2024 crypto market panorama: Bitcoin ETF, political and economic changes, and innovative ecology

1. Market Overview

1.1 Cryptocurrency Market Fundamentals

In 2024, the total market capitalization of the cryptocurrency market grew from $2.31 trillion to $3.33 trillion, an increase of 44.2%. This growth was attributed to key events such as the approval of spot Bitcoin ETFs and Trump's election victory. Bitcoin's dominance rose to 56.8%, with ETF assets under management doubling. Ethereum ETFs performed relatively flat. Solana showed remarkable performance, with a price increase of 29.3% and a net inflow of $2 billion into its ecosystem.

The total value locked (TVL) in DeFi has doubled year-on-year, with the ratio of DEX to CEX trading volume increasing to 11.05%, and the annual trading volume reaching 2.67 trillion USD. Solana and Base have both more than doubled their market share in DeFi TVL, reaching 7.17% and 3% respectively.

The market value of stablecoins has grown by 26.8%, exceeding $205 billion. New entrants like Ethena are driving this trend with competitive yields. The potential approval of ETFs for institutional favorites like XRP and SOL will bring positive catalysts to the market.

1.2 Macroeconomic Environment and Politics

Politics

United States: Trump is elected president again, and the Republican Party wins a majority in Congress. Trump's policies may bring uncertainty to the international situation. Whether his crypto-friendly policies can promote market development remains to be verified by the actual policies after taking office.

Europe: Affected by the Russia-Ukraine war, energy prices have risen and military spending has increased. The discourse power of right-wing parties has significantly strengthened. Cryptocurrency policies follow the United States, implementing the MiCA legislation, enhancing regulation on stablecoins and cryptocurrency entities.

Other regions: The Middle East is engulfed in continuous warfare, with conflicts between Israel and Hamas, Iran, and others. Several countries in South America are advancing the legalization of cryptocurrencies.

Economy

Global GDP growth rate is 2.6%, and the inflation rate is 2.5%. Inflation in the United States has been partially controlled, and interest rates are starting to be lowered. The Eurozone is experiencing slow growth due to the impact of geopolitical conflicts. China is facing challenges such as sluggish consumption and export obstacles. Emerging markets are affected by the US dollar interest rate hike, with some countries experiencing severe depreciation of their local currencies.

The three major U.S. stock indexes surged significantly, with tech stocks performing the best. The development of AI is disrupting multiple sectors and enhancing production efficiency. The Japanese stock market hit a 30-year high, benefiting from carry trades and export advantages.

2. Bitcoin

2.1 Product and Protocol Design

In the second half of 2024, there will be important software upgrades for Bitcoin, such as Bitcoin Core 28.0 introducing flexible transaction forwarding strategies and the Lightning Network launching BOLT12. There are differences within the community regarding the soft fork proposals, mainly focused on new opcodes and the LNHANCE scheme. BitVM is making steady progress, with a focus on cross-chain bridge design and implementation.

2.2 Layer 2 - Lightning Network

The number of Lightning Network channels has not changed much, maintaining a total of about 5000 BTC. The number of nodes is basically stable, but the number of channels continues to decrease. BOLT12 has been adopted by many clients and supports static payment methods. Some Layer 1 networks are developing Layer 2 solutions compatible with the BOLT specification.

2.3 Layer 2 - Side Chains

Layer 2 sidechains show varying performance. Some projects have declined since their peak, while others continue to grow. BTCFi faces challenges related to dependence on unsustainable TVL surges and airdrop incentives. The main driver for Bitcoin deposits into L2 is the opportunity to earn low-risk returns.

On-chain Assets

The overall performance of on-chain Bitcoin assets is mediocre and has not appreciated alongside the rise in Bitcoin prices. Assets under protocols like BRC20 and Runes have performed poorly. RGB is being promoted, and progress has been made in integrating with the Lightning Network. Taproot Assets, launched by Lightning Labs, enables low-cost minting of stablecoins.

2.5 BTCFi

BTCFi can provide additional yields for Bitcoin holders, and the overall locked value is expected to grow. Staking, liquid staking, and liquid re-staking are driving the growth of various BTCFi projects. Babylon attracts a large amount of TVL denominated in Bitcoin. Various LST projects are emerging, unlocking liquidity and driving DeFi activities.

3. Ethereum

Despite the launch of the ETH ETF, its performance has not been able to replicate the success of the Bitcoin ETF. The ETH/BTC ratio has fallen to 0.037. Gas fees on Layer 2 are significantly lower than on Ethereum, leading to an influx of funds into Layer 2 projects. The EVM remains the most dominant and active virtual machine in the ecosystem.

3.1 L2s

After the introduction of blob data storage, rollup transaction fees decreased by more than 90%. Base, OP Mainnet, and Arbitrum achieved net inflows of $3.5 billion, $2.1 billion, and $1.7 billion, respectively. Layer 2 daily transaction volume increased by 325%, reaching 16.86 million transactions.

The significant capital inflow into Base can be attributed to a smooth user experience, collaboration with Coinbase, and the launch of popular applications. Daily active users have increased to 1.6 million, and DeFi activity has significantly improved.

Arbitrum has launched Stylus, supporting multiple programming languages. The future roadmap includes measures such as multi-client support and adaptive pricing.

The OP Superchain continues to grow, reaching a total of 56 chains based on the OP-Stack by the end of the year. The number of active developers has increased to 3,446.

3.2 Re-staking

The total amount of staked Ethereum has risen overall, reaching a peak of 34.5 million coins. The yield has dropped to 3%, prompting users to seek alternative returns. The TVL of re-staking protocols has decreased from 5.11 million ETH to 4.44 million ETH. The TVL of Symbiotic has significantly increased, rising from $307 million to $2.12 billion.

3.3 Ethereum's Future Roadmap and EIP Proposals

The Pectra upgrade is scheduled to be completed in the first quarter of 2025 and will include several key EIP proposals:

• EIP-7691: Expand Blobs target capacity, reduce L2 costs
• EIP-7702: Implement EOA Account Smart Contract Functionality
• EIP-7251: Optimize validator management, reduce network load

The long-term roadmap aims to introduce core technologies such as zero-knowledge proofs and post-quantum cryptography by 2029.

4. Solana

Solana price increased by about 75%, with the SOL/ETH ratio rising to 0.06. Leveraging the advantages of the SVM architecture, it has attracted multiple high-performance applications for development. The market capitalization of stablecoins has grown more than threefold, reaching 5.1 billion dollars. The number of new developers surpasses that of other blockchains. Collaborations with Shopify and Visa strengthen network growth.

In 2024, the main focus of the Solana ecosystem will be on areas such as DePIN, meme, and PayFi.

DePIN: Leading projects like Helium and Render Network are migrating to Solana, leveraging the platform's advantages to provide services. Emerging projects such as Hivemapper and Cudis are also emerging.

Meme: Platforms like Pump.fun are boosting the Solana meme boom, with trading volumes surpassing Ethereum. Data analysis platforms such as GMGN.ai provide market insights for investors.

PayFi: Solana Pay is used as an integrated plugin in Shopify stores. Partnering with VISA to open offline payment channels.

The activation of Firedancer in the future will further enhance network performance. The Solana plugin offers more flexible token issuance capabilities. The potential approval of ETFs, growth of stablecoins, and institutional adoption will bring positive catalysts to the ecosystem.

5. Alt-L1s

Berachain

Berachain rewards liquidity providers with governance tokens through the liquidity proof mechanism (PoL). The BeaconKit modular consensus client is EVM compatible. It had a TVL of over $1.5 billion before launch and rose to become the eighth largest network after launch.

TON

With the support of Telegram's 900 million monthly active users, TON has attracted a lot of attention. Games like Catizen have reached 4.7 million monthly active users. TON's daily active users have increased to 293,539, and DeFi TVL has grown more than tenfold to 261.7 million USD.

Kaia

Merged from Klaytn and Finschia, integrating the two major messaging applications LINE and KakaoTalk. Provides optimization measures such as account abstraction and Gas fee proxy payments. TVL has increased from $37 million to $60 million. Launched the Kaia Wave program to promote ecological prosperity.

Move

The number of active developers in the Move ecosystem has increased to over 1,500. Sui outperformed Aptos on multiple metrics, including FDV, TVL, net capital inflow, and DEX trading volume. The market capitalization of Sui's stablecoin has risen to $370.77 million, with a TVL of $1.6 billion. Aptos' TVL grew more than 8 times to $975.52 million, and the market capitalization of its stablecoin increased by more than 12 times.

MegaETH

MegaETH is EVM compatible and has a transaction throughput of 100,000 TPS. It addresses the limitations of transaction throughput and computing power through node specialization. It focuses on real-time transaction processing and state synchronization.

Monad

Monad achieves optimistic parallel transaction execution across multiple EVM instances. The MonadBFT consensus mechanism reduces latency. MonadDB optimizes data storage, reducing computational bottlenecks. It supports asynchronous I/O to improve throughput. It can achieve up to 10,000 TPS, a block time of 1 second, and 1 second finality.

6. Other tracks

6.1 Meme

The overall increase in the Meme sector is 218%. Ethereum, Base, and Solana are the three most active public chains. Pump.fun has launched a standardized token issuance framework, greatly releasing retail demand. The Virtuals Protocol has launched an AI agent creation platform in the Base ecosystem. New tools such as Kaito and Photon are emerging to help users seize market opportunities.

6.2 AI

The AI field has transitioned from infrastructure in the early part of the year to a massive explosion of agents in the second half. The successful transformation of the Virtuals Protocol has catalyzed the explosion of agents. The functions of agents cover social media bots, on-chain execution, and VC agents, among others. Development frameworks such as ElizaOS and RIG framework have emerged. The combination of AI tokens and memes has become a hot topic.

6.3 RWA

The RWA market value increased by 63% to $13.67 billion. Private credit and U.S. Treasury bonds are the main asset classes. Tokens services have been launched by BNB, Tether, and others. Private credit TVL grew by nearly 50% to $16 billion. The TVL of the U.S. Treasury bond sub-sector rose from $769 million to $3.96 billion. The supply of stablecoins increased by 56% to $203.73 billion.

6.4 Trading Robot

Trojan and GMGN.AI have become the market-leading trading robots. Bloom will emerge by the end of 2024, with a steadily increasing market share.

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