Author: Carol, 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 "US election" drove the market changes of Bitcoin throughout the year. Behind this overall picture, what specific changes in the trading market, on-chain fundamentals, and application layer of Bitcoin are worth noting? What potential impact will these changes have on the development in 2025?
The PANews data column PAData has analyzed the changes in Bitcoin in 2024 from multiple dimensions, and in general:
- Trading Market:
- Bitcoin's annual price increase reached 131.83%, less than the 158.06% of the previous year.
- The main driver of Bitcoin's price increase this year was the gradual improvement and relaxation of the regulatory environment, rather than just the scarcity of supply (halving).
- The profitability level of long-term holders is better this year, and long-term holders tend to reduce their risk exposure earlier when the market is approaching overheating.
- This year's trading market saw a simultaneous increase in both volume and price. The annual average daily trading volume was about $38.354 billion, an increase of 102.72% over the previous year. The year-end open interest was about $30.948 billion, an increase of 195.79% over the end of the previous year.
- The total holdings of Bitcoin ETFs reached 11.2006 million BTC, a strong annual growth of 80.87%.
- On-chain Fundamentals:
- The average monthly active addresses on the Bitcoin blockchain this year was about 780,300, a decrease of 17.75% compared to the previous year. This may indicate that in the context of a clear upward trend, long-term holding strategies dominate, and the market may shift to a low-liquidity growth phase led by institutional investors.
- The total on-chain transaction volume for the year was about 49.6658 million BTC, equivalent to $3.28 trillion. The total BTC-denominated transaction volume increased slightly by 4.67% compared to the previous year.
- The number of addresses holding between 100 and 1,000 BTC increased by 11.21%, indicating that the trend of address balances becoming smaller in recent years has changed, and a trend of larger balances emerged this year.
- Application Layer:
- The year-end TVL of Bitcoin was about $6.755 billion, with an annual increase of 2117.11%, of which Babylon's TVL accounted for 82.37%.
- Staking has replaced payment (Lightning Network) as the mainstream application of Bitcoin.
- Outlook for Next Year:
- The tightening of both short-term and long-term liquidity under the QT background constitutes the main pressure for Bitcoin to continue its upward trend next year.
- This year's rise is related to the expected improvement in the regulatory environment after the election. If the regulatory environment can be further relaxed next year, it will be conducive to the continued rise of Bitcoin.
- BTCFi may develop further, but for its application to become the main logic for Bitcoin pricing, it still needs to achieve sustained expansion of application scale, which may still be difficult next year.
Trading Market: Annual Price Increase Exceeds 131%, ETF Holdings Exceed 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 strongly broke through the $100,000 mark, reaching a historical high of $106,074, with an annual high of about 151.31%. Although it began to correct slightly at the end of the year, the price is still running at historical highs.
In terms of the overall trend, this year, Bitcoin experienced three stages: "rise - sideways - rise", which basically corresponded to the three major events of "ETF approval", "4th halving", and "US presidential election". In general, the logic behind Bitcoin's rise this year was not solely attributable to the scarcity of supply brought about by the halving, or at least not entirely the traditional logic of supply scarcity. The approval of ETFs and the results of the US election indicated that the main driver of Bitcoin's price increase was the gradual improvement and relaxation of the regulatory environment, which attracted a large amount of institutional capital to the market, injecting liquidity and further pushing up the price.
According to glassnode's data, the profitability of the year-end coins has reached 90.16% (as of December 20), a historical high. In terms of profitability strategy, the LTH-SOPR/STH-SOPR (the output profitability ratio of long-term holders/the output profitability ratio of short-term holders) has risen 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 since late November, this ratio has been greater than 3 multiple times, and at its highest, greater than 4. A ratio greater than 1 indicates that the profitability level of long-term holders is higher than that of short-term holders, and the larger the value, the higher the profitability level of long-term holders.
Overall, the profitability level of long-term holders is better this year, and this advantage becomes more obvious towards the end of the year. In addition, combined with the price trend, it can be found that the profitability peak of long-term holders appears earlier than the price peak, indicating that long-term holders tend to reduce their risk exposure earlier when the market is approaching overheating.
This year, the Bitcoin trading market saw a simultaneous increase in both volume and price, with the steadily rising price accompanied by an increase in trading volume.
According to statistics, Bitcoin's average daily trading volume for the full year was about $38.354 billion, with a single-day high of over $190.4 billion. The trading peak of the year occurred after November, with the average daily trading volume in November and December reaching $74.897 billion and $96.543 billion respectively, significantly higher than the previous monthly average of $30.8 billion.
The futures market was also active. The total open interest increased from $10.915 billion at the beginning of the year to $30.948 billion at the end of the year, an annual increase of 183.53%, with a significant increase.
As one of the main factors driving the rise in Bitcoin's price, the asset holding situation of various ETFs has always been closely watched. According to statistics, the total holdings of Bitcoin ETFs increased from the initial 619,500 BTC to 11.2006 million BTC at the end of the year, a strong annual growth of 80.87%. The rapid growth period was basically consistent with the period of rapid price increase, both in February-March and after November.
Currently, BlackRock's holdings have reached 524,500 BTC, the largest among all ETFs. In addition, Grayscale and Fidelity also have relatively large holdings, 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, more and more 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 currently MicroStrategy, with 439,000 BTC, exceeding the holdings of many ETFs. In addition, the leading companies in the North American Bitcoin mining industry, Marathon Digital Holdings and Riot Platforms, also have relatively large holdings, exceeding 40,000 BTC and 10,000 BTC respectively.
On-chain Fundamentals: Decrease in Active Addresses, Increase in Large Addresses, Transaction Volume Reaches 49.6658 Million BTC
The average monthly active addresses on the Bitcoin blockchain this year was about 780,300, a decrease of 17.75% compared to 948,700 in the previous year. Among them, the average monthly active addresses were above 800,000 in January-April and November-December, but below 720,000 in May-October.
Despite the fact that this is fundamentally consistent with the trend of cryptocurrency prices, it is worth noting that against the backdrop of Bitcoin reaching a new all-time high, the annual average number of active addresses has declined, and the monthly peak number of active addresses has also declined. The changes behind this may mean that in the context of a clear upward trend, a long-term holding strategy is dominant, and the market may be transitioning from a stage of high-frequency trading by retail investors to a stage of low-liquidity growth led by institutional investors.
This year, the cumulative on-chain transaction volume of Bitcoin exceeded 188 million, an increase of about 29.66% compared to last year, with two consecutive years of growth. The monthly average cumulative transaction volume was 15.67 million, with the highest number of transactions in October at 20.47 million. It is worth noting that during the price consolidation phase, on-chain transaction volume was actually higher. This may be influenced by various factors, such as short-term arbitrage trading, address reorganization, and contract liquidation.
The total on-chain transaction volume for the year was approximately 49.67 million BTC, equivalent to $3.28 trillion. The total BTC-denominated transaction volume increased slightly by 4.67% compared to last year. The monthly average cumulative transaction volume this year was approximately 4.14 million BTC, equivalent to about $273.45 billion.
Overall, the relative changes in the trend of transaction volume and total transaction amount have continued the divergence pattern observed last year, i.e., compared to 2022 and earlier, Bitcoin's transaction volume has increased, while the total transaction amount has declined. The main reason for this is the expansion of the application layer, such as the Ordinals protocol outbreak last year, in the high-price environment.
From the perspective of the address balance distribution structure, the number of addresses with balances between 0.001 and 0.01 BTC, 0.01 and 0.1 BTC, and 0.1 and 1 BTC is still the highest, currently accounting for 97.24% of the total number of addresses. However, the number of addresses in these three balance ranges has shown a downward trend during the year, decreasing by 3.94%, 2.74%, and 2.62%, respectively. Among all balance ranges, only the number of addresses with balances between 100 and 1,000 BTC and 1,000 and 10,000 BTC increased by 11.21% and 1.68%, respectively. This means that the trend of address balances becoming smaller in recent years has changed, and a trend of larger balances has emerged this year, which may be related to address reorganization and institutional capital deployment.
Application Layer: From Ordinals to BTCFi, TVL Surges 2117% Year-Over-Year
This year, the focus of Bitcoin's applications has shifted from Ordinals to BTCFi, moving from asset issuance to asset usability. According to DeFiLlama data, the TVL of Bitcoin DeFi has surged from $305 million at the beginning of the year to $6.755 billion at the end of the year, a year-over-year increase of 2117.11%, with the peak TVL exceeding $7.3 billion. Currently, Bitcoin has become the fourth-largest blockchain in terms of TVL, behind only Ethereum, Solana, and TRON.
In terms of protocol types, the largest protocol on Bitcoin this year has shifted from the payment domain of the Lightning Network to the staking domain of Babylon. As of December 20, Babylon's TVL has reached $5.564 billion, accounting for 82.37% of the total. According to Dune (@pyor_xyz) data, as of December 23, Babylon has over 140,000 unique staking addresses, with a 7-day staking address growth rate of 100%.
The rapid development of Babylon has driven a series of staking and restaking protocols. Currently, in addition to Babylon, there are 10 other staking protocols on the Bitcoin blockchain, 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 and further promote its application expansion.
Outlook for Next Year
Bitcoin has already seen substantial price appreciation this year. Looking ahead to 2025, Bitcoin may enter a period of adjustment at the beginning of the year, and its subsequent performance will continue to be influenced by multiple factors, including the macroeconomic environment, regulatory environment, and industry development, with both volatility and opportunities.
From a macroeconomic perspective, the Federal Reserve turned hawkish on rate cuts at the end of this year, and more importantly, the quantitative tightening (QT) policy backdrop remains unchanged, meaning that under the goal of controlling inflation, long-term liquidity will remain tight, and short-term liquidity growth may also slow down. Therefore, Bitcoin faces some pressure to continue its upward trend next year.
However, based on Bitcoin's price performance this year, its sensitivity to changes in the regulatory environment is higher. The results of the U.S. presidential election directly triggered Bitcoin's price to break through $100,000, and if there is greater regulatory easing next year, it may provide momentum for Bitcoin to continue its upward trend.
From an industry development perspective, the rapid rise of BTCFi has pushed Bitcoin into a new stage of asset application, and staking protocols and other protocols may lead to network effects for these assets, which will further provide value support for Bitcoin's price. However, if Bitcoin's price is highly influenced by its application, this will be a new upward logic for Bitcoin, different from the scarcity of supply or digital gold, and this requires a high scale of applications, which may be difficult to achieve in the short term.
