5 key trends that defined crypto this year
Today we take a step back from the recent market volatility to highlight crypto’s growth in 2024. We analyze the five largest trends driving crypto this year through the lens of onchain activity.
We start comparing Bitcoin and Ethereum performance prior to diving deeper into the factors contributing to crypto’s all time highs reached in 2024.
Yearly Key Metrics (Yearly Change)*
Network Fees — Sum of total fees spent to use a particular blockchain. This tracks the willingness to spend and demand to use Bitcoin or Ether
Fees to use the Bitcoin blockchain increased by 4% to $890M in 2024. Ordinals, Bitcoin’s NFT equivalent, and Runes, the token standard, struggled to sustain onchain activity in the second half of the year, leading to fees remaining relatively stagnant despite Bitcoin’s meteoric price rise
Ethereum fees dropped by 15% to $2.4Bcompared to $2.8B in 2023. The main catalyst leading to lower fees was the Dencun upgrade implemented in March 2024, which reduced costs for layer 2 networks by more than 10x. As a result, transactions and value deposited on L2s grew rapidly, but led to lower revenues for Ethereum and less ETH being burnt
Exchanges Netflows — The net amount of inflows minus outflows of a specific crypto-asset going in/out of centralized exchanges
$9.4B worth of BTC left exchanges in 2024. Bitcoin ETFs have been a major factor contributing to these outflows, being one of the major buyers of Bitcoin throughout the year
Ethereum recorded $8.4B in net outflows this year. This is a sizable amount, but slightly smaller than the $10B recorded last year
2024 Onchain
2024 has been a turning point for crypto: from the launch of multiple ETFs to the US president-elect publicly supporting the space, tides are shifting in favor of crypto-assets.
Not only has the aggregate market cap of crypto doubled in 2024, user metrics are growing, innovation is flourishing and the regulatory landscape is getting brighter.
There are five major trends that reflect the shift in the crypto space in 2024:
1. Bitcoin’s rising dominance
2. Memecoin mania
3. Ethereum’s identity crisis
4. DeFi queenssance
5. New projects lead the way
Let’s dive in.
1. Bitcoin’s Rising Dominance
The launch of the Bitcoin ETFs in January bolstered BTC’s price early into the year. For the first time Bitcoin became directly accessible in traditional finance brokerages in the US. This helped Bitcoin’s market share to reach its highest level in over three and a half years.
Source: CoinMarketCap Dominance
Bitcoin-led Market — The largest crypto-asset has outperformed both on the way up and during corrections in 2024
Institutions have increasingly looked to Bitcoin as a digital gold, sending prices higher into new all time highs
Even though ETF flows slowed down in Q2 and Q3, they have recovered strongly in Q4, recording over $10B in inflows since
Trump’s election certainly helped push BTC higher, as odds of establishing a Bitcoin strategic reserve have become increasingly larger
Overall, this has led Bitcoin’s market dominance to rise from under 50% to 59% year-to-date
Outside of Bitcoin, the other sector gaining market share within crypto have been memecoins.
2. Memecoin Manias
The aggregate market cap of memecoins has increased by over 400% in 2024. Memecoins hit a wave of strong momentum in Q1 and another one recently in Q4.
Source: ITB 2024 Review Perspectives
$100B Gain — The aggregate market cap of memecoins climbed nearly eleven figures throughout 2024
Financial nihilism became the de-facto phrase to describe the rise of memecoins as millions piled in to gamble in tokens not backed by anything
The number of memecoin holders accelerated in 2024, with over 6.6 million addresses holding Dogecoin, having benefited from the association with Elon Musk and his Department of Government Efficiency (DOGE)
Pepe, based on the iconic frog meme, realized a gain of over 1,200% in price in 2024 reaching a valuation of $7B
Memecoins experienced a cambrian explosion on Solana, where the launchpad Pump.fun realized nearly $300M in revenue having just launched in February
This trend towards speculation on tokens moving out of the Ethereum ecosystem certainly affected ETH’s performance in 2024.
3. Ethereum’s Identity Crisis
Since the implementation of the Ethereum Improvement Proposal (EIP) 1559 in 2021, the Ethereum community has celebrated ETH being burnt during moments of high fees. The larger the fees being paid by users to transact on Ethereum, the more ETH would get burn. As Ethereum layer 2s scaled, however, Ethereans ultra-sound money mantra lost its momentum.
Source: ITB Ethereum supply indicators
Declining Fees — Ethereum fees have declined by 80% in ETH terms over the past three years, leading to less ETH being burnt
Since the Dencun upgrade in March, layer 2 networks on top of Ethereum have reduced their fees by over 10x, driving wider adoption but sacrificing ETH’s “moneyness”
ETH supply increased throughout 2024, after recording a decline in 2023 prior to Dencun being implemented
Memecoins and NFTs used to be main contributors to fee spikes in Ethereum, but those have shifted largely to Solana and the Base L2, resulting in relatively muted activity on Ethereum mainnet
This trend has led ETH to underperform BTC and other smart contract platforms throughout 2024, while casting doubts within the Ethereum community of what they should pursue and how. Looking into 2025, there are signs of hope for Ethereum, as efforts are likely to shift to scaling the layer one after years of favoring layer 2 improvements.
4. The DeFi Renaissance
The decentralized finance (DeFi) space experienced a rebirth throughout 2024, as capital flew onchain. “Bluechip” DeFi protocols were resilient during the bear market and emerged as a strong point for crypto in 2024.
Source: DeFiLlama TVL
$150B Growth — The aggregate value of assets deployed in DeFi protocols, including liquid staking and borrowed capital, reached its 2021 highs this year
Trust in DeFi applications grew as the value lost to exploits/hacks reached the lowest levels since 2020
Regulatory uncertainty surrounding DeFi also appears to be improving with SEC chairman Gary Gensler heading on his way out and the new administration embracing open finance as evidenced by Trump-backed World Liberty Financial building a market on top of Aave
As a result, the aggregate market cap of DeFi bluechips recently reached its highest since early 2022
New applications have been main contributors of DeFi’s resurgence, driving new opportunities for yield available for anyone to access.
5. New projects lead the way
Crypto bull markets often see the growth of new concepts that were pioneered during bear markets. This time has not been any different, as restaking and basis trading protocols became breakout applications for the crypto space.
Source: ITB 2024 Review Perspectives
$30B+ into New Categories — Restaking protocols managed to attract over $25B in assets, while basis trading protocols more than $6B
Restaking emerged as a new primitive in crypto, enabling applications and services to be secured using existing staking networks or liquidity
EigenLayer first brought this to Ethereum, and now Babylon has allowed similar mechanisms to work on top of the Bitcoin blockchain
Offering higher yields than regular staking, liquid restaking protocols have posed a threat to Lido’s dominance
Similarly, basis trading protocols have put pressure on previous-generation yield-bearing stablecoins.
Though basis trading stablecoins were originally piloted last bull cycle, Ethena has been the first protocol to allow billions of dollars to be deposited into a stablecoin-like vehicle earning eye-popping yields stemming from perpetual swaps’ funding rates
Ethena has democratized access to the funding rate arbitrage trade and developed an ecosystem around it
The space’s cyclical demand make Ethena a strong contender to continue growing into next year if the crypto bull market continues
Overall, 2024 has been a very strong year for crypto. Institutional access through ETFs and prospects of a strategic reserve have propelled Bitcoin to new highs. Memecoins also gathered momentum, while Ethereum faced some struggles. DeFi turned things around and capital poured into new projects. Ultimately, the crypto space has built a solid base this year that is poised to accelerate into 2025.
2024 Onchain was originally published in IntoTheBlock on Medium, where people are continuing the conversation by highlighting and responding to this story.
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