Article reprinted from: Carol
Author: Carol, PANews
In 2024, Bitcoin broke through the 100,000 USD mark in an upward trend, establishing a new milestone for the development of digital assets. The three keywords 'ETF approval', 'halving', and 'US presidential election' have driven the market changes throughout the year for Bitcoin. In this overall picture, what specific changes in the trading market, on-chain fundamentals, and application layers of Bitcoin are worth noting? What potential impact do these changes have on development in 2025?
PANews data column PAData has analyzed the changes in Bitcoin in 2024 from multiple dimensions. Overall:
Trading market:
Bitcoin's annual increase reached 131.83%, which is lower than last year's 158.06%.
This year's main driving force behind Bitcoin's price increase has been the gradual friendliness and looseness of the regulatory environment, rather than mere supply scarcity (halving).
This year the profit level of long-term holders has been better, and long-term holders tend to reduce risk exposure earlier when the market approaches overheating.
This year's trading market has seen both price and volume increase. The average daily trading volume for the year is approximately 38.354 billion USD, an increase of 102.72% compared to last year. The total open interest at the end of the year is approximately 30.948 billion USD, an increase of 195.79% compared to the end of last year.
The total holdings of Bitcoin ETFs have reached 11.2006 million BTC, with a strong annual growth of 80.87%.
On-chain fundamentals:
The average number of active on-chain Bitcoin addresses this year is approximately 780,300, a decrease of 17.75% compared to last year. This may indicate that in a clear upward trend, long-term holding strategies prevail, and the market may shift to a low liquidity growth phase dominated by institutional investors.
The total on-chain transaction volume for the year is approximately 49.6658 million BTC, equivalent to 3.28 trillion USD. The total transaction volume in coin-based trading has slightly increased by 4.67% compared to last year.
The number of addresses with balances between 100 and 1000 BTC has increased by 11.21%, indicating a shift in the trend of small balances in recent years towards larger balances this year.
Application layer:
At the end of the year, Bitcoin's TVL is approximately 6.755 billion USD, with an annual increase of 2117.11%, of which Babylon's TVL accounts for 82.37%.
Staking has replaced payment (Lightning Network) as the mainstream application of Bitcoin.
Outlook for next year:
The tightening of both short and long-term liquidity due to hawkish rate cuts under QT presents a major pressure for Bitcoin to continue rising next year.
This year's rise is related to the expected friendliness of the regulatory environment after the election. If the regulatory environment can be further relaxed next year, it will be beneficial for Bitcoin's continued rise.
BTCFi may further develop, but for application to become the main logic of Bitcoin pricing, it still needs to achieve a sustained expansion of application scale, which may still be difficult next year.
Trading market: annual price increase exceeds 131%, ETF holdings exceed 1.12 million BTC
In 2024, Bitcoin's price surged from 42,208 USD at the beginning of the year to 97,851 USD 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 USD mark, setting a historical record of 106,074 USD, with the annual maximum increase being approximately 151.31%. Although there was a slight adjustment at the end of the year, the price still operates at a historically high level.
From an overall trend perspective, this year, Bitcoin experienced three phases: 'rise - consolidation - rise', which corresponds closely to the three major events of 'ETF approval', 'fourth halving', and 'US presidential election'. Overall, the logic for Bitcoin's rise this year is not solely attributed to the supply scarcity brought by halving, or at least not entirely based on the traditional logic of supply scarcity. The approval of ETFs and the results of the US election indicate that the main driving force behind the rise in Bitcoin's price has been the gradual friendliness and looseness of the regulatory environment, which has attracted a large influx of institutional funds into the market, injecting liquidity and further propelling prices upward.
According to glassnode data, the proportion of profitable chips at the end of the year has reached 90.16% (as of December 20), which is at a historical high. From the perspective of profit strategies, LTH-SOPR/STH-SOPR (the output profit ratio of long-term holders / the output profit ratio of short-term holders) has risen 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 has repeatedly exceeded 3, peaking above 4. A value greater than 1 indicates that the profit level of long-term holders is higher than that of short-term holders, and the larger the value, the higher the profit level of long-term holders.
Overall, this year the profit level of long-term holders has been better, and this advantage becomes more evident towards the end of the year. Additionally, by integrating the price of coins, it can be seen that the high point of long-term holders' profit level appears earlier than the high point of the coin price, indicating that long-term holders tend to reduce risk exposure earlier when the market approaches overheating.
This year, Bitcoin's trading market has seen both price and volume rise steadily.
According to statistics, Bitcoin's average daily trading volume for the year is approximately 38.354 billion USD, with the highest single-day trading volume exceeding 190.4 billion USD. The trading peak of the year occurred after November, with average daily trading volumes in November and December being 74.897 billion USD and 96.543 billion USD respectively, significantly exceeding the previous monthly average of 30.8 billion USD.
The futures market is also active. The total open interest has grown from 10.915 billion USD at the beginning of the year to 30.948 billion USD at the end of the year, an annual increase of 183.53%, with a significant rise.
As one of the main factors driving Bitcoin's price rise, the asset holdings of various ETFs have been a focus of attention this year. According to statistics, the total holdings of Bitcoin ETFs have risen from 619,500 BTC at the beginning to 11.2006 million BTC at the end of the year, showing a strong annual growth of 80.87%. The rapid growth period coincides with the period of rapid price increases, mainly in February-March and after November.
Currently, BlackRock's holdings have reached 524,500 BTC, making it the largest among all ETFs. Additionally, Grayscale and Fidelity also hold significant amounts, at 210,300 BTC and 209,900 BTC respectively. Holdings of other ETFs are relatively low, mostly below 50,000 BTC.
In addition to ETFs, an increasing number of listed companies have also become buyers of Bitcoin, potentially bringing more possibilities to the market. According to statistics, the company with the largest holdings is MicroStrategy, which holds a total of 439,000 BTC, exceeding many ETF holdings. Additionally, leading companies in the North American Bitcoin mining sector, such as Marathon Digital Holdings and Riot Platforms, also hold relatively large amounts, exceeding 40,000 BTC and 10,000 BTC respectively.
On-chain fundamentals: decline in active addresses, increase in large addresses, total transaction volume rising to 49.66 million BTC
The average number of active on-chain Bitcoin addresses per month this year is approximately 780,300, a decrease of 17.75% compared to last year's 948,700, showing a significant decline. Among these, the average number of active addresses from January to April and November to December was above 800,000, while from May to October, it was below 720,000.
Although this is basically consistent with the price trend, it is worth noting that against the backdrop of Bitcoin's price reaching a historical high, the average number of active addresses per month has decreased, and the highest number of active addresses in a single month has also declined. This change may imply that in a clear upward trend, long-term holding strategies prevail, and the market may shift from a phase dominated by general investors' high-frequency trading to a low liquidity growth phase dominated by institutional investors.
This year, Bitcoin's total cumulative on-chain transaction count exceeded 188 million, an increase of approximately 29.66% compared to last year, marking two consecutive years of growth. The monthly average cumulative transaction count is 15.671 million, with October recording the highest transaction count at 20.4774 million. It is noteworthy that during the price consolidation phase, the on-chain transaction count was actually higher. This may be influenced by many factors, such as short-term arbitrage trading, address consolidation, contract liquidation, and more.
The total on-chain transaction volume for the year is approximately 49.6658 million BTC, equivalent to 3.28 trillion USD. The total transaction volume in coin-based trading has slightly increased by 4.67% compared to last year. This year's average monthly cumulative transaction volume is approximately 4.1388 million BTC, equivalent to about 273.451 billion USD.
Overall, the relative trend of changes in transaction frequency and total transaction volume has continued the differentiated pattern of last year, that is, compared to 2022 and earlier, the number of Bitcoin transactions has increased while the total transaction volume has declined. This is mainly due to the high price environment and the expansion of application layers, such as last year's Ordinals protocol explosion.
From the distribution structure of address balances, the number of addresses with balances between 0.001 and 0.01 BTC, 0.01 and 0.1 BTC, and 0.1 and 1 BTC is still the most numerous, currently accounting for 97.24% of the total number of addresses. However, this year, the number of addresses in these three balance ranges has shown a downward trend, with declines of 3.94%, 2.74%, and 2.62% respectively. Among all balance ranges, only the number of addresses with balances between 100 and 1000 BTC and between 1000 and 10000 BTC has increased by 11.21% and 1.68% respectively. This indicates that the trend of small balances in addresses in recent years has changed, and this year there has been a trend towards larger balances, which may be related to address consolidation and institutional capital accumulation.
Application layer: From inscriptions to BTCFi, TVL has surged 2117% throughout the year.
This year, Bitcoin's application focus shifted from inscriptions to BTCFi, moving from asset issuance to asset usability. According to DeFiLlama data, the TVL of Bitcoin DeFi surged from 305 million USD at the beginning of the year to 6.755 billion USD at the end of the year, with an annual increase of 2117.11%, and the highest TVL once exceeded 7.3 billion USD. Currently, Bitcoin has become the fourth blockchain in terms of TVL, following Ethereum, Solana, and Tron.
From the type of protocol, this year the largest protocol on Bitcoin has shifted from the payment domain of the Lightning Network to the staking domain of Babylon. As of December 20, Babylon's TVL has reached 5.564 billion USD, accounting for 82.37% of the total. According to Dune (@pyor_xyz) data, as of December 23, the number of independent addresses in 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 restaking protocols. Currently, in addition to Babylon, there are 10 other protocols on the Bitcoin chain, including 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's application, further promoting its application expansion.
Outlook for next year
Bitcoin has already experienced sufficient upward movement this year. Looking ahead to 2025, Bitcoin may enter a period of adjustment at the beginning of the year, and its subsequent performance will continue to be influenced by the macroeconomic environment, regulatory environment, and industry developments, with opportunities embedded in the volatility.
From a macroeconomic perspective, the Federal Reserve has shifted to a hawkish rate cut at the end of this year, and more importantly, the background of quantitative tightening (QT) policy remains unchanged, indicating that under the goal of controlling inflation, long-term liquidity remains tight, and short-term liquidity growth may also slow. Therefore, Bitcoin faces some pressure to continue rising next year.
However, from this year's Bitcoin price trend, its sensitivity to changes in the regulatory environment is higher. The results of the US presidential election directly stimulated Bitcoin's price to break above 100,000 USD. If there is more substantial loosening of regulatory policies next year, it may provide momentum for Bitcoin to continue rising.
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 other protocols may facilitate the network effect of these assets, further providing value support for Bitcoin's price. However, if Bitcoin's price is highly influenced by application, this will represent a new logic of price increase distinct from supply scarcity or digital gold, and it has high requirements for the scalability of applications, which may be difficult to achieve in the short term.
