Bitcoin 2024 Year in Review and 2025 Outlook

In 2024, the Bitcoin market achieved a significant breakthrough, with prices soaring past the $100,000 mark, setting a new milestone in the digital asset space. "ETF approval", "halving", and "U.S. elections" became the three key factors driving the Bitcoin market trends throughout the year. Let us review the developments and changes of Bitcoin in 2024 from multiple dimensions, including the trading market, on-chain fundamentals, and application layers, and look ahead to its potential impact on 2025.

Market Performance

• Bitcoin's annual increase reached 131.83%, lower than last year's 158.06%
• The gradually friendly regulatory environment has become the main driving force behind the price increase, rather than simply the scarcity of supply.
• Long-term holders achieve higher profits and tend to reduce risk exposure earlier when the market is approaching overheating.
• The trading market shows a trend of simultaneous increase in both volume and price, with an average daily trading volume of approximately 38.354 billion USD for the year, representing a year-on-year growth of 102.72%.
• The total open interest at the end of the year is approximately $30.948 billion, an increase of 195.79% compared to the end of last year.
• The total holdings of Bitcoin ETFs reached 11.2006 million BTC, with a strong annual growth of 80.87%.

On-chain Fundamental Changes

• The average number of active addresses on the chain is approximately 780,300, a decrease of 17.75% compared to last year, which may reflect a shift in the market towards a low liquidity growth phase dominated by institutional investors.
• The total on-chain transaction volume for the year is approximately 49.6658 million BTC, equivalent to 328 billion USD, with a slight year-on-year increase of 4.67% in coin-denominated transaction volume.
• The number of addresses with a balance between 100 and 1000 BTC increased by 11.21%, indicating a trend towards larger balances.

Application Layer Development

• At the end of the year, the TVL of Bitcoin DeFi is about 6.755 billion USD, with an annual increase of 2117.11%.
• Babylon has become the dominant protocol, with a TVL share of 82.37%.
• Staking applications replace payments (Lightning Network) as the mainstream application of Bitcoin

Outlook for 2025

• Under the backdrop of the Federal Reserve's hawkish interest rate cuts, the tightening liquidity in both the short and long term may exert pressure on Bitcoin's continued rise.
• A further loosening of the regulatory environment will be beneficial for Bitcoin to continue rising.
• BTCFi is expected to further develop, but if its application scale wants to become the main logic for Bitcoin pricing, it still faces challenges.

Overall, Bitcoin made significant progress in multiple aspects in 2024. Looking ahead to 2025, Bitcoin may enter an adjustment period at the beginning of the year, and its performance will continue to be influenced by various factors such as the macro economy, regulatory policies, and industry developments. Although facing some challenges, the Bitcoin market still contains many opportunities.