Crypto Market Report Q4 2024

The year 2024 began with optimism for the crypto market, fueled by the launch of Bitcoin ETFs, but it soon entered a consolidation phase during the second and third quarters. The turning point came in September, as the U.S. Federal Reserve started interest rate cuts, injecting renewed momentum into the market. This momentum accelerated after the November U.S. election, with the re-election of President Donald Trump. His administration, coupled with Republican control of Congress, laid the groundwork for potential pro-crypto initiatives.

The impact of these developments was evident in the fourth quarter, as the total crypto market cap surged by over 46% from Q3, with daily trading volumes more than doubling from $71 billion to $151 billion.

Stablecoin Market & SSR Ratio

Total stablecoin market cap reached $211.7B, up 29% from mid-year and 55% from the start of the year.

The emergence of new stablecoins like Ethena's USDe and PayPal's PYUSD caused a slight decline in the combined market share of USDT and USDC, now at 86%. USDe has been the biggest winner among new entrants, reaching a market cap of $5.85B to become the third-largest stablecoin. Major players such as Stripe, Visa, and PayPal have also entered the stablecoin space, signaling growing interest in this market.

SSR measures the buying power of stablecoins relative to Bitcoin. A low SSR implies there is more buying power in stablecoins relative to Bitcoin. While Bitcoin price has surged to over $93,000, the SSR ratio is still below the level seen in March 2024, indicating potential buying power.

Crypto Fear & Greed Index

Throughout most of the year, the Fear and Greed Index, a key sentiment indicator, closely mirrored the trend of the total crypto market cap, with stronger market performance driving greater greed.

However, a significant divergence emerged toward the end of the year. While the crypto market held steady at high levels, the Fear and Greed Index reset to a neutral level below 50.

A neutral Fear and Greed Index while the market holds at high level indicates investors are behaving more rationally, which is a healthy sign for the market.

BTC & ETH

Bitcoin and Ethereum retained their dominant positions in 2024, with BTC market cap rising 114% and ETH market cap increasing 42%. By the end of the year, BTC accounted for 57% of the total crypto market share, while ETH held 12%.

XRP emerged as the fourth-largest cryptocurrency with a 4% market share, trailing only Tether's USDT. BNB maintained in the top 5 largest cryptocurrencies with a market share of 3%.

While U.S. stocks and gold performed well in 2024, each recording returns of over 20%, Bitcoin and Ethereum outshined them with far greater annual gains. Bitcoin delivered an impressive 120% yearly return, while Ethereum achieved a solid 42%.

The truly striking fact is that these returns were achieved in a macro environment where interest rates remained at around 5%. With the U.S. Federal Reserve beginning to cut rates in late 2024 and expected to continue easing in 2025 (albeit not significantly due to inflation concerns), both Bitcoin and Ethereum could see an extended rally.

The ETH/BTC exchange rate declined throughout 2024, dropping from a high of 0.06 in February to 0.036 by year-end, highlighting Ethereum's relative weakness compared to Bitcoin.

BTC MVRV Z-Score & Holder Waves

The Bitcoin MVRV Z-Score compares BTC's market cap to its realized cap, indicating whether the current price is significantly overvalued or undervalued. A Z-Score above 6 signals extreme overvaluation, while a score between 1 and 3 suggests the price is in a neutral zone.

The current Z-Score of 2.58 indicates the asset is transitioning into a full-fledged bull market. While it remains below levels historically associated with multi-year price peaks, investors should be prepared for potential periods of consolidation.

The 6-Month+ Holder Waves metric tracks the proportion of BTC that has remained inactive for at least six months. Historically, long-term holders tend to sell during market peaks for profit-taking.

During the last bull market peak, the metric fell from around 70% to 60%. Currently, it remains steady at 70%, suggesting that most long-term holders have yet to start selling their coins.

BTC as a Treasury Asset

Bitcoin has gained significant traction as a corporate treasury asset, offering companies a novel way to diversify their holdings and hedge against economic uncertainty. This trend reflects growing confidence in Bitcoin’s role as a store of value and its potential to outperform traditional assets.

In addition to MicroStrategy, which now holds over 2% of the total BTC supply, several public companies across the U.S., HK, Germany, and Japan have adopted BTC as a corporate treasury asset. These companies span various industries, including fintech, gaming, medical products, and real estate.

MicroStrategy was added to the Nasdaq-100 Index on Dec 23, 2024. Numerous institutional investors, including pension funds, mutual funds, and ETFs, track the Nasdaq-100. These funds are now required to purchase its stock to align with the index composition, thereby gaining indirect exposure to Bitcoin.

EFTs

Launched in January 2024, U.S. spot Bitcoin ETFs provided investors with direct exposure to Bitcoin via regulated financial instruments. These ETFs experienced remarkable success throughout the year, garnering total net inflows exceeding $35 billion.

BlackRock's IBIT led the market in net asset value, followed by Fidelity's FBTC and Grayscale's GBTC.

Unlike the significant inflows seen with BTC ETFs, ETH ETFs ended the year with a modest total of $2.68 billion in inflows. Grayscale's ETHE led the market in net asset value, followed by BlackRock's ETHA and Fidelity's FETH.

The market anticipates that a staked ETH ETF could be approved during the Trump administration, potentially enhancing the attractiveness of ETH ETFs significantly.

Trump’s Crypto Promises

The incoming Trump administration is expected to implement significant changes to U.S. Crypto policy, creating a more favorable environment for digital assets.

Events in Q4 2024 & Catalysts in Q1 2025