Plaintext Annual Letter

2024 was a standout year for crypto. The long-awaited Bitcoin and Ethereum spot ETFs launched, unlocking institutional inflows and liquidity. At the same time, the incoming Trump administration promises to reverse years of regulatory headwinds, turning them into tailwinds by dismantling restrictive policies and introducing frameworks that encourage innovation. Bitcoin hit $100,000, cementing its role as digital gold. And breakout use cases like AI agents sparked the market’s imagination and allowed for outsized returns. 

2024 in Review: Key Developments

Institutional Milestones

The 2024 launch of Bitcoin and Ethereum spot ETFs, spearheaded by financial giants like BlackRock, marked a turning point. These products make digital assets more accessible, legitimizing them within traditional finance. Inflows surged, and the Bitcoin ETFs quickly became the most successful ETF launches in history, attracting over $35 billion of net inflows. The ETFs put crypto on a level playing field and ensure that, over time, crypto will be a staple part of every investor’s portfolio. 

Regulatory and Political Wins

The 2024 presidential election highlighted the growing influence of cryptocurrency holders and companies. Rising crypto adoption, representative of broad economic discontent and distrust of traditional financial systems, created a new voter demographic that played a pivotal role in Trump’s victory.

Substantial financial contributions from cryptocurrency PACs further bolstered this political force. In the 2024 elections, crypto firms like Coinbase and Ripple contributed over $119 million to federal campaigns, accounting for nearly half of all corporate political donations. Super PACs, such as Fairshake, backed 58 candidates, achieving a remarkable 93% success rate, with 54 of their candidates winning their races. These investments secured regulatory allies and underscored the increasing political clout of the crypto industry. Crypto went from pariah to powerhouse overnight. Crypto businesses that had previously been driven offshore will now have a supportive government in the US. 

Market Performance and Trends

Bitcoin has firmly established itself as a major global asset, gaining legitimacy with the launch of spot ETFs, breaching $100,000, and receiving support from multiple nations, including the United States. The possibility of Bitcoin becoming a US strategic reserve asset underscores its growing importance on the global stage. Franklin Templeton said, “We expect to see strategic Bitcoin reserves added by several nations” in 2025. Now the 7th largest asset in the world by market capitalization, Bitcoin has silenced skeptics, with the market proving its resilience and value over the past decade. 

This year, Bitcoin consolidated for seven months before breaking upward, following a pattern strikingly similar to gold. Its breakout signals the beginning of a sustained rally, as historical trends suggest prolonged upward momentum after extended consolidations. Bitcoin has nearly around four times the volatility and 10% the market cap of gold. As such, I expect the Bitcoin move to be multiples of what we’ve seen so far on gold. As we move into the new year, Bitcoin’s trajectory appears strong, supported by increasing adoption, global liquidity shifts, and its continued evolution as a trusted store of value.

Ecosystem Growth

AI agents

If you tuned into our quarterly call in October, you would have been early to the AI agent trend. We spent half of the call talking about Virtuals, which has turned out to be the fastest horse in this emerging sector. 

AI agents execute digital transactions that humans normally would. These transactions involve tweeting, posting to Instagram, or making a trade using DeFi. The possible objectives of these agents are broad, but we can already see them replicating the roles of influencers, analysts, traders, and digital marketers, among other things. Check out agent aixbt, the crypto analyst that has gained 260,000 followers in two months since its launch. The early iterations of these agents have been launched with tokens so investors can bet on their future growth or popularity. Many of the best investment opportunities of 2024 were in projects that enabled agents. Virtual, the token behind the leading agent platform, increased by 8000% in Q4. It’s worth mentioning that most of the agents will be uninteresting, and some will be exciting and insightful. What we love about the category is it’s a mix of cutting-edge technology, speculation, and tangible output. It’s been the clearest bet we’ve seen in years. 

Solana Adoption

Solana has continued to gain market share over Ethereum. All metrics are flawed when comparing the adoption of the two, but we’ll share a few anyway. Daily active addresses on Solana grew to 2.6 million, a 700% YoY increase. Contrast this with 500,000 active addresses for Ethereum, a mere 20% YoY increase. Dex trading volumes on Solana have also consistently overtaken Ethereum for the last few months with Base picking up some of the slack on the EVM side. Solana currently accounts for only 28% of Ethereum’s market cap. 

Stablecoins

Blockchains facilitated a remarkable $30 trillion of stablecoin volume in 2024. Solana processed $11 trillion of that volume overtaking Ethereum’s $8 trillion. This is nearly double the $16 trillion processed by Visa this year. 

In 2024, major financial and payment companies like Stripe, Visa, and PayPal significantly advanced their integration of stablecoins into their operations. Stripe strategically acquired Bridge, a startup specializing in stablecoin payment infrastructure, for $1.1 billion. Additionally, Stripe has partnered with platforms like Remote.com to enable contractors in 69 countries to receive payments in USDC stablecoins, providing fast and reliable payment solutions, particularly beneficial for freelancers in emerging markets. To streamline transactions, Visa is exploring ways to integrate stablecoins into its payment systems. PayPal has launched its stablecoin, PayPal USD (PYUSD), which is being used to settle cross-border money transfers through Xoom, its money transfer service. These developments underscore the increasing adoption of stablecoins by leading financial institutions to enhance transaction efficiency, reduce costs, and expand their global reach.

Looking Ahead to 2025: Key Trends and Opportunities

Altcoin Rotation

The crypto market goes through mini hype cycles within the more well-known four-year cycles. These mini-cycles are driven by innovations that capture the market’s imagination and allow for huge outperformance relative to Bitcoin. We experienced these with DeFi in early 2020, NFTs in 2021, AI infrastructure in 2023, and AI agents this year. We can also expect broad capital rotation as market participants take on more risk. This rotation up the risk curve happens both in traditional markets and crypto. In 2021 the Russel 2000 rallied as capital rotated from large caps. This rally coincided with altcoins outperforming Bitcoin after a year of lackluster returns. We are on the precipice of a similar rotation now. Over the coming months, we expect a significant rotation from Bitcoin to alts, providing the most fruitful return period. 

Some areas ex-Bitcoin that we are interested in:

• AI Integration: AI-powered agents continue to revolutionize user interfaces, especially in DeFi, where they simplify on-chain actions like staking, trading, and liquidity provision. This integration removes barriers for new users and makes DeFi more accessible.
• A new crop of AI infrastructure: The first iteration of AI infrastructure showed high-level implementation possibilities, but so far, most have lacked follow-through. We’re excited about new projects coming to market in the next year, especially those related to decentralized training, which previously seemed impossible. 
• DePIN Networks (Decentralized Physical Infrastructure Networks): These networks experience exponential growth, expanding from a niche base of a few hundred thousand digital commodity suppliers to millions of users.
• DeFi: DeFi remains a “no-brainer” for investors seeking DCF-based valuation opportunities. It continues to attract traditional finance (TradFi) participants seeking transparent yield and exposure to blockchain-native protocols.
• Media and Gaming: The market is ripe for innovation, particularly in gaming. Projects showcasing groundbreaking mechanics or economic models surpass the speculative mania of Axie Infinity’s 2021 cycle. Crypto media also emerges as an increasingly relevant vertical, meeting the growing demand for immersive and decentralized content platforms.

Crypto is a far more diverse ecosystem than five years ago, with each sector following its unique adoption trajectory. Looking at the Gartner Hype Cycle, the fastest outsized returns can be made right after the innovation trigger because expectations—and prices—can significantly exceed reality. Over time, these expectations inevitably return to reality, leading to a period of recalibration where hype fades and actual value emerges. For investors, this phase offers the opportunity to identify projects with real potential at significantly undervalued prices. As the technology matures, long-term innovation and adoption drive sustained growth, creating a more stable foundation for the sector and rewarding those who recognized its promise early.

Crypto investors get tripped up by misunderstanding where their investments sit in the hype cycle. Early-stage innovations are nearly impossible to value using traditional methods like discounted cash flow (DCF), as their potential and market dynamics are still highly uncertain. At the same time, during periods of slower, steady adoption, such as the slope of enlightenment, it’s crucial to temper expectations for the pace of growth. The diversity of crypto is exciting for active investors. 

AI and Crypto: The New Frontier

The convergence of cryptocurrency and artificial intelligence (AI) is reshaping how resources, data, and models are created, distributed, and utilized. As the market progresses, enormous investment opportunities​​ will continue in crypto x AI subsectors. If you want to nerd out, look at Defining the Crypto x AI Stack. 

In this post, Tommy who heads research for Plaintext, defines the stack in three primary layers:

Commodity Layer
This foundational layer includes decentralized physical infrastructure networks (DePINs) that provide compute, storage, and data essential for AI. Recent advancements, like distributed training techniques such as Google’s DiLoCo, have enhanced DePINs’ viability, allowing them to compete with centralized providers and support the growing demands of AI models. We’re interested in investment opportunities in decentralized training, which was previously thought impossible. These should become available in the public markets in 2025.

Model Layer
This layer connects raw digital commodities with machine learning models, enabling innovation in generative and expert AI. Tokenized GPU ownership and crypto incentives drive the creation of diverse, high-quality models, democratizing AI development and fostering inclusive ownership of these assets.

Application Layer
The Application Layer transforms decentralized infrastructure into user-facing solutions. Central to this layer are AI agents, autonomous entities that leverage decentralized computing and advanced AI models to perform tasks such as DeFi optimization, DAO governance, and resource management.

We are particularly excited about the agent layer because of its tangibility. AI agents make the potential of the Crypto x AI stack immediately accessible, providing clear use cases and immediate value to users. They prioritize transparency and autonomy, enabling users to retain ownership of data and outputs while engaging in decentralized systems. By reducing costs and enhancing efficiency, these agents are key to mainstream adoption, signaling a new era of scalable, user-centric applications at the intersection of blockchain and AI.

Regulatory Clarity and Market Evolution

Under the Trump administration in 2025, the regulatory landscape for cryptocurrencies is undergoing a massive shift, creating the clearest path to compliant innovation we’ve seen in years. Paul Atkins, the new SEC chair, brings a pragmatic, pro-innovation approach to the agency. This is expected to resolve many of the industry’s long-standing questions with clear, actionable guidelines that reduce friction for both startups and institutions.

Among the administration’s boldest proposals is a U.S. strategic Bitcoin reserve, which could redefine Bitcoin as a national asset class and economic hedge. Equally significant is a push to accelerate the tokenization of real-world assets—positioning blockchain as a foundational layer for global finance and industry.

The dismantling of Operation Chokepoint 2.0 is perhaps the most critical change for crypto businesses. For years, access to essential banking services has been the industry’s Achilles’ heel, stifling growth and pushing innovation offshore. With this barrier removed, crypto companies can operate within a functioning financial system, laying the groundwork for institutional adoption and sustainable scaling.

Bitcoin’s Evolving Cycle Dynamics

Bitcoin’s market cycles may be entering a new phase, breaking from the well-documented patterns of the past. Historically, Bitcoin has followed a four-year cycle tied to its halving events, characterized by explosive bull markets and sharp corrections. However, as Bitcoin matures and integrates more deeply into global financial systems, its behavior is likely to evolve.

One key driver of this evolution is the emergence of passive flows into Bitcoin, mirroring trends in equity markets. Retail investors will increasingly allocate a portion of their paychecks to Bitcoin each month, facilitated by platforms offering automated purchases and custodial solutions. This consistent inflow acts as a stabilizing force, providing a steady demand floor and mitigating some of Bitcoin’s historical volatility. Much like passive index fund flows in equities, these retail allocations could become foundational support for Bitcoin’s long-term price trajectory. We see little reason why Bitcoin should trade at a lower market capitalization than gold. 

At the same time, altcoins continue to present pockets of opportunity, with bouts of enormous outperformance often coinciding with periods of Bitcoin consolidation or cooling dominance. However, these trends are cyclical and transient. It provides an opportunity for liquid managers who have proven an ability to capture the trends. 

Summary

Bitcoin is no longer a question mark—it’s a cornerstone of the global financial system. Altcoins and emerging sectors like decentralized AI infrastructure offer asymmetric opportunities for those who understand the interplay between adoption cycles and hype. The next wave of growth will favor investors who can navigate complexity, and capitalize on trends before they become obvious. Crypto is no longer just an alternative asset class; it’s the foundation of a digital-first future. This is the year crypto makes its way from Coinbase accounts to retirement accounts.