Author: Carol, PANews
In 2024, Bitcoin broke through the $100,000 mark in an upward trend, establishing a new milestone for the development of digital assets. The keywords 'ETF approval', 'halving', and 'U.S. elections' drove the market changes throughout the year. What specific changes in the trading market, on-chain fundamentals, and application levels of Bitcoin are noteworthy behind this overall picture? How might these changes impact development in 2025?
According to PANews data column PAData, a multi-dimensional perspective on Bitcoin's changes in 2024 reveals that overall:
Trading market:
Bitcoin's annual increase reached 131.83%, less than last year's 158.06%.
The main driving force behind Bitcoin's price increase this year has been the gradually friendly and loose regulatory environment, rather than simply supply scarcity (halving).
This year, long-term holders have better profit levels, and long-term holders tend to reduce risk exposure earlier when the market approaches overheating.
This year's trading market has seen simultaneous increases in both volume and price. The average daily trading volume for the year was approximately $38.354 billion, an increase of 102.72% compared to last year. The total outstanding amount at the end of the year was approximately $30.948 billion, representing a year-on-year increase of 195.79%.
The total holdings of Bitcoin ETFs reached 11.2006 million BTC, showing strong annual growth of 80.87%.
On-chain fundamentals:
This year, Bitcoin's average number of active on-chain addresses was approximately 780,300, down 17.75% from last year. This may indicate that, in a clear upward trend, long-term holding strategies prevail, and the market may transition to a low liquidity growth phase led by institutional investors.
The total on-chain transaction amount for the year is approximately 49.6658 million BTC, equivalent to 328 billion USD. The total amount of coin-based transactions has slightly increased by 4.67% compared to last year.
The number of addresses with a balance between 100 and 1000 BTC has increased by 11.21%, indicating a shift in the trend of small balances in recent years, with a trend towards larger balances this year.
Application layer:
At the end of the year, Bitcoin's TVL was approximately $6.755 billion, with an annual increase of 2117.11%, of which Babylon's TVL accounted for 82.37%.
Staking has replaced payment (Lightning Network) as the mainstream application of Bitcoin.
Outlook for next year:
The hawkish interest rate cuts against the backdrop of QT have tightened both short- and long-term liquidity, constituting the main pressure for Bitcoin's continued rise next year.
This year's increase is related to the favorable expectations of the regulatory environment after the elections, and if next year's regulatory environment can be further loosened, it will be beneficial for Bitcoin's continued rise.
BTCFi may further develop, but for its applicability to become the main logic for Bitcoin's pricing, continuous expansion of application scale needs to be achieved first, which may still be challenging next year.
Trading market: Bitcoin's price increased by over 131% throughout the year, and ETF holdings surpassed 1.120 million BTC.
In 2024, the price of Bitcoin rose from $42,208 at the beginning of the year to $97,851 at the end of the year (as of December 20), achieving an annual increase of 131.83%. On December 17, it strongly broke through the $100,000 mark, setting a historical record of $106,074, with the highest annual increase reaching approximately 151.31%. Although there was a slight pullback at the end of the year, the price remained at historical highs.
From an overall trend perspective, this year, Bitcoin has experienced three phases: 'upward - consolidation - upward', which corresponds to the three major events: 'ETF approval', '4th halving', and 'U.S. presidential election'. Overall, this year's logic for Bitcoin's rise cannot be attributed solely to supply scarcity brought about by halving, or at least it is not entirely based on the traditional logic of supply scarcity. The approval of ETFs and the outcome of the U.S. election indicate that the main driving force behind Bitcoin's price increase is the gradually friendly and loose regulatory environment, which has attracted substantial institutional capital into the market, injecting liquidity and further propelling the price upwards.
According to glassnode data, the percentage of profitable chips reached 90.16% at the end of the year (as of December 20), at a historical high. From a profit strategy perspective, LTH-SOPR/STH-SOPR (long-term holders' output profit ratio/short-term holders' output profit ratio) rose from 1.55 at the beginning of the year to 2.11 at the end of the year, with an annual average of 2.16. Especially after late November, this ratio was greater than 3 multiple times, with a peak exceeding 4. A value greater than 1 indicates that long-term holders' profit levels are higher than those of short-term holders, and the larger the value, the higher the profit level of long-term holders.
Overall, this year, long-term holders have better profit levels, and this advantage becomes more apparent as the year ends. Additionally, analyzing the price of Bitcoin, we can see that the profit peak for long-term holders appears earlier than the price peak, indicating that long-term holders tend to reduce risk exposure earlier when the market approaches overheating.
This year, Bitcoin's trading market has seen simultaneous increases in both volume and price, with steadily rising prices accompanied by increasing trading volumes.
According to statistics, Bitcoin's average daily trading volume for the year was approximately $38.354 billion, with the highest single-day trading volume exceeding $190.4 billion. The trading peak occurred after November, with average daily trading volumes in November and December reaching $74.897 billion and $96.543 billion respectively, significantly surpassing the previous monthly average of $30.8 billion.
The futures market is equally active. The total outstanding amount increased from $10.915 billion at the beginning of the year to $30.948 billion at the end of the year, reflecting a significant annual growth of 183.53%.
As one of the main factors driving Bitcoin's price increase, the asset holdings of various ETFs have been consistently monitored this year. According to statistics, the total holdings of Bitcoin ETFs increased from 619,500 BTC at the start to 11.2006 million BTC by the end of the year, showing a strong annual growth of 80.87%. The rapid growth period coincided with the periods of rapid price increases, both occurring in February-March and after November.
Currently, BlackRock's holdings have reached 524,500 BTC, making it the largest ETF by size. In addition, Grayscale and Fidelity also have significant holdings of 210,300 BTC and 209,900 BTC respectively. Other ETFs have relatively lower holdings, mostly below 50,000 BTC.
In addition to ETFs, more and more listed companies have become buyers of Bitcoin, which may bring more possibilities to the market. According to statistics, the company with the most holdings is MicroStrategy, which holds a total of 439,000 BTC, exceeding the holdings of many ETFs. Additionally, leading companies in the North American Bitcoin mining sector, Marathon Digital Holdings and Riot Platforms, also have relatively large holdings of over 40,000 BTC and 10,000 BTC respectively.
On-chain fundamentals: active addresses decreased, large addresses increased, and total transaction volume rose to 49.66 million BTC.
This year, the average number of active on-chain addresses for Bitcoin was approximately 780,300, down 17.75% from last year's 948,700, showing a significant decline. Among them, the average number of active addresses from January to April and November to December was above 800,000, while the average number from May to October was below 720,000.
Although this is generally consistent with the price trend, it is noteworthy that in the context of Bitcoin's price reaching a historical high, the average number of active addresses decreased throughout the year, and the highest active address count in a single month also decreased. This change may imply that, in the face of a clear upward trend, long-term holding strategies prevail, and the market may shift from a high-frequency trading phase dominated by retail investors to a low liquidity growth phase led by institutional investors.
This year, the total number of on-chain Bitcoin transactions exceeded 188 million, an increase of about 29.66% compared to last year, marking two consecutive years of growth. The average monthly cumulative transaction count is 15.671 million, with October having the highest transaction count, reaching 20.4774 million. Notably, during the price consolidation phase, the number of on-chain transactions was actually higher. This may be influenced by various factors such as short-term arbitrage trading, address consolidation, and contract liquidation.
The total on-chain transaction amount for the year is approximately 49.6658 million BTC, equivalent to 328 billion USD. The total amount of coin-based transactions has slightly increased by 4.67%. This year, the average monthly cumulative transaction amount is approximately 4.1388 million BTC, or about 273.451 billion USD.
Overall, the relative change trend of transaction counts and total transaction volume continues the differentiated pattern from last year, where the transaction count for Bitcoin grew, while the total transaction volume declined compared to 2022 and earlier. This is mainly due to the high coin price environment and the expansion of the application layer, such as the explosion of the Ordinals protocol last year.
From the distribution structure of address balances, the number of addresses with balances between 0.001 to 0.01 BTC, 0.01 to 0.1 BTC, and 0.1 to 1 BTC remains the highest, currently accounting for 97.24% of the total address count. However, this year, the number of addresses in these three balance ranges has shown a declining trend, decreasing by 3.94%, 2.74%, and 2.62% respectively. Among all balance ranges, only the number of addresses with balances between 100 to 1000 BTC and 1000 to 10000 BTC increased by 11.21% and 1.68% respectively. This indicates a shift in the trend of small balances in recent years, with a trend towards larger balances this year, possibly related to address consolidation and institutional capital accumulation.
Application layer: From inscriptions to BTCFi, TVL surged 2117% throughout the year.
This year, Bitcoin's applications shifted focus from inscriptions to BTCFi, moving from asset issuance to asset usability. According to DeFiLlama data, Bitcoin DeFi's TVL surged from $305 million at the beginning of the year to $6.755 billion at the end of the year, with an annual increase of 2117.11%, and the highest TVL at one point exceeded $730 million. Currently, Bitcoin has become the fourth highest blockchain in terms of TVL, following Ethereum, Solana, and Tron.
From the type of protocols, this year the largest protocol on Bitcoin has shifted from the payment sector Lightning Network to the staking sector Babylon. As of December 20, Babylon's TVL has reached $5.564 billion, accounting for 82.37% of the total. According to Dune (@pyor_xyz), as of December 23, the number of independent addresses for Babylon has exceeded 140,000, with a staking address growth rate of 100% in the last 7 days.
The rapid development of Babylon has driven a series of staking and re-staking protocols. Currently, apart from Babylon, there are 10 protocols on the Bitcoin chain: Lombard, SolvBTC LSTs, exSat Credit Staking, Chakra, Lorenzo, uniBTC Restaked, alloBTC, pSTAKE BTC, b14g, and LISA BTC LST. These staking protocols may bring network effects to Bitcoin applications and further promote their expansion.
Outlook for next year
Bitcoin has already experienced a substantial rise this year. Looking ahead to 2025, Bitcoin may enter a period of adjustment early in the year, with subsequent performance continuing to be influenced by macroeconomic conditions, regulatory environments, and industry developments, containing opportunities amidst fluctuations.
From a macroeconomic perspective, the Federal Reserve has turned hawkish at the end of this year, and more importantly, the background of quantitative tightening (QT) policy remains unchanged, meaning that long-term liquidity is still tightening under inflation control targets, and short-term liquidity growth may also slow down. Therefore, Bitcoin faces certain pressures to continue rising next year.
However, from this year's price trends, Bitcoin's sensitivity to changes in the regulatory environment is higher. The outcome of the U.S. presidential election directly stimulated Bitcoin's price to break through $100,000. If there can be greater loosening of regulatory policies next year, it may provide momentum for Bitcoin's continued rise.
From the perspective of industry development, the rapid rise of BTCFi has pushed Bitcoin into a new stage of asset application, and staking protocols and others may facilitate the network effects of these assets, further providing value support for Bitcoin's price. However, if Bitcoin's price is highly influenced by its applicability, this will represent a new logic for price increases that differs from supply scarcity or digital gold, and it will require a significant scale of application, which may be difficult to achieve in the short term.
