Grayscale's newly released research report comprehensively reviewed the crypto market in November and looked ahead to future market trends.

1. The results of the US election drove to a new all-time high. Although crypto-related issues span across party lines, Grayscale believes that with the Republican Party in control of the White House and Congress, there is hope for more favorable legislation and regulatory policies that promote industry innovation. Furthermore, the appointment of a series of key cabinet members nominated by President Trump also indicates a policy inclination to promote the development of the crypto market;

2. The crypto market has also experienced other important developments, including the launch of exchange-traded product (ETP) options, MicroStrategy's large-scale purchases, a surge in trading volume on South Korean crypto exchanges, innovative applications of artificial intelligence agent technology, and heightened market attention on Dogecoin;

3. 2024 is a positive stage for crypto investment returns, and Grayscale expects this bull market to continue over the next year.

has risen over 110% this year, and the US election results are a potential turning point for the crypto market

Prior to November 2024, the value of had already increased by 57%. The strong performance in the past month has further pushed the year-to-date return of to 110%. It is worth noting that the positive sentiment in November was not limited to , but also broadly covered many other crypto asset categories. According to Grayscale's Crypto Industry Market Index (CSMI), which tracks a diversified portfolio of crypto assets, the index grew by 59% this month.

Although the crypto market is global, we believe the recent US election results may be a potential turning point for the crypto asset industry. The next president and Congress are likely to work on comprehensive crypto legislation and shape the regulatory landscape through key appointments and confirmations to regulatory agencies. These decisions may impact many aspects of blockchain technology adoption and development in the US, including asset tokenization, stablecoin usage, and the integration of decentralized finance (DeFi) applications with traditional systems.

At the voter level, poll data shows that the crypto industry is a cross-party issue, with Democrats holding a slightly higher rate of ownership than Republicans. However, among the current and incoming members of Congress, Republicans have shown more consistent support for crypto asset innovation, and the elected President Trump has publicly expressed his support for the industry. Therefore, we believe Republican control of the White House and Congress will have a positive impact on the crypto market. Considering the candidates' past comments on cryptocurrencies and their professional backgrounds, the nominations of Scott Bessent as Treasury Secretary and Howard Lutnick as Commerce Secretary are early positive signals from the new administration.

Crypto assets have outperformed all other global asset classes

Although many asset classes have appreciated globally after the US election, in terms of risk-adjusted performance, and the broader crypto market have emerged as one of the best-performing market segments (i.e., considering the return per unit of volatility for each asset). The stock market has generally risen, with financial stocks leading the gains, perhaps reflecting market optimism about expected tax cuts and relaxed regulations in certain industries. At the same time, the Chinese yuan has depreciated, possibly due to concerns about increased US tariffs; gold prices have also declined, likely reflecting the reduced tail risk from the contentious election outcome.

The uptrend is likely to continue

The price movement of exhibits a clear momentum effect (statistical persistence), similar to many physical commodities, a phenomenon that is sometimes mistaken for a "cycle" in prices. Although each cycle has its specific drivers, the past price volatility of may have been partly influenced by the quadrennial block reward halving. As matures and is increasingly accepted by traditional investors, and the impact of future halvings on supply diminishes, this cyclical price fluctuation may become less pronounced. While prices will always exhibit some degree of momentum, future volatility is expected to no longer strictly follow a four-year pattern.

However, historical cycles can still provide a reference for understanding the typical price behavior of . In November 2022, prices reached a cycle low and then began a growth phase that has now lasted nearly two years. Reviewing the most recent four price cycles, the average duration is about 2.2 years, with the last two cycles approaching three years. For the current cycle, the cumulative returns so far are roughly in line with the previous two bull markets. Although the fundamental factors, such as economic conditions and US dollar strength, ultimately determine prices, historical data suggests that the current uptrend may continue to develop.

In summary:

1. prices exhibit commodity-like high momentum characteristics;

2. Past price cycles may have been influenced by the quadrennial block reward halving;

3. As the market matures and broader investor participation increases, this cyclical impact may weaken;

4. The new growth phase since November 2022 has performed similarly to the previous two bull markets;

5. While long-term fundamentals are key, historical experience suggests the current uptrend may continue.

Improvements in the crypto market's financial structure, with MEME tokens standing out

In November, the financial market structure around continued to improve. Net inflows into US-listed exchange-traded products (ETPs) reached $6.5 billion, some of which may have been used for cash-and-carry arbitrage between spot and futures. Additionally, options based on these ETPs began trading last month. As of November 30th, the total open interest in ETP options was $7 billion, with about 70% being call options and 30% being put options. As the spot ETP market environment optimizes, this may have an impact on alternative investments like MicroStrategy stock, which effectively serves as a investment vehicle, despite being a software company. During November, MicroStrategy purchased $12 billion worth of and announced plans to acquire a total of $42 billion worth of over the next three years.

From the crypto industry's perspective, the Consumer & Culture segment (as defined by Grayscale) stood out the most, primarily due to a 161% price surge in Dogecoin (DOGE) during the month. While Dogecoin originated as an internet MEME, its blockchain technology is a fork of , with faster block generation times and transaction processing capabilities close to , Cash, and Litecoin. Dogecoin is the largest asset by market value in the Consumer & Culture segment. On November 12th, Trump announced the creation of a new government efficiency department called DOGE, to be co-led by Musk, which drew additional attention to Dogecoin. Although the newly established department has no direct connection to Dogecoin, the increased attention around Musk and the DOGE MEME may have stimulated demand for Dogecoin, driving up its price.

Trading volume of centralized crypto exchanges in South Korea surges

Apart from Bitcoin and Dogecoin, the cryptocurrencies with the most significant market cap growth last month were XRP and Stellar (XLM). These two projects initially focused on the cross-border remittance sector, but have now expanded into asset tokenization and support for central bank digital currencies (CBDCs) and other applications. Since late October, the value of XRP has risen by 281%, while XLM has surged by nearly 470%.

The outcome of the US election may provide a clearer regulatory environment for crypto projects involved in remittance applications, which could benefit the fundamentals of XRP and XLM. However, the recent growth in returns may also have been influenced by specific capital flows. In particular, the rapid rise in the price of XLM has been accompanied by a surge in trading volume on the major Korean exchange Upbit, which may reflect speculative trading by Korean investors in XLM. Therefore, the short-term performance of XLM may depend more on the sustainability of these demand sources than on the project's underlying fundamentals alone.

Solana has outperformed Ethereum so far this year

In the public blockchain sector, Solana's performance has continued to surpass Ethereum, partly due to the widespread MEME token trading on Solana. Now, the fees generated by Solana are already comparable to Ethereum Layer 1, but its market cap is only about a quarter of the latter. If Solana can further expand its application scope, such as entering the decentralized physical infrastructure (DePin) or stablecoin payment sectors, it is believed that it may continue to maintain a higher fee growth and token price advantage. Among the major public chain projects, the most outstanding performers are Cardano (+216%), Polkadot (+127%), and Sui (+77%).

Although Ether has underperformed Bitcoin and Solana this year, it has overall remained consistent with the average performance of the entire public chain sector. Ethereum has certain competitive advantages, such as being a leader in asset tokenization and having a large developer ecosystem, which may support its development in the coming year. Grayscale points out that Ethereum is taking a "long-term strategy" to promote network effect growth by maintaining low fees on the Base and other Layer 2 solutions.Under the post-election regulatory environment, the trend of institutional adoption of crypto assets will help determine whether Ethereum's current expansion strategy is sufficient to support its position as the leader in the public chain space.

Summary

With the dust of the election settling, developers continue to delve deeper into exploring new blockchain technology applications. Recently, the market's attention has focused on decentralized artificial intelligence (DeAI) projects. Although this field exhibits diverse characteristics, many projects are committed to decentralizing key aspects of AI technology development, including data collection and storage, computing resources, and model training and inference, through blockchain-based economic incentive mechanisms. Grayscale Research specifically mentioned the innovative experiments of "AI influencers" - autonomous AI entities active on social media platforms that can utilize blockchain wallets for payments and receipts.

At the same time, another emerging field that has attracted attention is decentralized science (DeSci), where projects are using blockchain technology to build a more transparent, open, and collaborative research environment. A DeSci-themed event held in early November, which gathered industry leaders, further raised the profile of this market segment.

Looking ahead to the next year, Grayscale predicts that the bull market will continue, provided that macroeconomic conditions remain favorable (i.e., avoiding a recession and the Federal Reserve beginning to lower interest rates). Globally, Bitcoin, as a unique form of digital currency, is gradually gaining recognition, attracting the attention of many investors with its digital scarcity and censorship resistance. We expect that as long as governments are unable to effectively control the ever-increasing debt problem, and policymakers impose restrictions on the traditional financial system through sanctions and other capital control measures, the demand for assets like Bitcoin will continue to rise. Additionally, as the market structure continues to optimize and evolve, investors will be able to access a wider range of crypto assets more efficiently; the new US Congress may also provide a clearer regulatory framework for the domestic market; and developers will continue to introduce exciting new applications, such as innovations closely related to decentralized AI.While 2024 has been an outstanding year for the crypto market, we believe that the prospects for 2025 are equally promising, and may even surpass the previous year's performance.