As 2024 came to an end, Coin Metrics says that the year stands in stark contrast to the crypto winter of 2022.
As mentioned in the report from Coin Metrics, 2024 was one of the “most consequential years in the history of crypto” across multiple fronts, starting with the launch of Bitcoin ETFs and concluding with Bitcoin crossing $100K post-election.
In the Coin Metrics’ State of the Network report, the researchers have examined in detail the major developments that shaped the digital assets industry in 2024 through a data-driven lens.
Supported by the success of Bitcoin ETFs in January, the crypto market saw a strong phase of growth in Q1 with Bitcoin soaring to new all-time highs of $73K, the report from Coin Metrics noted.
What came after though was a relatively quieter period of consolidation, characterized by “subdued catalysts and significant supply redistributions from major market participants.”
Now, as 2024 concluded, optimism has returned, fueled by “a pro-crypto U.S. administration and the onset of a rate-cutting cycle.”
The report from Coin Metrics added that Bitcoin (BTC) took center stage this year, “outperforming traditional asset classes and crypto-assets with a 125% gain year-to-date.”
Solana (SOL) notably led the market several times this cycle, “ending the year 78% higher, while Ethereum continued its relative underperformance, rising 44% over the year.”
The report from Coin Metrics further noted that memecoins like DOGE and PEPE captured attention “fueled by retail exuberance, while Ripple (XRP) and Stellar (XLM) staged an unexpected comeback.”
Alternative Layer-1s like Sui (SUI) and blue-chip DeFi protocols like Aave also gained traction, “reflecting the investor sentiment and thematic rotations that shaped the market in 2024.”
The report also mentioned that the arrival of spot Bitcoin ETFs ushered in “a large wave of adoption” and “opened the floodgates to Wall Street.”
The report added that assets under management (AUM) for the 11 issuers now exceeds “$105B, with over 1.2M bitcoin held by the vehicles.”
This amounts to “5.6% of Bitcoin’s current supply with demand from corporate balance sheets further accelerating the pace at which supply is absorbed.”
In less than a year since launch, spot Bitcoin ETFs have “experienced robust flows, cementing their position as the most successful debut of any ETF category in history.”
The report also noted that weekly flows illustrate consistent accumulation, with peak weeks “exceeding $2B in net additions, although occasional outflows were observed during market consolidations in the summer months.”
In parallel to this Bitcoin-driven institutional adoption that pushed the overall market higher, meme coins started to “attract tremendous mindshare, leading to an uptrend driven by extreme ends of the risk spectrum. In early March, spot trading volume for meme coins hit $13B, as the market capitalization of major meme coins reached $60B.”
As stated in the report from Coin Metrics, March also marked a major milestone for Ethereum with the “deployment of EIP-4844 as part of the Dencun upgrade.”
Shortly after, Ethereum Layer-2 rollups adopted “a new fee market for blob transactions in parallel to mainnet.”
This laid the foundation for Ethereum to “scale execution with the help of Layer-2s like Base, Optimism, and Arbitrum while reducing the cost of settlement to the Layer-1, making transacting on the network more affordable.”
Although this has made the Ethereum ecosystem accessible, it has hindered ETH’s “value accrual due to reduced Layer-1 fees, while also contributing to a more fragmented user experience.”
The report further noted that ubiquitously recognized as “crypto’s killer app”, the global importance of stablecoins started “permeating beyond the crypto industry.”
Stablecoins continued to “export the dollar around the world, crossing an aggregate $210B in supply. USDT ($138B) and USDC ($42B) remained the dominant players, while a majority of stablecoin supply tilted in favor of the Ethereum network, with $122B in stablecoin supply. Altogether, stablecoins facilitated $1.4T in monthly (adjusted) transfer volumes in November.”
As stated in the update from Coin Metrics, BlackRock entered the tokenization space, launching the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), “investing in dollar-equivalent assets like cash and US Treasury bills. BUIDL quickly reached a supply of 500M, growing the landscape of tokenized securities on public blockchains.”
The report from Coin Metrics added that the 2024 U.S. presidential election had a “profound impact on digital asset markets, propelling BTC above $100K for the first time.”
The report also stated:
“Market optimism surged post-election, fueled by the administration’s pro-crypto stance, a stark departure from the regulatory headwinds of the prior SEC regime. Demand from ETFs and corporate treasuries bolstered the rally, with MicroStrategy’s holdings reaching 444,262 BTC, funded by its equity and convertible bond offerings. Institutional interest hit new highs in derivatives markets, as reflected in record Bitcoin futures open interest of $22.7B on CME out of a total of $52B+, alongside the launch of options-based ETFs.”
Despite this momentum, uncertainties “remain regarding the implementation and timeline of crypto-friendly policies.”
While there are indications of a shift towards a more supportive regulatory environment, including the “appointment of crypto advocates to key positions like SEC chair and crypto czar, specific regulatory frameworks remain unclear.”
Market exuberance has also been “tempered by revised expectations for interest rate cuts, leaving participants cautiously optimistic heading into 2025.”
The Coin Metrics report concluded:
“2024 leaves us with a strong foundation: the introduction of spot Bitcoin ETFs, acceleration of stablecoin adoption, significant strides in on-chain infrastructure and applications, and a pro-crypto administration taking office at the onset of a rate-cutting cycle.”