2024 has already passed, on the first day of 2025; we reflect on the past and look to the future; what surprises and unexpected events did the crypto space bring in 2024? What opportunities did you seize, and which ones did you miss? Did we achieve our goals? Are there any regrets?
In 2024, Bitcoin completed its fourth halving, the Federal Reserve began its rate-cutting cycle, and Bitcoin spot ETFs were finally approved by the U.S. SEC. These combined factors heightened investor enthusiasm and expectations for the fourth round of the halving bull market to their peak.
However, the subsequent market trends have left many investors puzzled: on one hand, Bitcoin continually breaks new highs, reaching above $100,000 several times by December; on the other hand, a host of altcoins represented by ETH remain stagnant, even declining rather than rising!
Of course, in this year's market, there are also some sectors such as BRC20 inscriptions, MEME, AI, public chains, RWA, and old mainstream coins that perform prominently. These concepts have continuously seen coins surge, attracting the attention of the entire market.
In this year, significant and complex global political and economic events, such as the Russia-Ukraine war and conflicts in the Middle East, have continuously impacted the crypto space, causing short-term spikes and drops, making some people rich while leaving others with nothing.
During this year, countries around the world have also begun to actively or passively formulate crypto policies to cope with the increasingly surging crypto wave. The crypto policies of regions such as Europe, the Middle East, East Asia, and Southeast Asia have increasingly significant short-term and long-term impacts on the crypto space.
Reflection on 2024 Part 1: Bitcoin completes halving and breaks through the $100,000 mark
On April 20, 2024, at 8:09 (UTC+8), Bitcoin successfully completed its fourth halving at block height 840,000, reducing the mining reward from 6.25 BTC to 3.125 BTC.
Before this, in October 2023, Bitcoin officially emerged from the bottom, starting a remarkable seven-month rise; just before the halving, it broke through the previous bull market high, reaching over $73,000. Just when the entire market was cheering for the halving bull market to begin ramping up, April's halving month unexpectedly saw a drop of 20%;
The decline in April not only ended the seven consecutive monthly gains but also directly broke the upward trend, completely engulfing the gains from March, starting a five-month-long oscillating decline, dipping to over $49,000; it wasn’t until September that Bitcoin regained its upward momentum, rising for three consecutive months, finally breaking through the $100,000 mark in December, but the market then began to oscillate around the $100,000 mark, repeatedly dipping below and rebounding back to the $100,000 level.
Tracing the logic behind Bitcoin's rise, we can see that it is driven by the three crucial factors of halving, the Federal Reserve beginning its rate-cutting cycle, and the approval of Bitcoin spot ETFs, all combining to create a bull market.
On January 10, 2024, the U.S. SEC approved 11 Bitcoin spot ETFs in one go, including those from ARK Investments, BlackRock, Fidelity, Invesco, Bitwise, Grayscale, and others. The launch of Bitcoin spot ETFs undoubtedly changed the game for Bitcoin, allowing institutional and large investors to access the world’s largest cryptocurrency by market cap without directly holding Bitcoin. Currently, there are 12 Bitcoin spot ETFs and 9 futures ETFs that have been approved and are trading. See the image below:
Currently, the total market value held by Bitcoin ETFs has reached $110.479 billion, and since approval, most of the 12 spot ETFs have seen net inflows of funds. Since the end of October, the amount of net inflows has continued to reach new highs, with $1.359 billion flowing in on November 7, creating a historical high. During this period, Bitcoin has also continuously reached new highs, finally breaking through the $100,000 mark in early December.
From historical data, the amount of net inflows is generally proportional to the increase in Bitcoin's price, which shows the significant impact of the approval of Bitcoin spot ETFs on its price. However, this also leads to another consequence: the new funds entering the market are all aimed at Bitcoin, and most of these funds are also concentrated in Bitcoin.
This has resulted in most of 2024 being a time when Bitcoin stands alone, with other altcoins lacking the spillover effect of Bitcoin’s capital. They not only failed to rise to new highs alongside Bitcoin but many coins haven't even emerged from their bottom ranges. This indicates that currently, in the crypto space, only Bitcoin is truly a breakout asset, breaking the cognitive barrier between the crypto world and the real world, gaining recognition both inside and outside the circle. While this is beneficial for Bitcoin's rise, it also exposes the fragility of the crypto space itself, as there is no second asset that can truly attract capital into the crypto market, relying solely on Bitcoin as the pillar supporting the market's progress.
Of course, Bitcoin is expected to break the $100,000 mark in 2024, which is supported not only by spot ETF approvals but also by the expectations of Federal Reserve interest rate cuts and halvings. The issue of interest rate cuts will be discussed in detail later; here I mainly want to mention the increasing consensus regarding Bitcoin halving because this is closely related to the fluctuations in the market.
This round of Bitcoin has already experienced its fourth halving, and due to the support of the previous three halving bull markets, many are convinced that this round of halving will be challenging. On one hand, this strengthens Bitcoin's consensus and is beneficial for its price increase, but on the other hand, it has also greatly increased the difficulty of market manipulation. In our previous article: Three massive drops in Bitcoin within a month, cut losses or buy the dip? it was stated that because the consensus around Bitcoin's four rounds of halving is too strong, it is hard to manipulate, leading the main players to resort to all means to shake out positions. For instance, in December, the market was repeatedly battered by three massive drops in a short period, which forced retail investors to abandon resistance and relinquish their holdings.
Not only did it lead to a halving of numerous altcoins but it also caused nearly 1 million investors to face liquidation. This means that as the consensus around Bitcoin halving becomes stronger, the cruelty of this market is also increasing, and the methods of market manipulation are becoming more diverse and torturous. One must have a clear awareness and psychological preparation for this basic situation.
Reflection on 2024 Part 2: When will the altcoin season come? When will mainstream coins break new highs?
As mentioned earlier, in 2024, while Bitcoin is continuously breaking new highs, a host of altcoins are performing poorly, declining rather than rising, leading many to exclaim that there is no altcoin season, only a Bitcoin bull market.
The significant gap between the current mainstream coins and their historical highs highlights the severity of this situation: ETH is down -30% from its all-time high, BNB is down -11%, DOGE is down -57%, ADA is down -71%, TRX is down -40%, and AVAX is down -74%.
Even the coins that performed strongly in 2024 are still some distance from their historical highs, such as XRP down -43% from its all-time high, SOL down -28%, PEPE down -36%, and AAVE down -49%.
The performance of old mainstream coins is as disappointing as could be, such as BCH down -89% from its historical high, LTC down -75%, XLM down -62%, LINK down -56%; this is still the result after this market underwent a rise at the end of the year.
The performance of many hot coins from the last bull market is even more tragic, such as ICP down -99% from its all-time high, FIL down -98%, DOT down -87%, UNI down -69%.
It can be said that with Bitcoin continually breaking historical highs, the poor performance of a host of altcoins is an unprecedented situation not seen in the previous three halving bull markets. The underlying reason is that there is simply not enough money in the market; in other words, the funds flowing into the market from the Federal Reserve's rate cuts pass through banks, bond markets, stock markets, and real estate markets, and only then flow into the crypto space, where they are pumped into Bitcoin through ETFs, causing it to swell and overflow into other coins.
In previous articles: Bitcoin is 'breaking' historical highs again, while altcoins continue to languish! What should we do next? it was also mentioned that institutions are mainly focused on Bitcoin, and the narratives surrounding altcoins are not attractive enough to draw in 'old money'; furthermore, the current unfavorable and uncertain political and economic environment has led most investors to adopt conservative strategies, making investment in Bitcoin the safest choice.
Given this, does this mean that this bull market really lacks an altcoin season? I believe quite the opposite; it is precisely now that Bitcoin's bull market is transitioning toward an altcoin season. Whether it is the rebound of the altcoin season index or the tempering of trends and changes in market sentiment, all point toward the arrival of the altcoin season.
Since October, the greed-fear index has remained above 50, and even after experiencing three massive drops in December, this value still leans towards greed, indicating that market sentiment remains high. This is one of the foundational conditions for the arrival of the altcoin season. Only when the market experiences FOMO can altcoins continue to rise and set new highs.
From historical trends, we are now just eight months post-halving, which is precisely when the altcoin season is expected to erupt; moreover, the current rate-cutting cycle of the Federal Reserve is still ongoing, and all these factors point toward the arrival of the altcoin season.
From the perspective of the leading indicator of the altcoin season, ETH broke through the March small bull market high in December. Although it was brought down by Bitcoin, it indicates that the progress of the altcoin season has reached a critical juncture. From the current market situation, ETH may exceed its historical high before March 2025, at which point other altcoins may also rise consecutively and successively surpass their historical highs.
Reflection on 2024 Part 3: The Federal Reserve enters a rate-cutting cycle, but the market performance is not as expected
Bitcoin's ability to break through the $100,000 mark in 2024 is largely due to the Federal Reserve's interest rate cuts, which is also one of the most important bases for the market's judgment of a bull market. However, since the Fed cut rates by 50 basis points in September, there have already been three rate cuts totaling 100 basis points, yet the market's performance has not met expectations, especially the performance of altcoins, which does not resemble a bull market at all. Why is that?
The previous text discusses the flow path of money from interest rate cuts. Here, I would like to mention other reasons. The first reason is the diminishing marginal effect of interest rate cuts; that is, in the initial stage of rate cuts, the market often reacts strongly, but as the number of cuts increases, the market's sensitivity to the policy gradually declines. All investment markets are driven by speculative expectations; before positive developments occur, emotions are at their most intense and most hopeful. After multiple announcements, if there isn’t a greater stimulus, sensitivity diminishes.
The second reason is the significant uncertainty in the current macroeconomic environment, which is also why the Federal Reserve's cut of 25 basis points in the early hours of December 19 led to a market drop. This was mainly due to mixed signals from U.S. economic data, causing market sentiment to become cautious, prompting Federal Reserve Chairman Powell to adopt a 'hawkish' tone in his subsequent remarks, suggesting a slowdown in the pace of rate cuts.
The third reason is the uncertainty of global crypto policies. For instance, while Europe has implemented the MiCA regulation, which officially took effect on June 30 this year, the transition period will not end until June 30, 2026, and the details of execution are still being adjusted, failing to fully release the policy dividends. Meanwhile, the ongoing disputes over the United States' tax policies concerning the crypto industry have dampened investor enthusiasm. In this context, the investment attitude of large funds is likely to be more cautious, making it difficult for altcoins to gain much recognition.
It can be said that the Federal Reserve's interest rate cuts are not the only determining factor for a bull market. Although the cuts indeed create conditions for the market, the performance of the crypto space is also influenced by multiple factors such as technological progress, policy support, and capital flow. Currently, it is necessary to view market rotations in stages; once Bitcoin has finished rising, altcoins can catch up.
Overall, the Federal Reserve's interest rate cuts played a crucial role in Bitcoin's breakthrough of the $100,000 mark in 2024, but the underwhelming market performance reflects the uncertainty in the macroeconomic environment, the complexity of the policy landscape, and the inherent adjustment demands within the market.
Reflection on 2024 Part 4: Severe differentiation, strong concept coins perform in turn
In 2024, the crypto space shows a clear differentiation in sectors, with most concept sectors being lukewarm, but some strong concepts such as BRC20 inscriptions, MEME, AI, public chains, and old mainstream coins performing in turn.
Inscriptions and BRC-20 have become a new explosive point in the Bitcoin ecosystem. During the initial phase of this bull market, they attracted the attention of the vast majority of investors. Projects like ORDI, SATS, RATS experienced price surges of 10 times or even 30 times; these projects leveraged the security and decentralization of the Bitcoin network and the hype of the Bitcoin ecosystem, drawing in a significant influx of developers and funds.
Although the Ordinals protocol further activates Bitcoin's expansion potential, the simplicity and ease of use of the BRC20 standard lowers the development threshold, the high transaction costs and network congestion issues of the Bitcoin network remain unresolved, which is also a reason why many investors are hesitant about this sector. The debate over the quality of the Bitcoin ecosystem is still very intense.
The MEME sector coexists with fervor and bubbles. The MEME concept, which was brought to life by Elon Musk's promotion of DOGE, has performed particularly well in this cycle, even becoming the hottest concept for a period. Numerous MEME coins like PEPE, PENGU, SHIB, BONK, FLOKI, PNUT have emerged. However, compared to the exuberance of 2021, this year's MEME sector is more rational, as many investors have gradually recognized its short-term speculative nature, with most projects experiencing significant price drops after the hype subsided.
AI and blockchain, the integration of technology and value. The combination of AI and blockchain continues to heat up, becoming one of the most promising sectors in this halving cycle. AI-driven decentralized protocols and the application of smart contracts have become focal points in the market; coins like FET, AGIX, WLD, and AI have all seen significant price increases at different times. AI tools are being used to optimize trading strategies, predict market trends, and enhance the generation and application efficiency of NFTs. The AI sector has attracted a lot of venture capital in this cycle, showcasing strong growth potential.
RWA (Real World Assets), real-world assets on-chain. This concept was favored at the beginning of this cycle, seen as a significant breakthrough in the DeFi field. For example, tokenizing real estate, bonds, and other real-world assets through blockchain not only broadens the application scenarios of DeFi but also provides traditional financial institutions with an entry point for participation in the crypto space. However, the development of this sector still faces regulatory and legal challenges. Currently, related concepts and coins like ONDO, SNX, USUAL, RSR have also performed well, but there is still a long way to go before a genuine breakthrough and implementation occurs.
In the public chain sector, there is a fierce competition between old and new. ETH remains the leader, but emerging public chains like SOL, APT, SUI, and TIA have achieved rapid growth through performance advantages and innovative ecosystems. Other established public chains like ADA, TRX, AVAX, DOT, MATIC, and NEAR have also performed well. It can be said that every bull market sees the rise of public chain projects, and their ceilings are remarkably high, typically ranking among the top ten in terms of market capitalization.
Old mainstream coins, old trees bearing new flowers. In the fourth quarter of 2024, BCH, LTC, XRP, XLM, LINK and other old mainstream coins surged one after another, overturning the concept of 'investing in new rather than old.' This is mainly because the 'old money' institutions entering the market prioritize risk control over yields, so after these institutions pushed Bitcoin up, much of the overflow went to mainstream coins that had already been tested by the market, reminding us of the limitations of historical experience.
The differentiation of sectors in 2024 reflects structural changes in the flow of market funds and shifts in investor preferences. Strong sectors such as BRC20 inscriptions, MEME, AI, and public chains indicate that projects with strong narratives, practical applications, and technical support can still attract capital and attention. We should closely monitor changes in market narratives and continually update our understanding.
Reflection on 2024 Part 5: The influence of external financial events on the crypto space is increasingly significant
In 2024, the performance of the cryptocurrency market is driven not only by internal industry factors but also significantly influenced by major financial events outside the circle. From U.S. economic data to central bank monetary policies, to geopolitical situations, these external factors have a profound impact on price fluctuations, capital flows, and investor sentiment in the crypto space.
U.S. economic data mainly includes PCE, non-farm data, CPI, etc., which are published on fixed dates every month. For example, non-farm data is released on the first Friday of each month, and CPI is published between the 10th and 15th of each month. Since the Federal Reserve's monetary policy relies on this data, the market will adjust liquidity and risk preferences based on the data. The timing of each data release can cause significant market fluctuations. Relevant information can be obtained from the U.S. Bureau of Labor Statistics (BLS): www.bls.gov and the U.S. Bureau of Economic Analysis (BEA): www.bea.gov to assist in making investment decisions.
The monetary policies of the Federal Reserve and other central banks are decisive influencing factors for this halving cycle. For example, the Federal Reserve's three rate cuts in 2024 (a total of 100 basis points) improved liquidity, directly allowing Bitcoin to break through the $100,000 high. Overall, 2024 is about waiting for the interest rate cuts to take effect and for liquidity to arrive afterward, which will elevate the crypto bull market to a new level.
Other major events, such as the Russia-Ukraine situation and conflicts in the Middle East, as well as financial crises and turbulence in the banking industry, have also caused short-term or long-lasting shocks to the crypto space. These major events have led to increased market volatility, requiring short-term investors to pay more attention to risk control and market sentiment analysis; long-term investors can focus on the macro environment's supportive role for core assets like Bitcoin, seizing trend-based opportunities.
In 2024, the influence of external financial events on the crypto space deepens, indicating an increasingly close connection between crypto assets and the global economic system. The Federal Reserve's interest rate cuts, geopolitical conflicts, and financial crises have propelled the performance of core assets like Bitcoin, but they have also increased market volatility.
In the future, investors need to pay more attention to macroeconomic indicators, policy changes, and regional market opportunities, combining external financial events with trends in the crypto industry in order to better cope with market uncertainties and seize potential growth opportunities.
Reflection on 2024 Part 6: The influence of crypto regulations and policies from various countries on the crypto space
In 2024, the regulatory and policy attitudes toward cryptocurrencies in regions such as Europe, the Middle East, East Asia, and Southeast Asia play an important role in the crypto space. The policies in these regions not only directly influence capital flows, market sentiment, and project development but also shape the long-term landscape of the industry.
In the United States, primarily due to the Federal Reserve's loose monetary policies and the approval of Bitcoin spot ETFs, the crypto asset market has significantly benefited. Additionally, tax regulatory efforts have intensified, especially regarding capital gains tax and cross-border transactions for crypto assets; the regulatory framework for stablecoins is gradually being established, but altcoins are facing considerable restrictions.
In Europe, the MiCA regulation (Market in Crypto-Assets Act) will be fully implemented in 2024, providing a clear compliance framework for crypto asset trading and services in the EU, focusing on user protection and anti-money laundering (AML) measures. However, it maintains an open attitude toward innovative projects. After the introduction of the MiCA regulation, some non-compliant platforms and assets have been cleared, resulting in a short-term decline in market trading volume. However, the compliance and stability of the crypto space have improved, helping to attract more traditional financial institutions and long-term investors into the European market.
In the Middle East, the UAE continues to implement crypto-friendly policies, with the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) becoming regional hubs for crypto assets. The Middle East may become an important innovation center for the global crypto industry, demonstrating effects in technology research and compliance frameworks.
In East Asia, Japan maintains an open attitude towards the regulation of crypto assets, continuing to support institutional development. Clear tax incentives have been introduced to encourage companies and investors to participate in the crypto space, attracting a substantial return of trading volume, with Japanese exchanges performing actively.
The South Korean government has strengthened its regulation of the crypto space through taxes and compliance requirements while also supporting blockchain technology research and development. This has enhanced market transparency but reduced speculative behavior in high-risk assets in the short term. In the long term, South Korea may promote more innovative crypto projects through the integration of blockchain and artificial intelligence technologies.
China still prohibits most crypto asset trading but has increased support for blockchain technology and central bank digital currency (CBDC). Crypto activities have shifted to places like Hong Kong and Singapore. However, China may indirectly influence the global crypto landscape through the global promotion of CBDC.
Southeast Asia, Singapore continues to maintain a crypto-friendly policy, emphasizing investor protection and compliance, and has become an operational hub for numerous crypto asset funds and projects. Singapore may further consolidate its position as a center for crypto assets in Asia and drive regional innovation.
In emerging markets such as Thailand, Indonesia, and Malaysia, these countries have a more lenient attitude toward crypto assets and focus on developing blockchain technology applications in financial inclusion and payment sectors, which may make Southeast Asia an important market for DeFi and GameFi projects.
In summary, the crypto policies of different regions will result in different roles in the crypto market. For example, the tightening regulation and tax policies in Europe and the U.S. limit short-term speculative behaviors but attract more institutional funds; the friendly policies in the Middle East and Southeast Asia attract project migration and capital inflow; Japan and South Korea enhance the stability and attractiveness of the regional market through favorable policies and technical support.
In the long run, the different crypto policies of various countries will intensify competition between regions, such as the Middle East and Southeast Asia competing for the position of innovation center; but it will also make the industry more standardized. The compliance policies of Europe, the U.S., and East Asia will set standards for the global market, promoting the entire industry towards mainstream and institutional development; while some policy-friendly regions will attract more technological innovations and project incubation, resulting in profound impacts on the global crypto industry.
Summary
2024 is a year of remarkable developments in the crypto space, whether it’s Bitcoin continuously reaching new highs, the rise of popular sectors, or the impacts of macroeconomics and geopolitics. The crypto space has shown strong adaptability and innovation. Looking ahead, as the regulatory framework continues to improve and technology iterates, the crypto space will continue to attract more capital and participants, embarking on a more diversified development journey.
All of the above constitutes the capricious 2024! Just as British writer Charles Dickens wrote in (A Tale of Two Cities): It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness; it was the epoch of belief, it was the epoch of incredulity; it was the season of Light, it was the season of Darkness; it was the spring of hope, it was the winter of despair; we had everything before us, we were all going direct to Heaven, we were all going direct the other way— in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.
This description of the world 165 years ago vividly highlights that, 165 years later, despite the vast changes in the sea and mulberry fields, technological advancements, and the world seeming to have changed a lot, it also seems that nothing has changed, because human nature has never truly changed!
Finally, allow me to conclude the reflection on 2024 with Dou Wei's (Advanced Animals):
Contradiction, hypocrisy, greed, deception
Fantasy, doubt, simplicity, changeability
Strong, helpless, lonely, fragile
Endurance, anger, complexity, dislike
Jealousy, insidiousness, rivalry, blame
Selfishness, boredom, abnormality, adventure
Lust, kindness, philanthropy, sophistry
Can say, emptiness, sincerity, money
Oh~~ Roar, Advanced Animals
Hell and heaven both exist in the human world.
Greatness, smallness, mediocrity, pity
Joy, pain, war, peace
Brilliance, dimness, pride, sentimentality
Resentment, revenge, tyranny, blame
Where is happiness?
Where is happiness?
Where is happiness?