The three key phrases 'ETF Approval', 'Halving', and 'U.S. Presidential Election' have driven the market changes of Bitcoin throughout the year. Behind this overall picture, what specific changes in the trading market, on-chain fundamentals, and application levels of Bitcoin are worth noting? What potential impacts do these changes have on the development of 2025?
Article Author: Carol, PANews
Source: 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 three keywords 'ETF Approval', 'Halving', and 'U.S. Presidential Election' drove Bitcoin's market changes throughout the year. Behind this overall picture, what specific changes in the trading market, on-chain fundamentals, and application levels of Bitcoin are worth noting? What potential impacts do these changes have on the development of 2025?
This article provides a multi-dimensional perspective on the changes in Bitcoin in 2024. Overall:
Trading Market:
· Bitcoin's annual increase reached 131.83%, which is lower than last year's 158.06%.
· The main driving force behind the increase in Bitcoin prices this year is the gradually friendly and loose regulatory environment, rather than purely supply scarcity (halving).
· This year, long-term holders have seen better profit levels, and they tend to reduce risk exposure earlier when the market approaches overheating.
· This year's trading market experienced a simultaneous increase in 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 open interest at the end of the year was approximately $30.948 billion, an increase of 195.79% compared to the end of last year.
· The total holdings of Bitcoin ETFs reached 11.2006 million BTC, with strong annual growth of 80.87%.
On-chain fundamentals:
· The average number of active addresses on Bitcoin's chain this year was approximately 780,300, a decrease of 17.75% compared to last year. This may indicate that under a clear upward trend, long-term holding strategies dominate, and the market may shift to a phase of low liquidity growth led by institutional investors.
· The cumulative on-chain trading volume for the year was approximately 49.6658 million BTC, equivalent to $3.28 trillion. The total trading volume in coin terms increased slightly by 4.67% compared to last year.
· The number of addresses holding between 100 to 1000 BTC increased by 11.21%, indicating a change in the trend towards smaller address balances in recent years, with a shift towards larger balances this year.
Application Level:
· The total value locked (TVL) in Bitcoin at the end of the year was approximately $6.755 billion, with an annual increase of 2117.11%, of which Babylon's TVL accounted for 82.37%.
· Staking has replaced payments (Lightning Network) as the mainstream application of Bitcoin.
Outlook for Next Year:
· The hawkish rate cuts under the QT background have tightened both long-term and short-term liquidity, constituting the main pressure for Bitcoin to continue rising next year.
· This year's increase is related to the favorable expectations of the regulatory environment following the elections. If next year's regulatory environment can further loosen, it will be beneficial for the continued rise of Bitcoin.
· BTCFi may further develop, but if applicability is to become the main logic for Bitcoin pricing, it still needs to achieve sustained expansion in application scale, which may still be difficult next year.
Trading Market: The price of Bitcoin increased by over 131% throughout the year, with ETF holdings exceeding 1.12 million BTC.
In 2024, Bitcoin's price rose from $42,208 at the beginning of the year to $97,851 at the end of the year (as of December 20), with an annual increase of 131.83%. On December 17, it even 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 still operates at historical highs.
From an overall trend perspective, this year, Bitcoin went through three stages: 'Rise - Consolidation - Rise', which basically correspond to the three major events of 'ETF Approval', '4th Halving', and 'U.S. Presidential Election'. Overall, the logic behind Bitcoin's rise this year is not solely attributed to the supply scarcity brought about by halving, or at least not completely rooted in the traditional logic of supply scarcity. The approval of ETFs and the results of the U.S. elections indicate that the main driving force behind the increase in Bitcoin prices is the gradually friendly and loose regulatory environment, which has attracted a large influx of institutional funds into the market, injecting liquidity and further boosting prices.
According to data from glassnode, the percentage of profitable chips at the end of the year reached 90.16% (as of December 20), a historical high. From the perspective of profit strategies, LTH-SOPR/STH-SOPR (Long-Term Holder’s Output Profit Ratio/Short-Term Holder’s Output Profit Ratio) increased 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, peaking above 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, long-term holders have seen better profit levels this year, and this advantage has become more apparent as the year comes to an end. Additionally, from the comprehensive price perspective, it can be observed that the profit levels of long-term holders peaked earlier than the price peaks, indicating that long-term holders tend to reduce risk exposure earlier when the market approaches overheating.
This year's Bitcoin trading market has experienced a simultaneous increase in volume and price, with steadily rising prices accompanied by an increase in trading volume.
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 of the year occurred after November, with average daily trading volumes in November and December reaching $74.897 billion and $96.543 billion respectively, significantly exceeding the previous monthly average of $30.8 billion.
The futures market is also active. Open interest increased from $10.915 billion at the beginning of the year to $30.948 billion at the end of the year, a significant annual increase of 183.53%.
As one of the main factors driving the increase in Bitcoin prices, the asset holdings of various ETFs have attracted much attention this year. According to statistics, the total holdings of Bitcoin ETFs increased from the initial 619,500 BTC to 11,200,600 BTC by the end of the year, a strong annual growth of 80.87%. The rapid growth period coincided with the time when the price surged, occurring mainly in February-March and after November.
Currently, BlackRock's holdings have reached 524,500 BTC, making it the largest among all ETFs. In addition, Grayscale and Fidelity also hold a relatively large number of BTC, reaching 210,300 BTC and 209,900 BTC, respectively. The 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, which may bring 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 the holdings of many ETFs. In addition, leading companies in the North American Bitcoin mining sector, Marathon Digital Holdings and Riot Platforms, also have relatively high holdings, exceeding 40,000 BTC and 10,000 BTC, respectively.
On-chain fundamentals: decrease in active addresses, increase in large addresses, total trading volume increased to 49.66 million BTC.
The average number of active addresses on Bitcoin's chain this year was approximately 780,300, down from 948,700 last year, a significant decline of 17.75%. Among them, the average number of active addresses from January to April and from November to December remained above 800,000, but the average number of active addresses from May to October was below 720,000.
Although this is generally consistent with the trend of Bitcoin prices, it is worth noting that against the backdrop of Bitcoin prices reaching historical highs, the average number of active addresses has decreased throughout the year, and the highest monthly active address count has also decreased. This change may imply that under a clear upward trend, long-term holding strategies dominate, and the market may shift from a high-frequency trading phase dominated by general investors to a low liquidity growth phase led by institutional investors.
This year, Bitcoin's total on-chain transaction count exceeded 188 million, an increase of approximately 29.66% compared to last year, marking two consecutive years of growth. The average monthly transaction count was 15.671 million, with October recording the highest transaction count at 20.478 million. Notably, during the price consolidation phase, on-chain transaction counts actually increased. This may be influenced by several factors, such as short-term arbitrage trading, address consolidation, contract liquidations, and so on.
The cumulative on-chain trading volume for the year was approximately 49.6658 million BTC, equivalent to $3.28 trillion. The total trading volume in coin terms increased slightly by 4.67% compared to last year. This year's average monthly cumulative trading volume was approximately 4.1388 million BTC, equivalent to about $273.451 billion.
Overall, the relative change trends in transaction counts and total transaction volume continue the differentiation pattern of last year, indicating that compared to 2022 and earlier, the transaction counts for Bitcoin have increased while the total transaction volume has decreased. This is mainly due to the expansion of application levels in a high price environment, such as the explosive growth of the Ordinals protocol last year.
From the distribution structure of address balances, the number of addresses holding 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 number of addresses. However, this year, the number of addresses in these three balance ranges has shown a downward trend throughout the year, decreasing by 3.94%, 2.74%, and 2.62% respectively. Among all balance ranges, only the number of addresses holding between 100 to 1000 BTC and 1000 to 10000 BTC increased by 11.21% and 1.68%, respectively. This indicates a change in the trend towards smaller address balances in recent years, with a shift towards larger balances this year, possibly related to address consolidation and institutional capital accumulation.
Application Layer: From inscriptions to BTCFi, TVL surged by 2117% throughout the year.
This year, Bitcoin's application focus shifted from inscriptions to BTCFi, moving further from asset issuance to asset usability. According to data from DeFiLlama, Bitcoin DeFi's TVL surged from $305 million at the beginning of the year to $6.755 billion by the end of the year, with an annual increase of 2117.11%, and the highest TVL once exceeded $7.3 billion. Currently, Bitcoin has become the fourth highest blockchain in terms of TVL, only behind Ethereum, Solana, and Tron.
From the perspective of protocol types, this year's largest protocol in Bitcoin has shifted from the payment sector's Lightning Network to the staking sector's Babylon. As of December 20, Babylon's TVL had reached $5.564 billion, accounting for 82.37% of the total. According to Dune (@pyor_xyz), as of December 23, the number of unique addresses for Babylon has exceeded 140,000, and the growth rate of staking addresses in the last 7 days has reached 100%.
The rapid development of Babylon has driven a series of staking and re-staking protocols. Currently, in addition to Babylon, there are also 10 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 applications, further promoting its application expansion.
Outlook for Next Year
Bitcoin has seen a significant rise this year. Looking ahead to 2025, Bitcoin may enter an adjustment period 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 buried within volatility.
From the perspective of the macroeconomic environment, the Federal Reserve turned hawkish on interest rates at the end of this year, but more importantly, the background of quantitative tightening (QT) policy remains unchanged, which means that under the control of inflation targets, long-term liquidity will still tend to tighten, and short-term liquidity growth may also slow down. Therefore, Bitcoin faces certain pressures 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 U.S. presidential election directly stimulated Bitcoin's price to break through $100,000. If next year there can be greater loosening of regulatory policies, 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 agreements may contribute to the network effect of these assets, further providing value support for Bitcoin's price. However, if Bitcoin's price is highly influenced by its applicability, then this will represent a new logic of increase distinct from supply scarcity or digital gold, and it imposes high requirements on the scalability of applications, which may be difficult to achieve in the short term.
