as a private placement memorandum, subscription agreement, and other relevant materials, which should be carefully reviewed in their entirety. The investments or portfolio companies mentioned may not represent all investments made by RockawayX, and past results do not assure similar outcomes in future investments.
