Original Article Title: "2024 Bitcoin Year in Review: Price Surges 131%, Short of Last Year, TVL Soars Over 21x to 6.7 Billion USD"

Original Article 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 key words "ETF approval," "Halving," and "U.S. election" drove the market changes throughout the year. Behind this overall picture, what specific changes are worth noting for Bitcoin in terms of the trading market, on-chain fundamentals, and application layer? What potential impacts will these changes have on the development in 2025?

PANews' data column PAData provided a multidimensional perspective on Bitcoin's changes in 2024. In general:

Trading Market:

· Bitcoin's full-year price surge reached 131.83%, falling short of last year's 158.06%.

· The main driver behind this year's Bitcoin price surge was the gradually friendly and lenient regulatory environment, rather than just supply scarcity (Halving).

· Long-term holders had better profit levels this year, and they tended to reduce risk exposure earlier when the market approached overheating.

· The trading market this year saw a simultaneous rise in volume and price. The average daily trading volume for the year was around $383.54 billion, a 102.72% increase from last year. The end-of-year open interest was around $309.48 billion, a 195.79% increase from the previous year-end.

· The total holdings of Bitcoin ETFs reached 11.2006 million BTC, showing a strong yearly growth of 80.87%.

On-Chain Fundamentals:

· The average monthly active address count for Bitcoin this year was approximately 780,300, a 17.75% decrease from last year. This may indicate that in a clear upward trend, a long-term holding strategy is favored, and the market may be shifting to a low liquidity growth phase dominated by institutional investors.

· The total on-chain transaction volume for the year was around 49.6658 million BTC, equivalent to $3.28 trillion in USD. The coinbase transaction volume saw a slight increase of 4.67% from last year.

· The number of addresses with balances between 100 and 1,000 BTC grew by 11.21%, indicating a shift from the trend of small balance addresses in recent years to a trend of larger balances this year.

Application Layer:

· The end-of-year TVL of Bitcoin was about 67.55 billion USD, with a staggering annual growth rate of 2117.11%. Babylon accounted for 82.37% of the TVL.

· Staking replacing payments (Lightning Network) has become a mainstream application of Bitcoin.

Outlook for Next Year:

· The Hawk Rate Cut in the background of QT has tightened both short-term and long-term liquidity, posing a major pressure for Bitcoin to continue its upward trend next year.

· This year's price increase was influenced by the expectation of a friendly regulatory environment post-election. If the regulatory environment remains even more lenient next year, it will be favorable for Bitcoin's continued rise.

· BTCFi may further develop, but for its utility to become the primary logic for Bitcoin pricing, it first needs to achieve a sustained expansion of its application scale. In terms of next year, this may still be challenging.

Market Trading: Annual Coin Price Surged Over 131%, ETF Holdings Exceeded 1.12 Million BTC

In 2024, Bitcoin's price surged from 42,208 USD at the beginning of the year to 97,851 USD at the end of the year (as of December 20), with an annual increase of 131.83%. On December 17, it even powerfully broke through the $100,000 mark, reaching a record high of 106,074 USD, with an annual peak increase of about 151.31%. Despite a slight pullback at the end of the year, the price is still operating at historical highs.

From an overall trend perspective, this year, Bitcoin went through three stages of "rise—consolidation—rise," which basically corresponded to the three major events of "ETF approval," "4th halving," and "US Presidential Election." Overall, the logic behind Bitcoin's rise this year is not solely attributed to the supply scarcity brought 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 indicate that the main driving force behind the rise in Bitcoin's price lies in the gradual friendliness and leniency of the regulatory environment, attracting a large amount of institutional funds to enter the market, injecting liquidity, and further boosting the price.

According to glassnode data, the end-of-year profit-taking chips have reached 90.16% (as of December 20), at a historical high. From a profit-taking strategy perspective, LTH-SOPR/STH-SOPR (Long-Term Holder Spent Output Profit Ratio / Short-Term Holder Spent Output Profit Ratio) rose 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 after late November, this ratio has been above 3 multiple times, peaking above 4. A ratio greater than 1 indicates that the profit level of long-term holders is higher than that of short-term holders, and the higher the value, the higher the profit level of long-term holders.

Overall, this year long-term holders have enjoyed a higher level of profitability, with this advantage becoming more pronounced towards the end of the year. Additionally, when considering the overall coin price, it can be observed that the peak profitability of long-term holders precedes the peak coin price, indicating that long-term holders tend to reduce their risk exposure earlier as the market approaches overheating.

This year, Bitcoin's trading market has seen a synchronized rise in both price and volume, with a steady price increase accompanied by surging trading volume.

According to statistics, Bitcoin's average daily trading volume for the year was around 383.54 billion US dollars, with the highest single-day trading volume exceeding 1,904 billion US dollars. The peak trading activity occurred after November, with daily average trading volumes in November and December reaching 748.97 billion US dollars and 965.43 billion US dollars, significantly surpassing the previous monthly average of 308 billion US dollars.

The futures market has also been active. The total open interest has grown from 10.915 billion US dollars at the beginning of the year to 30.948 billion US dollars at year-end, representing a 183.53% annual increase, showing a significant growth rate.

As one of the main drivers of Bitcoin's price surge, the asset holdings of various ETFs have been closely monitored throughout the year. According to statistics, the total holdings of Bitcoin in various ETFs have increased from 619,500 BTC at the beginning to 11,200,600 BTC by the end of the year, marking a strong annual growth of 80.87%. The period of rapid growth coincides with periods of rapid price increase, mainly in late February to March and after November.

Currently, BlackRock holds 524,500 BTC, making it the largest holding in any ETF. Additionally, Grayscale and Fidelity hold significant amounts, with holdings of 210,300 BTC and 209,900 BTC, respectively. The holdings of other ETFs are relatively lower, mostly below 50,000 BTC.

In addition to ETFs, an increasing number of publicly traded companies have also become buyers of Bitcoin, potentially bringing more opportunities to the market. According to statistics, the company with the largest holdings currently is MicroStrategy, holding a total of 439,000 BTC, exceeding the holdings of many ETFs. Furthermore, leading North American Bitcoin mining companies Marathon Digital Holdings and Riot Platforms also hold relatively large amounts, with holdings exceeding 40,000 BTC and 10,000 BTC respectively.

On-chain Fundamentals: Decrease in Active Addresses, Increase in Large Addresses, Total Transaction Volume Reaches 49.66 Million BTC

The monthly average number of active addresses for Bitcoin this year is around 780,300, a 17.75% decrease from last year's 948,700. The monthly average active addresses for January-April and November-December were all above 800,000, but for May-October, they were all below 720,000.

Although this trend is largely in line with the price movement, it is worth noting that despite Bitcoin reaching an all-time high price, the monthly average active addresses for the year decreased, and the highest active address count in a single month also decreased. This shift may indicate that in a clear upward trend, a long-term holding strategy is favored, and the market may be transitioning from a phase of high-frequency trading by retail investors to a low-liquidity growth phase led by institutional investors.

This year, the total number of on-chain Bitcoin transactions exceeded 188 million, representing an increase of approximately 29.66% from last year, marking two consecutive years of growth. The monthly average total transaction count was 15.671 million, with October having the highest transaction count at 20.477 million. Interestingly, during price consolidation phases, there were even more on-chain transactions. This could be influenced by various factors such as short-term arbitrage trades, address consolidation, and contract settlements.

The total on-chain transaction volume for the year is approximately 49.6658 million BTC, equivalent to $3.28 trillion. The BTC-denominated transaction volume saw a slight increase of 4.67% compared to last year. The monthly average total transaction volume for the year is around 4.1388 million BTC, equivalent to approximately $2,734.51 billion.

In general, the relative trends in transaction count and total transaction volume have continued the split pattern from last year, where compared to 2022 and earlier, Bitcoin's transaction count has increased while the total transaction volume has decreased. This is mainly due to the high price environment and the expansion on the application layer, such as last year's Ordinals protocol breakout.

Looking at the address balance distribution structure, the number of addresses with balances between 0.001 to 0.01 BTC, 0.01 to 0.1 BTC, and 0.1 to 1 BTC is still the highest, accounting for 97.24% of the total addresses. However, this year, the number of addresses in these three balance ranges has shown a decreasing trend throughout 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 to 1,000 BTC and 1,000 to 10,000 BTC has increased by 11.21% and 1.68% respectively. This suggests that the trend of smaller balance addresses in recent years has shifted, showing a trend towards larger balances this year, possibly influenced by address consolidation and institutional fund accumulation.

Application Layer: From Clear Text to BTCFi, TVL Surges by 2117% YoY

This year, Bitcoin's application focus has shifted from clear text to BTCFi and from asset issuance to further asset utilization. According to DeFiLlama data, Bitcoin DeFi's Total Value Locked (TVL) surged from $305 million at the beginning of the year to $6.755 billion by the end of the year, marking a staggering 2117.11% YoY increase, with TVL peaking at over $7.3 billion at one point. Currently, Bitcoin has become the fourth-highest blockchain in terms of TVL, following only Ethereum, Solana, and Tron.

In terms of protocol type, the largest protocols on Bitcoin this year have shifted from the Lightning Network in the payments space to Babylon in the staking space. As of December 20, Babylon's TVL had reached $5.564 billion, accounting for 82.37% of the total. According to Dune (@pyor_xyz) data, as of December 23, the number of unique addresses on Babylon has exceeded 140,000, with staking address growth in the last 7 days reaching 100%.

The rapid development of Babylon has driven a series of staking and restaking protocols. Currently, apart from Babylon, there are 10 protocols on the Bitcoin chain, including Lombard, SolvBTC LSTs, exSat Credit Staking, Chakra, Lorenzo, uniBTC Restaked, alloBTC, pSTAKE BTC, b14g, LISA BTC LST. These staking protocols could bring network effects to Bitcoin applications, further promoting its application expansion.

Outlook for Next Year

Bitcoin has experienced significant growth this year. Looking ahead to 2025, Bitcoin may enter a consolidation phase at the beginning of the year. Subsequent performance will continue to be influenced by the macroeconomic environment, regulatory landscape, and industry developments, with opportunities inherent in volatility.

From a macroeconomic perspective, the Federal Reserve has shifted to a hawkish rate-cutting stance at the end of this year. More importantly, the quantitative tightening (QT) policy background remains unchanged, indicating that under the inflation control target, long-term liquidity is still tightening, and short-term liquidity growth may slow down. Therefore, Bitcoin may face some pressure to continue its upward trend next year.

However, based on Bitcoin's price trend this year, its sensitivity to regulatory environment changes is higher. The outcome of the US presidential election directly boosted the Bitcoin price above $100,000. If there is a greater degree of regulatory relaxation in the coming year, it could provide momentum for further Bitcoin price appreciation.

From an industry development perspective, BTCFi's rapid rise is pushing Bitcoin into a new phase of asset application. Staking protocols and other protocols may catalyze network effects for these assets, further supporting Bitcoin's price. However, if Bitcoin's price is heavily influenced by its applications, this will present a new price increase logic for Bitcoin, distinct from its scarcity value proposition or digital gold narrative. Moreover, this scenario places high demands on the scalability of applications, which may be challenging to achieve in the short term.

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