Author: DWF Ventures; Translation: Jinse Chajing Xiaozou
2024 will be a pivotal year for the crypto world—both in terms of institutional participation and the growth of on-chain activities.
Let's summarize this year with the following data.
1. Healthy Growth
With the total market cap of crypto exceeding the historical high of 2021, the market has rebounded significantly, reaching $3.7 trillion. Not only is liquidity increasing, but the number of users and trading volume are also rising, indicating healthy growth and utilization.
2. ETF & Institutional Capital Inflows
This year's major catalysts include the launch of the BTC ETF in January and the ETH ETF in July. Besides having a lower barrier to entry, these inflows indicate that traditional investors have a significant interest in crypto assets, and this interest continues to grow. The total on-chain holdings of the Bitcoin ETF have also increased to 1.1 million BTC, doubling since the beginning of this year.
Many large companies (including non-crypto companies) are also increasing their exposure to Bitcoin and other crypto assets. Saylor's MicroStrategy has continuously doubled its Bitcoin holdings, which have now increased to 439,000 BTC.
3. Stablecoin Opportunities
Stablecoins are crucial for cryptocurrencies because they enable seamless entry and exit of assets and transactions, and are often seen as indicators of new capital inflows. The total supply of stablecoins has reached 187.5 billion, setting a new historical high. The number of transactions and trading volume have also increased by over 30-40%. Notably, trading volume has remained stable in a volatile market environment, indicating strong use cases beyond trading.
TRON DAO, Ethereum Foundation, BNB Chain, and Solana are handling the largest on-chain trading volume of stablecoins. Layer 2 solutions like Arbitrum and Base are also experiencing significant growth in USDC trading volume/user counts. The activity of centralized exchanges (CEXs) has surpassed that of decentralized exchanges (DEXs), although this trend may be shifting.
Recently launched BlackRock and Ethena Labs USDtb allow traditional funds easy access to DeFi while keeping funds secure. As access becomes regulated, we can expect more capital to flow on-chain.
Over the past year, the market size of stablecoins in Latin America and Africa has grown by over 40-50%. In these regions, the stablecoin market is flourishing due to strong demand for trustless currency hedging. More investments are flowing into these areas, such as Tether launching educational programs and Circle expanding its payment business into Latin America. Therefore, we expect significant growth in this sector in the upcoming year.
4. On-Chain Activity
Layer 2 solutions such as Base, Arbitrum, and Optimism, as well as non-EVM chains like Solana, have the highest net inflows, as users are shifting to chains that are cheaper and faster. The fastest-growing sectors are perpetual contracts and decentralized exchanges, with trading volumes increasing by over 150% and TVL growing 2-3 times.
pump.fun ignited the meme coin craze, significantly boosting trading volume, benefiting Raydium and creating a trickle-down effect on other ecosystems. This also led to the growth of trading bots, such as Photon and BONKbot, which continue to increase in usage, ranking among the highest revenue-generating protocols in the crypto space.
Considering that only 5-10% of cryptocurrency holders actively participate in on-chain trading, there is still immense room for growth in on-chain activities.
Mobile-friendly interfaces, such as the TON mini app, have proven successful, attracting over 50 million users to the TON chain. Therefore, user experience and retention mechanisms will be key to the protocol's advancement.
5. Conclusion
2024 is set to be an incredible year, and we believe that in 2025, the crypto market will experience strong tailwinds.
