Grayscale Unveils Top 20 Altcoin Picks for Q1 2025: A Closer Look at the New Entrants

Grayscale Research has updated its top 20 altcoin list for the first quarter of 2025, introducing six new cryptocurrencies: Hyperliquid (HYPE), Ethena (ENA), Virtual Protocol (VIRTUAL), Jupiter (JUP), Jito (JTO), and Grass (GRASS). This reshuffling underscores the evolving landscape of the crypto market, influenced by themes such as the U.S. election’s regulatory impact on DeFi and staking, advancements in decentralized AI, and the burgeoning Solana ecosystem.

• New entries: Hyperliquid, Ethena, Virtual Protocol, Jupiter, Jito, Grass
• Themes: U.S. election, decentralized AI, Solana’s growth
• Competition: Ethereum faces pressure from Solana, others

The U.S. election looms large over the crypto world, with potential regulatory changes that could either propel or hinder DeFi and staking. Grayscale’s list reflects these uncertainties, betting on a future where these sectors might flourish. Decentralized AI, another driving force, sees new players like Virtual Protocol and Grass stepping into the ring, aiming to revolutionize how AI and blockchain interact.

Hyperliquid (HYPE) introduces a Layer 1 blockchain, which is the foundational blockchain that directly processes transactions and smart contracts, alongside a decentralized perpetual futures exchange. This positions Hyperliquid as a beacon of innovation in the DeFi trading landscape. Ethena (ENA) brings to the table USDe, a stablecoin designed to maintain its value through strategic investments in major cryptocurrencies like Bitcoin and Ethereum, showcasing a fresh approach to digital asset stability.

Virtual Protocol (VIRTUAL) ventures into the realm of tokenized AI agents on Ethereum’s Layer 2 network, Base. This could redefine how AI and blockchain technology collaborate, opening new avenues for decentralized applications. Jupiter (JUP), as the leading decentralized exchange (DEX) aggregator on Solana, holds the highest Total Value Locked (TVL), a testament to its dominance in the ecosystem. Jito (JTO), another Solana standout, has generated over $550 million in fee revenue in 2024, highlighting the lucrative potential of liquid staking protocols.

Grass (GRASS) offers a unique proposition by rewarding users for sharing their internet bandwidth through a data-sharing platform. This could be a game-changer for decentralized data networks and AI training, providing a new model for data monetization.

Grayscale’s decision to remove Celo (CELO) from the list reflects a strategic focus on expected risk-adjusted returns for the upcoming quarter. This move is a stark reminder of the crypto market’s fluidity, where today’s leaders can quickly fall out of favor.

The competition among smart contract platforms remains fierce, with Ethereum facing challenges from Solana and The Open Network. These platforms strive to solve the blockchain trilemma—balancing scalability, security, and decentralization—through innovative solutions. Grayscale’s inclusion of Ethereum, Solana, Sui, and Optimism in its top 20 list underscores their potential to generate sustainable fee revenues and deliver long-term ecosystem value.

The crypto market’s surge in Q4 2024, reaching a total industry market capitalization of $3 trillion, sets the stage for these updates. A more crypto-friendly Congress post-election could further fuel the growth of DeFi and staking, areas central to Grayscale’s thematic focus.

The Solana ecosystem continues to expand, with projects like Io.net, Render Network, and Fastlane leveraging its high-speed and low-cost infrastructure for AI and decentralized computing applications. This growth supports the inclusion of Solana-based projects like Jupiter and Jito, signaling bright prospects ahead.

While Bitcoin maximalists might argue that these altcoins are mere distractions, they embody the disruptive spirit that e/acc proponents celebrate. Yet, it’s crucial to acknowledge the potential risks. Hyperliquid’s perpetual futures exchange, for instance, introduces the volatility of high-leverage trading, a double-edged sword that can amplify both gains and losses.

The inclusion of Ethena might reflect a bet on a more favorable regulatory environment post-election, potentially boosting stablecoin adoption. However, the stability of USDe hinges on the performance of its underlying assets, Bitcoin and Ethereum, which are notorious for their price swings. Jito’s impressive fee revenue in 2024 highlights the potential of liquid staking, but investors should remain cautious of the inherent volatility in the staking market.

Key Questions and Takeaways

• What are the new additions to Grayscale’s top 20 altcoin list for Q1 2025?
  The new additions are Hyperliquid (HYPE), Ethena (ENA), Virtual Protocol (VIRTUAL), Jupiter (JUP), Jito (JTO), and Grass (GRASS).
• What themes influenced Grayscale’s selection of these altcoins?
  The themes include the U.S. election’s regulatory implications on DeFi and staking, breakthroughs in decentralized AI technologies, and the growth of the Solana ecosystem.
• What unique functionalities do these new altcoins offer?
  Hyperliquid operates a Layer 1 blockchain and a decentralized exchange for perpetual futures. Ethena introduced USDe, a stablecoin backed by hedged positions in BTC and ETH. Virtual Protocol enables tokenized AI agents on Base. Jupiter is the leading DEX aggregator on Solana. Jito is a liquid staking protocol generating significant fee revenue. Grass is a data-sharing platform compensating users for sharing internet bandwidth.
• How does Grayscale view the competition among smart contract platforms?
  Grayscale highlights intensifying competition, with Ethereum facing pressure from Solana and The Open Network. They emphasize the importance of addressing the blockchain trilemma and generating sustainable fee revenues.
• Why were certain tokens like Celo removed from Grayscale’s list?
  Celo was removed as Grayscale’s updated selection better reflects the expected risk-adjusted returns for the upcoming quarter.
• Which smart contract platforms did Grayscale include in its top 20 list for Q1 2025?
  Ethereum, Solana, Sui, and Optimism were included for their potential in generating sustainable fee revenues and delivering long-term ecosystem value.
• What is the significance of fee revenue in the context of these altcoins?
  Fee revenue is critical in driving the value of smart contract platform tokens, as it allows projects to generate sustainable revenue while delivering value to their ecosystems.

“The list highlights cryptocurrencies the company believes demonstrate strong potential for the upcoming quarter.”

“These platforms are gaining traction by addressing the ‘blockchain trilemma,’ balancing scalability, security, and decentralization with innovative solutions.”

“According to the asset manager, these projects can generate sustainable fee revenues while delivering long-term value to their ecosystems.”

At “Let’s Talk, Bitcoin,” we remain committed to providing balanced insights into the dynamic world of cryptocurrency. While these new altcoins offer exciting possibilities, we encourage our readers to approach the crypto market with a healthy dose of skepticism and due diligence. Stay tuned as we continue to explore the future of finance, one block at a time.