AI Bubble and the Rise of Bitcoin L2: An In-Depth Conversation with Delphi Labs

What is the outlook for the crypto market in 2025? The core team members of Delphi Labs recently shared their insights in a podcast that explored hot topics such as the evolution of the AI narrative, the Bitcoin L2 ecosystem, and the return of infrastructure value. Here are the main takeaways from the conversation:

Market Watch

• The recent market volatility has not changed the fundamentals, and Bitcoin remains the best performing asset
• Trump's election may be beneficial for cryptocurrencies, but the specific impact depends on actual policies.
• The current market downturn may be a buying opportunity, and Trump is generally bullish on cryptocurrencies.

AI Bubble

• AI will be the biggest narrative in 2025, with the potential to achieve the (AGI) of artificial general intelligence
• The AI bubble is inevitable and could become one of the biggest bubbles in financial history
• The current market value of AI projects is about $50 billion, and it will continue to grow in the future
• At the moment the main leaders are Virtuals and ai16z, but the moat is not strong
• Investors should be flexible in adjusting their strategies and not stick to AI tokens for a long time

The Decline of OG Memes

• AI is essentially a larger meme than WIF that is easier to tell a story and generate excitement
• In 2025, most crypto money flows are likely to shift to AI
• The market has grown tired of traditional Memes and is leaning towards projects that at least have some actual value.
• DOGE is still a good benchmark for assessing the overall meme coin market and may not have peaked yet

Fundamentals regression

• Projects without long-term income stories struggle to sustain themselves, and infrastructure projects are gaining more attention.
• Solana currently accounts for 56.8% of the crypto space's revenue and could reach 80% in the future
• The market is maturing and investors are starting to look for projects backed by real businesses

Next generation L2 and L3

• L2 performed well last year, with total locked positions growing from 22 billion to 40 billion.
• At least one major financial institution will launch its own L2 by 2025
• There are only three L2 TPS that surpass Ethereum, but mainly because of insufficient demand
• Technology is very important, the entire industry is moving towards high-performance systems.

Bitcoin Dominance

• Bitcoin dominance has risen steadily since 2022 and is currently around 58%.
• The traditional concept of "altcoin season" may be outdated, and projects with strong fundamentals will behave significantly
• Bitcoin is still expected to outperform Ethereum this year
• If Bitcoin rises to $125,000-$150,000, BTC's dominance may return to 62%-63%.

Bitcoin L2 Feasibility

• Bitcoin L2 could be a dark horse in 2025, providing scalability and programmability
• Even if only 1-2% of Bitcoin enters the L2 ecosystem, it is enough to multiply the TVL of L2 several times
• Starknet could be a dark horse for Bitcoin L2
• The launch of Bitcoin L2 may put significant pressure on Ethereum.
• The main source of future demand for Bitcoin is likely to be the non-crypto-native market

In general, in 2025, the crypto market may see trends such as the AI bubble, the rise of Bitcoin L2, and the return of infrastructure value. Investors need to remain nimble and focus on projects of real value, while keeping a close eye on the regulatory environment and technological developments.

! Conversation with Delphi Labs: The Demise of OG Memes, the AI Bubble and BTC Dominance