Phemex forecasts a good year for memes, opportunities and challenges for centralized exchanges
Nobody can foresee the future, but that doesn’t mean it’s completely unpredictable. While bitcoin crossing the $100,000 mark and XRP skyrocketing wasn’t on too many people’s bingo cards for 2024, Phemex has been following through on its game plan throughout this past year.
Despite uncertainties and the need to seize immediate opportunities during evolving market conditions, this leading hybrid futures exchange thrived this past year because it identified and anticipated the trends outlined recently in this space. Phemex is about as well placed as possible to make some good calls for 2025.
Memes and other themes
One of the cryptosphere’s top trends has been the resurgence of meme coins, which Phemex expects to persist through 2025 and beyond. PEPE, linked to a popular meme, is one example that has seen its market cap exceed $8 billion.
“Meme coins are likely here to stay for a while,” says Phemex CEO Federico Variola. “Their success is driven by viral marketing and strong community engagement, which are currently thriving.”
The fast-paced nature of meme coins makes it challenging for exchanges to list them promptly. Timing is crucial. Phemex’s early listing of PNUT allowed users to benefit significantly, as Phemex traders early to the party achieved a reported 10x return as the token’s market cap soared. Phemex is considered one of the most efficient and prescient exchanges in listing trending coins.
Even meme coins, though, require some utility protocol in the background to ensure that they can be traded according to crypto’s unique road rules. Until recently, that coin has been ETH. Now, though, Ethereum has serious competition from Solana and its SOL token, which is gaining in preference from retail traders.
“Much of Solana’s success is due to its role as a hub for emerging trends like meme coins,” according to Variola. “Its ability to support high-volume, low-cost transactions makes it particularly appealing for launching meme coins. This has emerged as a much better user experience compared to the L2s fragmentation that Ethereum opted for to solve their scaling issues.”
Another trend reversal, Phemex forecasts, is the decline of venture capital’s dominance in crypto as key opinion leaders and content creators become more influential. Tokens backed by VCs, according to Variola, are underperforming, prompting a reevaluation of investment strategies.
But the most consequential trend for 2025 might be the mounting challenges faced by centralized exchanges. First among those challenges is the ever-present thirst for liquidity. Meme tokens in particular face such issues, with market caps that may not accurately reflect their actual fully diluted value.
Some tokens are supported by specific market makers who are hired by the token’s team, which can lead to conflicts of interest, unreliable liquidity, and unfair price action. While exchanges must adapt to trends like meme coins, they also serve as the gatekeepers of user funds. Therefore, choosing the right exchange with deep liquidity is crucial.
Phemex prioritizes liquidity without taking its eye off security. Its cold wallet system ensures the safety of users’ funds, while its robust liquidity allows for seamless trading experiences. Additionally, Phemex’s Proof of Reserves tool lets users verify the secure storage of their assets. It is the first exchange to publish both proof-of-reserves and proof-of-solvency.
A separate challenge to CEXes apart from liquidity is the underperformance of traditionally funded tokens. As meme tokens gain traction, traditionally funded utility tokens are losing appeal which can prompt a shift in investor focus.
“As exchanges, we must strike the right balance to cater to diverse investor interests. By offering a comprehensive range of both utility and meme tokens in our spot and contract markets, we ensure we meet these needs,” Variola said. “Currently, we provide a robust selection of 335 contract and 398 spot trading pairs, with more being added regularly. To adapt to changing narratives and trends, we’ve also implemented such tools as iceberg orders, multiple watchlists and basket orders designed to enhance user control and mitigate risks.”
Looking forward
Perhaps the easiest prediction Variola has for the new year is the continued dominance of bitcoin and, by “bitcoin,” he means BTC.
“BCH and BSV have struggled to achieve the same level of adoption and recognition as BTC,” he said. “While they have dedicated communities, their market performance has been modest compared to BTC’s recent surge past $100,000.”
Phemex also anticipates a DeFi renaissance. Regulatory changes, especially following the U.S. elections, could spark a resurgence in DeFi protocols.
“The election of a crypto-friendly administration is expected to foster a more favourable regulatory environment for digital assets,” Variola continued. “This includes potential legislative changes, increased institutional adoption, and the introduction of bitcoin-backed financial products. Such developments could enhance the integration of digital assets into the global financial system, potentially leading to increased market stability, adoption and growth.”
Phemex expects two particular investment themes to drive strategies through 2025. The first is a bifurcation in the blockchain ecosystem. On one hand, institutional chains such as Ethereum will likely focus on real-world asset integration and centralized infrastructure. On the other, retail-oriented chains such as Sui and the previously mentioned Solana may flourish, driven by their appeal to meme enthusiasts and casual traders.
Hybrids plug in
Lastly, Phemex predicts that its own recipe for success will serve as a model for others in the crypto exchange space.
Exchanges will increasingly move operations on-chain, according to Variola, and platforms will expand their user bases as a result.
CEXes won’t go away, though. A large segment of the market favors them for their high liquidity, user-friendly interfaces, margin trading capabilities and other features. They attract both beginners and institutional investors by providing customer support and adhering to know-your-client and anti-money laundering regulations. Still, Phemex sees an inevitable drift toward DeFi, although not a full-on adoption of it.
“We’ve seen this need early on and established ourselves as a hybrid exchange back in 2022,” Variola recounted. “As hybrid platforms continue to grow, Phemex will remain committed to expanding our on-chain offerings, allowing users to enjoy the benefits of decentralized governance combined with centralized efficiency.”
As the year winds down, Phemex is celebrating the holiday season with an exciting reward. The Phemex Cryptomas Event – the exchange’s holiday campaign – is now live, offering users a chance to enjoy the island of Bali and win a grand prize of 4 ETH.
Source: CoinDesk
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