Author: Chainalysis
Compiled by: 1912212.eth, Foresight News
The cryptocurrency industry has entered a new stage of maturity, driven by increasing global adoption, continuous innovation, and deeper integration with the traditional financial system.
This year, BTC reached new all-time highs in March and December, reflecting strong demand. Meanwhile, DeFi's position in the global economy is steadily consolidating, with capital inflows approaching new highs. Additionally, traditional finance (TradFi) has been reactivated, with capital flowing into the stablecoin and crypto exchange-traded product (ETP) markets, indicating that cryptocurrencies are quietly fulfilling their promise of reshaping the global financial infrastructure.
This is not just another market cycle, but a critical moment for cryptocurrencies.
An Atypical Bull Market
At the end of 2023, BTC began to rise, marking the start of a new upward trend.
On March 5, 2024, BTC broke through its previous all-time high, reaching over $73,000; in December of the same year, it broke through the $100,000 mark again.
Furthermore, the transfer activity of all digital assets has surpassed the historical highs of the end of 2020 and 2021, indicating that the activity level of this market cycle is far higher than the previous bull market.
From the end of 2023 to the beginning of 2024, DeFi began to show signs of recovery, with its activity level reaching its previous historical high, as shown below.
The current asset prices and DeFi activity are not the only indicators of market adaptability and resilience - the global adoption of stablecoins, the explosive interest of traditional finance (TradFi), and the emergence of services for new application scenarios such as tokenization (as described below) all indicate that cryptocurrencies are being more widely accepted and integrated into the global economy.
Global Utility Drives the Rise of Stablecoins
Stablecoins are typically pegged 1:1 to the US dollar or other fiat currencies, combining the efficiency, security, and transparency of cryptocurrencies while avoiding the volatility risks common in other crypto markets.
Although major cryptocurrencies like BTC and ETH often dominate the headlines and offer returns that stablecoins cannot match, stablecoins have surpassed other types of cryptocurrencies in terms of adoption rate. In recent months, the on-chain transaction volume of stablecoins has exceeded 50%, even reaching 75%.
By providing the stability of the US dollar to anyone with an internet connection worldwide, stablecoins offer a critical solution for residents of countries facing currency volatility, both for protecting savings and facilitating commercial transactions.
The increasingly prominent position of stablecoins in overall transaction activity indicates that this asset class has achieved a very high level of utility among crypto users.
BTC and ETH ETPs Mark a Historic Integration of Cryptocurrencies with Traditional Finance
Traditional finance (TradFi) reached a historic milestone in its validation of cryptocurrencies in 2024, with the launch of spot BTC exchange-traded products (ETPs) in the US further enhancing institutional investor interest. Exchange-traded funds (ETFs) - the most popular form of ETP - have generated tremendous interest from both retail and institutional investors.
The introduction of crypto ETFs has led to a market rally based on this, as these funds provide regulated mainstream investment vehicles that can access cryptocurrencies, typically attracting investors who may be hesitant about the complexity and security issues of using traditional crypto trading platforms directly.
The trading volume of the BTC ETF has surged, approaching $10 billion per day in March. The inflows into the BTC ETF have also surpassed the net gold ETF (adjusted for inflation) launched in 2005, making it the fastest-growing ETF in history, as shown in the image below.
On January 10, 2024, the news of the BTC ETF approval was announced, and the BTC price began to rise rapidly and started trading shortly after.
By providing more convenient access to cryptocurrencies through traditional trading platforms, ETPs can unlock new sources of demand for the underlying assets, which appears to be one of the key factors driving the recent price increase of BTC.
While it is difficult to precisely define the specific impact of the launch of the US BTC ETP, it is generally believed to have boosted market sentiment and increased institutional investors' exposure to BTC. The surge in demand reflects the unique appeal of ETPs among retail and institutional investors, offering a regulated and familiar way to access BTC without the complexity of managing private key wallets.
Tokenization: Real-World Assets (RWA) are Growing
The excitement around the large-scale tokenization of real-world assets (RWA) on the blockchain is quietly transforming the landscape of asset management and investment, with many traditional finance (TradFi) giants, such as Franklin Templeton, already staking a claim in this market. Goldman Sachs is reportedly planning to launch a crypto trading platform focused on tokenization in the next 12 to 18 months.
RWA refers to any valuable asset - tangible or intangible - whose value originates outside of the blockchain. Through tokenization, the rights to these assets (from real estate, art, to intellectual property) are represented as tokens on the blockchain. This process not only simplifies the process of selling and trading these assets but also increases their accessibility to a wider audience, creating a more efficient and liquid market. RWA also promises to enhance the transparency of investment markets, as all transactions are recorded on-chain.
Currently, most RWA projects focus on tokenizing relatively simple and stable financial instruments, such as US Treasuries, and lending platforms like Goldfinch and Ondo Finance, which rely on the tokenization of RWA as their core, have captured a significant share of the RWA market. According to data compiled by asset management firm 21.co, the total market capitalization of tokenization projects has exceeded $100 billion.
Although still in the early stages, the growing importance of RWA is a critical step towards the future, where most value transfers will take place on the blockchain, facilitating a more unified, open, and frictionless global market.
What Maturity in the Cryptocurrency Industry May Mean for Organizations
When we examine the progress of the crypto ecosystem, it is clear that we are experiencing a significant transformation in perception and utilization. Although the crypto markets may experience volatility and prolonged bear market cycles, one trend is consistent: wallets holding positive balances are growing linearly and continuously. Currently, over 400 million wallets are holding cryptocurrencies.
While a single wallet does not necessarily mean a single user, as institutions and individuals can manage multiple wallets, the sheer number of growing wallets indicates that the adoption of cryptocurrencies is steadily increasing.
As the influence of cryptocurrencies continues to expand, the standards for measuring success in this new paradigm become increasingly important. For organizations, adapting to the on-chain reality is not just about keeping up with technological progress - it also requires a fundamental reassessment of their operating models to leverage the unique opportunities presented by blockchain technology.
