The year 2024 marks a significant milestone in the development of the crypto market, with unprecedented volatility, historic milestones, and emerging trends, as noted in Coin Metrics' analysis report titled 'State of the Network,' conducted by Tanay Ved.
The transformation of cryptocurrency in 2024
The crypto industry has experienced strong growth in 2024, thanks to the launch of spot Bitcoin ETFs in January. These ETFs have attracted widespread attention, accumulating over $105 billion in assets under management, accounting for 5.6% of the current total Bitcoin supply. The success of these funds helped Bitcoin reach a record high of $73,000 in the first quarter, setting the stage for strong growth throughout the year.
AUM of Bitcoin ETF | Source: Coin Metrics
Although the market went through a correction phase in the middle of the year, optimism returned towards the end of the year, as Bitcoin surpassed the $100,000 mark following the US presidential election. This milestone was reinforced by strong acceptance from institutions, a pro-crypto administration, along with a cycle of interest rate cuts, creating favorable conditions for the growth of the digital asset market.
Monthly returns of crypto assets in 2024 | Source: Coin Metrics
Bitcoin is the standout cryptocurrency in 2024, recording an impressive 125% increase. Other coins like Solana (SOL) and Ethereum (ETH) also achieved significant gains of 78% and 44%, respectively. Memecoins like Dogecoin (DOGE) and Pepe (PEPE) drew retail community attention, while older coins like XRP and Stellar (XLM) made surprising comebacks.
Institutional adoption of Bitcoin has propelled the market higher, but memecoins have also attracted significant attention, driving upward trends at the extremes of the risk spectrum. In March, spot trading volume for memecoins surged to $13 billion, with their total market capitalization reaching $60 billion.
While established large-cap memecoins witnessed gains, much of the activity stemmed from a surge in new memecoins on Solana. The pump.fun platform became the center for this boom in Q1, allowing the creation of over 75,000 tokens and pushing the number of active wallets on Solana to a record 2.06 million. Although this frenzy has subsided, memecoins made a comeback at the end of the year, with volumes exceeding $23 billion in November, partly driven by new AI agent platforms like Virtuals on Base.
Memecoin trading volume | Source: Coin Metrics
The market is also heavily influenced by thematic trends, particularly the emergence of new layer 1 (L1) platforms like Sui (SUI) and decentralized finance (DeFi) protocols like Aave, which have attracted significant interest. These trends reflect a shift in investor preferences, strongly influenced by market stimuli and technological developments.
"Alternative L1 platforms like Sui (SUI) and blue-chip DeFi protocols like Aave attracted attention in 2024, reflecting investor sentiment and a shift towards dominant trends," Ved explained.
The participation of institutions: A new driving force in the crypto market
The participation of large institutions is a key factor driving the market in 2024, particularly through the increasingly popular adoption of Ethereum's layer 2 (L2) solutions and the implementation of Ethereum Improvement Proposal EIP-4844. This improvement, known as 'blobs,' has helped reduce transaction costs and enhance Ethereum's scalability. However, the reduction in L1 transaction fees has also led to a decrease in accumulated value for investors holding ETH, creating new challenges for the network's economic model.
Additionally, the Bitcoin halving event in April reduced the amount of BTC issued per day to 450 BTC, prompting miners to innovate with more efficient hardware and expand operations into AI data center investment projects. Stablecoins continue to assert their indispensable role in the global financial ecosystem, with total supply surpassing $210 billion.
Tether (USDT) and USD Coin (USDC) continue to maintain their leading positions, while the tokenized stock market is also attracting significant attention, especially through Blackrock's launch of the BUIDL fund. These developments highlight the increasingly expanding utility of stablecoins in the areas of payments, savings, and liquidity provision.
2024 stablecoin statistics | Source: Coin Metrics
Changes in the regulatory landscape and crypto policy
The regulatory landscape in 2024 has also seen significant changes, highlighted by the European Union implementing specific stablecoin requirements under the Markets in Crypto Assets (MiCA) regulation, thereby reshaping the Euro-pegged stablecoin market.
The 2024 US presidential election has spurred the transformation of the cryptocurrency market. Pro-crypto policies from the administration have increased confidence in the market, helping Bitcoin's price surpass the $100,000 mark and driving robust growth in prediction platforms and smart contracts.
However, uncertainties still exist, particularly regarding the timing and implementation of pro-crypto policies. As the industry moves into 2025, stakeholders continue to maintain a cautiously optimistic attitude, awaiting clarity on the regulatory framework and the global economic situation.
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