Written by: InnoMin Capital

1. Summary

1. Market review in 2024

The Bitcoin bull market will continue in the first quarter of 2024, with positive overlap and strong upward driving force for market performance. The first quarter of 2024 got off to a strong start. The first batch of spot Bitcoin ETFs in the United States were approved for listing on January 11. In addition to GBTC and Hashdex, the 11 newly approved spot ETFs had a net inflow of US$1.9 billion in the first three trading days. In March, it reached the peak in the first half of the year, about US$63.4 billion. By the end of the first quarter, the spot price of BTC had increased by 62%. Entering the second quarter, Bitcoin experienced its fourth halving event on April 20, with the reward per block reduced from 6.25 BTC to 3.125 BTC. After BTC hit a new high of nearly $73,800 in March, the overall market entered a long period of adjustment. It fluctuates between 52,000 points and 72,000 points. As of the end of the second quarter, due to the negative impact on the market caused by special events including the German sell-off and Mt. Gox compensation, the BTC market ended in a downturn with shock. In the third quarter of 2024, Bitcoin measured key support and resistance levels, forming an overall volatile trend, and market trading activity decreased. Among them, BTC fell by 4% quarter-on-quarter, and ETH fell by 24.5% quarter-on-quarter. The overall encryption field was in Price performance was relatively weak until September, when the Federal Reserve announced an interest rate cut for the first time, which was beneficial to the market and trading sentiment gradually recovered. In the fourth quarter of 2024, Trump won the US election and the first cryptocurrency accounting standards formulated by FSAB (Financial Standards Advisory Board) officially came into effect. The currency circle gained more regulatory clarity and released an unprecedented signal. As of December 17, the price of BTC exceeded $100,000 for the first time in December, reaching an all-time peak of 108366.80. BTC rose 71% quarterly, and ETH rose 52% quarterly, and continued to maintain a high level. November is a turning point for the crypto industry. We believe that the current Bitcoin price has fully reflected the market’s optimistic expectations for a turn. It is expected that BTC will drive other currencies to usher in a dual resonance of sentiment and both sides, and the industry will continue to be bullish.

Figure 1: BTC daily K-line

Figure 2: ETH daily K-line

2. BTC historical cycle review< p style="text-align: left;">Judging from historical data, the cryptocurrency market shows obvious four-year cycle characteristics. Prices have significant statistical momentum characteristics, that is, upward trends tend to continue the previous upward trend, while downward trends tend to continue to decline. This characteristic makes the periodic fluctuations of prices somewhat predictable. However, each cycle is driven. Factors are different, such as macroeconomic and technological progress, so future price trends will also be different. However, investors can better understand the statistical characteristics of Bitcoin by analyzing past price trends, and refer to these rules when making decisions. Market volatility.

In the cycle from January 2015 to December 2017, the price of Bitcoin increased more than 100 times. In the cycle from December 2018 to November 2021, the price of Bitcoin increased approximately 20 times, and thereafter in 2022 It fell to a cyclical low of $16,000 in November, and the current price increase phase starts from November 2022. Starting in January, it lasted two years. From an increase perspective, Bitcoin is currently up 6 times this cycle, which is far lower than the returns achieved in past cycles.

Judging from the BTC on-chain indicators, the BTC unrealized net profit/loss indicator is currently at a benign level of around 0.62 (in the belief stage), which is consistent with the level in the middle of the bull market. It is currently in the peak stage and is lower than the previous cycle. The peak value is 0.75. The indicator also tells the same story, with a peak of 2.67 in December (in the ‘increasingly high’ range) and currently in the continuation phase. Looking at the total market capitalization/miner cumulative revenue, the yellow line is in 2024. The position of the year is far from entering the red high range, indicating that the market has not yet reached the overheated state of the bull market. The current ratio is at a medium level. From the black line, we can see that the Bitcoin price is showing a gradual upward trend, which is consistent with the performance in the middle of the past bull market. According to the market value. levels and the historical performance of Bitcoin prices, it can be judged that the cryptocurrency market still has a lot of room to reach the peak of the bull market, and investors should pay attention to the further development of the market at this stage.

Figure 3: BTC price cycle chart

Figure 4: BTC unrealized net profit/loss chart, currently at the 0.62 level, in the confidence-denial stage

(Note: BTC unrealized net profit/loss is the difference between relative unrealized profit and relative unrealized loss, and its thresholds are set to 0.0, 0.25, 0.5 and 0.75, showing different sentiments throughout the BTC macro cycle)

Figure 5: The peak value of BTC MVRV in December was 2.67

(Note: This method is to calculate the historical MVRV transaction The proportion of days that prices were below or above certain levels. Only results since 2017 are considered in the chart, with the following criteria: Extreme Lows: MVRV has been below 0.8 for approximately 5% of trading days; Gradually Low: MVRV has been low for approximately 15% of trading days at 1.0; ? gradually higher: about 20% of the trading days MVRV exceeds 2.4; ? extremely high: about 6% of the trading days MVRV exceeds 3.2. )

Figure 6: BTC MCTC is currently away from There is still room in the red high range

(Note: MCTC total market value/cumulative income of miners, red range represents high, green range represents Low)

3. Main market data

(1) Cryptocurrency exchange trading volume

As of December 18, 2024, monthly cryptocurrency trading The mean value of volume is US$1.47t, the standard deviation is 0.54t, and the trading volume fluctuates greatly. The maximum trading volume is US$2.71t, reaching peaks in March and November 2024 respectively. This level is basically close to the second largest peak of the previous cycle (November 2021). Overall, trading volume showed greater volatility, mainly concentrated between US$1.1t and US$1.8t.

Figure 7: Cryptocurrency monthly exchange trading volume (USD)< /p>

(2) Total stablecoin supply

The current total stablecoin supply is US$211 billion. The overall growth trend from the beginning of this year to December was generally linear, with overall growth 43.8%, especially showing large increases in November and December, indicating that capital is accelerating into the crypto ecosystem.

Figure 8: The total supply of stablecoins, of which USDT accounts for 71.1% and the proportion is gradually stabilizing

(3) Spot ETF trading volume

As of December 18, Bitcoin spot ETF Continued strong performance, with single-day capital volume reaching $275 million, maintaining net inflows for 12 consecutive months. On December 17, according to data from investment institution K33 Research, the capital size of Bitcoin spot ETFs exceeded US$129.3 billion in less than a year after being listed for trading, surpassing the US$128.9 billion of traditional gold ETFs. From July to November, the trading volume of ETH ETF showed a trend of first declining and then recovering, and investor confidence in Bitcoin spot ETF and Ethereum spot ETF continued to strengthen.

Figure 9: Spot BTC ETF trading volume (USD)

Figure 10: Spot ETH ETF trading volume (USD) em>

(4) DeFi Total locked-up volume

The total DeFi locked-up volume in 2024 will show a continuous upward trend, especially in the fourth quarter, TVL (Total Value Locked-up Volume) is rapidly Climbing up to 1On February 17, it reached an all-time high of approximately $218.7 billion. Since the interest rates provided by decentralized lending platforms such as Aave and Compound are generally higher than traditional bank deposit rates and the advantages of operating in a decentralized manner can greatly reduce risks, DeFi protocols have shown broad potential and become a highlight of the crypto market. Among them, the proportion of Liquid Staking has increased compared with the beginning of the year, indicating that the Proof of Stake (PoS) protocol has enhanced its role in promoting locked positions.

Figure 11: DeFi total locked position (USD)

Summary: Overall, the current indicator group shows that the crypto market is in the mid-term stage of the bull market. The major market indicators are all well above the cycle lows, but they are not yet Reaching levels that marked the previous market top. The high trading volume and the continued growth of DeFi lock-up volume represent a further increase in market activity. The growth in the total amount of stablecoins and the accelerated capital inflow indicate that the market capital environment is loose and liquidity is increasing, providing basic support for the rise of the cryptocurrency market. Push prices up.

4. Risk warning

Risk 1: Delay or failure to meet expectations

Currently, Bitcoin prices have largely reflected the market’s optimistic expectations for a turnaround. However, this also means that if there is a delay or falls short of market expectations, it could have a significant impact on market sentiment. For example, the replacement of the SEC Chairman or the related release process of the Bitcoin Strategic Reserve Plan may become potential risk points.

Risk 2: Adjustment of the Fed’s currency

Any unexpected change in the Fed’s monetary path, especially A re-acceleration of the interest rate hike process or a significant tightening of the stance may have a direct impact on market liquidity, thereby inhibiting the performance of BTC and other crypto assets.

Risk 3: Market bubbles and emotional fluctuations

The cryptocurrency market is dominated by retail investors Dominant and highly susceptible to emotional drives. This characteristic makes the market prone to the formation of speculative bubbles, and the risk of violent price fluctuations due to emotional fluctuations increases significantly.

2. TrumpThe era of President Trump 2.0 has begun

Trump has not yet officially entered the White House, and the encryption market is ushering in a carnival ahead of schedule, and it is expected to continue to release benefits.

1. How the three most critical encryption "commitments" will affect the market outlook

Special Trump's election has brought expectations of looser regulations for the crypto industry, including announcing the creation of a Bitcoin reserve and nominating a crypto-friendly SEC chairman. These measures will drive up Bitcoin prices in the short term, and more importantly, legislative progress in the medium to long term. If the three key bills are passed, the U.S. encryption industry will usher in a new stage of development.

(1) The FIT 21 bill will be promoted as a priority, and DeFi innovation may "return" to the United States

FIT 21 is regarded as a milestone in the field of encryption. It aims to clarify the commodity and security attributes of cryptocurrency and resolve regulatory disputes between the SEC and CFTC. After Trump is elected, the progress of the bill is expected to accelerate. After its passage, more compliant trading platforms and financial products may emerge in the United States, enriching the types of spot ETFs, and paving the way for more crypto asset ETFs. At the same time, decentralized application innovation will be encouraged, especially in the DeFi track. The bill stipulates that tokens that meet decentralization standards can be exempted from supervision, attracting more projects to return to the United States. The combination of traditional capital and RWA (real asset tokenization) track will promote the integration of on-chain finance and real assets.

(2) US stable currency legislation may return to the agenda

2023 "Payment Stability" The Currency Clarity Act failed to pass due to disagreements. Trump’s election and his stance against CBDCs could inject new impetus into stablecoin legislation. Clear compliance standards will benefit compliant stablecoins such as USDC and accelerate the adoption of traditional payment institutions. As the role of stablecoins in cross-border payments increases, their market share and user scale will continue to grow.

(3) The proposal to abolish SAB 121 is restarted, and the crypto asset custody problem will be solved

The SAB 121 announcement released in 2022 imposes strict requirements on the accounting treatment of crypto assets, hindering the development of custody services. Trump promises to repeal SAB 121, reduce compliance costs for financial institutions to enter the custody business, and attract more institutional investors and traditional custody institutions to participate in on-chain businesses. Stablecoins and RWA tracks will benefit and promote the digital management boom of traditional assets.

Figure 12: The two parties voted unanimously to reject the SEC SAB 121 initiative.

2. Paul Atkins leads regulatory reform, and cryptocurrency regulation enters a new era

Trump team’s recent financial regulations The move shows clear support for the crypto market, especially following the nomination of Paul Atkins, who has an industry background, as SEC chairman. This choice demonstrates the Trump team’s determination to build an inclusive and innovation-driven capital market.

(1) Paul Atkins’ position and influence

Paul Atkins is known for his support of market innovation and Openness is widely recognized. He has long advocated reducing regulatory intervention to unleash innovation potential and drive economic development. As co-chairman of Token Alliance, he has accumulated extensive experience in the field of crypto assets and blockchain. In its nomination announcement, the Trump team highlighted Atkins' endorsement of crypto assets and technological innovation, as well as his commitment to promoting strong capital markets. The move signals a possible shift by the SEC from a penalty-driven toward flexible regulation.

(2) Support tendencies of other team members

According to statistics, the Trump Cabinet More than 60% of the members nominated publicly support the development of crypto assets and financial innovation. Some of its members have stated that they hold Bitcoin or other encrypted assets and advocated easing to promote industry development. The existence of these supporters shows that the development of the encryption market will be further promoted in the future and new implementations will be ensured with more efficient execution.

Table 1: Comparison of regulatory ideas

3. The beginning of a new round of interest rate reduction cycle

1. Summary of the US economic situation

Since 2022 Since then, in order to deal with the inflation caused by the epidemic, the United States has launched the most comprehensive policy since the financial crisis.for radical quantitative tightening. The Fed, under Powell, has raised its benchmark interest rate from 0.08% to 5.33% in July 2023 through rate hikes. High interest rates boost fixed-income investing but are detrimental to risky assets such as stocks and cryptocurrencies. However, high interest rates failed to effectively curb inflation and fell short of the Federal Reserve's 2% target. These high interest rates have remained high for more than a year, amid continued concerns about a possible recession and stagflation. In 2024, the U.S. macroeconomic situation begins to turn around. Since April, core CPI has gradually declined, indicating that inflation has cooled; non-farm employment data has also exceeded expectations for five consecutive months, reflecting the recovery of the labor market. These indicators indicate changes in inflation trends and the need for adjustments. On July 31, 2024, the Federal Reserve announced that it would cut interest rates in September, four and a half years since the last rate cut in March 2020.

2. The impact of three interest rate cuts in 2024 on cryptocurrencies

September 18, The Federal Reserve officially decided to lower the target range of the federal funds rate by 50 basis points, starting a monetary easing cycle. The good news of a large-scale interest rate cut was quickly realized in the cryptocurrency market. Starting from September 18, the price of Bitcoin continued to rise by 9.0% in 11 days. % It was only later that the market gradually cooled down and ushered in a partial correction. Some investors began to make large-scale arrangements the day before the resolution, pushing the currency price up by 3.6% in a single day before the interest rate cut was announced. On November 8, the Federal Reserve announced another 25 basis point interest rate cut. This rate cut was basically in line with market expectations. According to CME Fed Watch data, the probability of a 25 basis point interest rate cut has remained above 80% since October 4. The Bitcoin market It has also started a volatile rise since October, with the currency price rising by 11% within a month. This round of sentiment had almost been digested by the market before the results were announced. Although the entire market was still immersed in the good news of Trump's election, the Fed's announcement of an interest rate cut did not arouse a strong reaction from the market that day. The currency price within 24 hours after the announcement The amplitude is only 2%.

Since the beginning of December, CME has predicted that the probability of a 25 basis point interest rate cut has always been at a high point. All macroeconomic indicators are in line with or better than market expectations, and the market has confirmed the interest rate cut forecast. Advance bets and pricing were completed earlier and before the Federal Reserve officially announced an interest rate cut. After the Federal Reserve officially announced an interest rate cut of 25 basis points on December 19, the market did not rise because it had already digested the good news in advance. Instead, it fell sharply because of the Federal Reserve's decision to slow down the pace of interest rate cuts next year. Bitcoin fell by nearly 20% in 2 hours. 4%.

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Figure 13: BTC price and Fed decision rate in 2024

Looking at the currency price changes throughout 2024, the currency price trend has been in a state of shock after the bull market faded at the beginning of this year. Since the interest rate cut was announced in September , compared to 3 From January to September, the currency price began to show a fluctuating upward trend. After the second interest rate cut was announced in November, excluding the short-term surge caused by the news of Trump's election, the market rose again in November and December compared with September to November. The first two interest rate cuts this year have a significant boosting effect on long-term currency prices. Although the December interest rate cut was announced with a slight correction, judging from the correlation between currency prices and interest rates in 2024, in the next few months The price of the currency will not fall below the current level, and is more likely to continue to rise with the reduction of interest rates and the benefits of cryptocurrency that will be implemented after Trump takes office next year.

3. The impact of the release of macroeconomic data on the cryptocurrency market

In addition to the Federal Reserve’s annual In addition to the 8 interest rate adjustments, the macro data released regularly by the United States can also reflect the economic conditions under the current currency. The market usually uses these data to predict currency reforms or changes in the economic cycle, thus affecting currency prices. Important macro data include changes in U.S. non-farm employment after seasonally adjustment, initial jobless claims, real gross product (GDP) annualized quarterly rate, and core consumer price index (CPI) monthly rate. The table below sets out the correlation between the short-term returns of the Bitcoin price in 2024 and the recorded and exceeded expected values ​​of each macro indicator on the day, three days and seven days of the release of these indicators.

Table 2: Changes in non-agricultural employment in the United States after seasonally adjusted

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Table 3: United States Number of initial jobless claims

Table 4: National Real Gross Product (GDP)Annualized quarterly rate

Table 5: Core residents of the United States Consumer Price Index (CPI) monthly rate

Among the four indicators, the overall correlation between the number of Americans filing for unemployment benefits and BTC yields is low. The reference value is small.

The change in U.S. non-farm payroll employment after seasonally adjustment is positively correlated with Bitcoin's three-day and seven-day returns. The increase in the number of employed people indicates a strong labor market and promotes consumption and economic growth. Under this circumstance, the Federal Reserve may cut interest rates to stimulate investment and consumption. Market optimism and expectations of interest rate cuts will prompt investors to increase their holdings of Bitcoin and drive up currency prices.

The monthly rate of the U.S. core consumer price index (CPI) is basically negatively correlated with the BTC yield in the short term. Since the CPI indicator represents the overall degree of inflation in the United States, High inflation may hinder or slow down the process of interest rate cuts, thereby reducing market expectations for future interest rate cuts. Some investors will choose to sell in advance, causing currency prices to fall.

The annualized quarterly rate of U.S. real gross product (GDP) exceeds expectations and is strongly positively correlated with BTC yields. This is because GDP is the most direct description of the whole It is an indicator of economic level and development momentum. If this indicator exceeds expectations, it will bring a more obvious positive signal to the market, drive the market's optimism about the U.S. economy, and thus promote the rise in currency prices.

The December rate cut marked the end of the first phase of the Fed's rate cut cycle. After three consecutive rate cuts, the CPI has risen to 0.3 since September. Although there is no sign of continuing to rise for the time being, But markets and the Federal Reserve are concerned that continued interest rate cuts could further push up inflation. The non-farm payroll data fell sharply in November and rebounded in December, reflecting the destabilizing impact of successive interest rate cuts on the labor market. At the December meeting, despite cutting interest rates by 25 basis points, it was announced that the pace of interest rate cuts would be slowed in 2025, with markets predicting no more than two rate cuts next year. The CME currently predicts that the probability of an interest rate cut in January is only 8.3%. In the next few months, the Federal Reserve is more likely to stop cutting interest rates and make a longer assessment based on the U.S. economic situation under existing interest rates, and wait until at least three months later. The Fed will decide whether to continue cutting interest rates after the meeting. If various economic indicators do not deviate significantly from expectations, U.S. interest rates will no longer be a key factor affecting the cryptocurrency market in the first half of next year. Cryptocurrencies and classic macroeconomic indicators such as GDP implemented after Trump took office will be the deciding factorA key factor in currency prices.

4. Review of important events in 2024

Table 6: Currency Circle in 2024 Important events

1. Review and outlook since the issuance of Bitcoin and Ethereum ETFs

ETF (Exchange Traded Fund) is a popular investment vehicle in traditional financial markets that allows investors to invest indirectly in an asset without directly owning it. The launch of the Bitcoin (BTC) ETF and Ethereum (ETH) ETF is a key step in the integration of the crypto industry with traditional financial markets.

(1) Overview of the event

In January 2024, the U.S. Securities and Exchange Commission (SEC ) approved a Bitcoin spot ETF. At the end of July 2024, the SEC approved an Ethereum spot ETF. This marks the official acceptance of Bitcoin and Ethereum by the mainstream financial market, making investment in these two virtual currencies more convenient and formalized.

(2) Fund review

670 ETFs have been launched in the financial market this year, according to management Ranking by asset size (AUM), 9 of the top 10 are only related to cryptocurrencies. This highlights the growing influence and integration of digital assets in the financial sector, reflecting widespread acceptance and interest in cryptocurrencies among institutional and retail investors.

Table 7: Financial Market ETFs as of December 7, 2024 Top 11 AUM

(3) Bitcoin ETF

Bitcoin spot ETF in January this year After the approval, assets under management grew rapidly, reaching a first-half peak of $63.4 billion in mid-March before pulling back. In the second half of the year, the managed assets of Bitcoin spot ETFs experienced two expansions in mid-November and late November. Bitcoin spot ETF inflows surged in early December, with IBIT leading the way, driving total sizePassed $100 billion. As of December 18, the U.S. spot Bitcoin ETF had $129.3 billion in assets under management, surpassing the 20-year-old gold ETF.

Figure 14: Total assets under management of gold ETFs and Bitcoin spot ETFs Scale Curve

(4) Ethereum ETF

Since its implementation in July By the end of October, the growth in assets under management of Ethereum ETF was not as good as that of Bitcoin ETF, daily net inflows and net outflows alternate. The Ethereum ETF’s assets under management began to increase significantly after November. At the end of the year, Ethereum (ETH) once again became the market focus. On-chain data shows that giants such as BlackRock and Fidelity are accelerating their accumulation of Ethereum. Since November 21, the Ethereum ETF has maintained net inflows almost every day, with trading volume reaching a record high and attracting an influx of $1.29 billion. BlackRock's ETHA fund expanded assets under management (AUM) to $3.55 billion, while Fidelity's ETH ETF grew to $1.56 billion. This trend suggests year-end demand for Ethereum ETF investments is growing significantly. Especially as the price of ETH approaches $4,000 recently, the recovery in spot buying and the surge in ETF inflows are forming a virtuous cycle.

Currently, Grayscale remains the largest ETH holder, with its Ethereum Trust holding $5.56 billion worth of ETH. With the number of known on-chain ETH wallets at BlackRock exceeding 820,000, inflows have accelerated significantly, a trend that bears a striking resemblance to the initial frenzy surrounding the launch of the ETH ETF in the summer of 2024. The active layout of these giants shows that they are preparing in advance for the bull market that may come in 2025, and at the same time attracting traditional investors to join this wave of market.

(5) Future Outlook

ETF combines virtual currency investment with traditional financial instruments. Allows investors with stock accounts to easily purchase Bitcoin and Ethereum. Compared with directly purchasing virtual currency coins, ETF trading methods are simpler and investors have a higher degree of trust. As the U.S. cuts interest rates and Trump comes to power and announces policies that are good for cryptocurrencies, Bitcoin may further increase its price.The Bitcoin ETF and Ethereum ETF will further expand in size.

Additionally, Ethereum’s staking functionality adds a layer of unique appeal to its ETFs. ETH can generate passive income through staking. However, due to asset liquidity requirements, most current ETF products only passively hold ETH and do not get involved in the staking field. Some market views believe that ETF products that allow staking may appear in the future to achieve higher returns. But staking involves longer lock-in periods, as well as potential risks from hackers or breaches. Even so, the scarcity brought about by the Ethereum network due to staking, liquidity locking, and the fee burning mechanism (EIP-1559) may still further drive the price of ETH higher. With the global economy recovering amid expectations of a bull market in 2025, Ethereum, as the second largest crypto asset, may see a rapid price catch-up. A slump in the altcoin market could further solidify Ethereum’s status as the go-to investment alternative to Bitcoin compared to other currencies.

As the ETF landscape continues to evolve, the strong performance and popularity of cryptocurrency ETFs suggests that market dynamics may be changing. This trend may have an impact on the launch of future cryptocurrency ETFs and asset management companies’ strategic investments in cryptocurrencies. The integration of digital assets into mainstream financial products may shape a new investment landscape. It is worth noting that since the price of Bitcoin ETF directly reflects the market performance of Bitcoin, it is highly volatile and investors need to have a certain risk tolerance. Furthermore, most Bitcoin ETFs do not pay dividends and therefore cannot provide investors with a steady flow of cash flow, unlike traditional high-dividend ETFs.

2. Current status and trends of adoption of BTC by institutions or listed companies

(1) Level Adoption

i. Legal proportion

There are currently about 120 and 4 British overseas territories legalize cryptocurrencies, accounting for 50% of global total above. 64.7% of cryptocurrency legalizations come from many emerging and developing countries in Asia and Africa. Of those countries where cryptocurrencies are legal, about 52.1% (or 62 countries) have introduced comprehensive cryptocurrency regulations. This number has grown by 53.2% since 2018, reflecting growing legal awareness and acceptance of cryptocurrencies around the world. Especially in emerging markets, the acceptance and frequency of use of cryptocurrencies are alsoContinue to increase.

ii. Attitudes of major powers

In the second half of this year, Russia will officially Legalized Bitcoin, passed a series of related bills, and turned to digital assets such as Bitcoin with a high profile. Starting from September 1 this year, the Central Bank of Russia conducted three experiments on using cryptocurrencies for foreign trade settlements, trading in cryptocurrencies, and creating a cryptocurrency trading platform based on the payment system (NPS); Russian President Putin hinted at a shift to holding cryptocurrencies. alternative assets as foreign exchange reserves. Similar to Russia, the United States has also seen significant changes in its approach to cryptocurrencies. After Trump took office, it was good for the currency market, and the United States ushered in an era of loosening regulations on cryptocurrencies and digital assets. Trump hinted at plans to create a U.S. strategic reserve of Bitcoin similar to the Strategic Petroleum Reserve. At present, some states in the United States (such as Pennsylvania and Texas) have launched Bitcoin Reserve Acts, showing local positive attitudes towards Bitcoin adoption.

(2) Institutional adoption

i. Active layout of US stock listed companies

Companies represented by MicroStrategy continue to expand their Bitcoin reserves and significantly increase their market value with their "Bitcoin Strategy"; including Genius Group, Cosmos Health, Semler Scientific A number of U.S.-listed companies, including Bitcoin, have officially announced Bitcoin reserve plans, reinforcing the importance of Bitcoin as a corporate asset reserve. Many U.S. stock companies, including companies in technology, pharmaceuticals, consumer goods and other industries, have incorporated Bitcoin into their financial management strategies as a reserve tool to fight inflation and diversify risks.

It is worth noting that Microsoft, the technology giant with the second largest market value in the U.S. stock market, is currently not considering allocating Bitcoin. Microsoft shareholders once again vetoed its holdings in December this year. There are proposals for Bitcoin, saying that the current strategy has evaluated Bitcoin-related assets, and that their high volatility conflicts with the company's need for stable investment and is not in line with the long-term interests of shareholders. But this vote still sends a strong signal to the encryption market. Microsoft’s statement shows that they have not completely ruled out cryptocurrency as a potential investment option in the future, but regard it as an area that requires continuous monitoring, improving future prospects. Crypto adoption is expected.

ii. Financial institutions accelerate their entry

Traditional financial investors and hedge fundsManagers gradually increase their holdings of financial instruments linked to Bitcoin, further promoting the penetration of Bitcoin into the mainstream financial market. Tudor Investment Group, for example, holds BlackRock's iShares as the third-largest non-options position in its portfolio, behind S&P 500 ETF Trust and Nvidia. At the same time, the approval of Bitcoin ETFs in the United States and Hong Kong this year provides compliance channels for institutional investment and promotes the increasing acceptance of Bitcoin in the global market.

3. Bitcoin breaks through the $100,000 mark

(1) Event Overview< /p>

On December 5, 2024, the price of Bitcoin (BTC) exceeded $100,000 for the first time, becoming a milestone event in the global financial market and cryptocurrency industry. Since the birth of Bitcoin in 2009, the decentralized digital currency has grown from a technological experiment to a mainstream choice for investment, payment, store of value and safe-haven assets around the world. Bitcoin's breakthrough of $100,000 marks a new stage of global recognition of its asset status, and has also attracted widespread attention from the financial market, the encryption industry and all sectors of society.

(2) Key driving factors

Bitcoin price breaks through 100,000 US dollars. The results are driven by a combination of factors, including the macroeconomic environment and expectations brought about by the U.S. presidential election:

i. Bitcoin halving effect

April 20, 2024 On the same day, Bitcoin ushered in its fourth block reward halving, reducing miner rewards from 6.25 BTC to 3.125 BTC. This mechanism reduces the supply of new Bitcoins and can significantly improve the relationship between supply and demand. Historical data shows that the Bitcoin market typically experiences significant price increases after each halving event.

ii. Approval of Bitcoin Spot ETF

U.S. Securities and Exchange Commission (SEC) In 2024, Bitcoin spot ETF applications submitted by multiple financial institutions (such as BlackRock, Fidelity, etc.) were approved. This incident has greatly enhanced the institutional investment appeal of Bitcoin, provided traditional investors with a convenient and safe investment channel, and attracted a large amount of capital inflows. ETFs bring transparency and liquidity to the Bitcoin market, further fueling price increases.

iii. Trump was elected as the new President of the United States

In the 2024 U.S. presidential election , Trump was successfully elected as the new president. His questioning attitude towards the traditional financial system and his support for decentralized technology have brought positive expectations to the cryptocurrency industry.

iv. The Federal Reserve cuts interest rates

In 2024, the U.S. economy will respond to inflationary pressure and economic growth Slowing down, the Fed has cut interest rates at multiple meetings. This has significantly reduced the risk-free rate of return, prompting capital to flow from low-yielding assets such as bonds to high-risk, high-return assets such as cryptocurrencies such as Bitcoin.

v. Uncertainty of the macroeconomic environment

The global economic environment in 2024 is full of Uncertainties, including geopolitical conflict, dollar depreciation and partly high inflation, have further enhanced Bitcoin’s appeal as a digital gold and safe-haven asset. Especially in developing countries, Bitcoin is increasingly regarded as a store-of-value tool that replaces fiat currency.

vi. Technology upgrade and network effect

Bitcoin’s technological development, such as Lightning Network The widespread application of (Lightning Network) reduces transaction costs, increases payment speed, and enhances the practicality of Bitcoin. Additionally, its decentralization, security, and limited supply of 21 million coins further solidify its scarcity and store-of-value capabilities.

(3) Impact analysis

i. Impact on the global financial system

Cryptocurrencies are further integrated into mainstream financial markets. Bitcoin has exceeded $100,000 and its market value exceeds $2 trillion, which is closer to the market value of traditional assets such as gold and stocks. Financial institutions regard Bitcoin as a "must have" for asset allocation, and more global banks and asset management companies provide Bitcoin-related services. The popularity of spot ETFs has driven traditional investors into the crypto market in large numbers, with cryptocurrencies gradually becoming part of mainstream investment portfolios. The rise of Bitcoin has created significant competitive pressure on traditional safe-haven assets such as gold. Some funds flow from the gold market to the Bitcoin market, especially in the yearYounger generation investors are more likely to choose Bitcoin. The Federal Reserve's interest rate cuts have directly reduced the attractiveness of the U.S. dollar, and Bitcoin, as an anti-inflation tool, has become an important choice for investors to hedge against the devaluation of legal currencies. The pattern of capital flows will change. Bitcoin’s high price has attracted massive international capital inflows, especially from emerging markets and institutional investors. High net worth individuals and businesses view Bitcoin as an important tool for cross-border capital transfers, further promoting the globalization of funds.

ii. Impact on the cryptocurrency industry

Increased industry confidence. The price of Bitcoin exceeded $100,000, which greatly increased the confidence of the entire encryption industry and attracted more developers and enterprises to participate in the application and innovation of blockchain technology. Other cryptocurrencies (such as Ethereum, Solana) have achieved positive spillover effects, promoting the development of decentralized finance (DeFi), NFT and Web3 ecosystems. The popularity of Layer 2 solutions (such as Lightning Network) has accelerated the development of the Bitcoin payment ecosystem, and the functional boundaries with smart contract platforms such as Ethereum are gradually blurring. In terms of the expansion of the decentralized ecosystem, more and more companies are incorporating Bitcoin into payment and stored-value systems, promoting the further development of the decentralized financial system.

iii. Impact on asset recognition

Bitcoin becomes "digital gold" Consensus increases. Bitcoin's breakthrough of $100,000 has further verified its value storage function, and global investors' recognition of it as "digital gold" has significantly increased. It has become an important asset allocation tool in high-inflation and regions. Legal status and mainstream acceptance will increase. Trump's announcement may prompt more U.S. states and institutions to accept Bitcoin payments, promoting the transformation of Bitcoin from a "speculative asset" to a "stored value asset and payment instrument." Parts of Africa, the Middle East and Latin America may incorporate Bitcoin into legal tender or as a legitimate means of payment. In terms of public perception, the continued rise in the price of Bitcoin has attracted more public attention and promoted its transformation from a speculative tool to a mainstream asset. Efforts to popularize education and technology are accelerating, especially in emerging markets, and Bitcoin may become an important tool for financial education and inclusion.

iv. Impact on other fields

For macroeconomics and geography, Bitcoin’s The rise poses a challenge to the sovereign monetary system, especially in economically unstable countries, and Bitcoin may be regarded as an alternative currency. Trump may use Bitcoin as a tool to counter other central bank digital currencies (CBDC) and further promote their globalization. Environment and energy, BitcoinThe price increase may trigger more mining activities, putting pressure on energy consumption and environmental protection issues. At the same time, clean energy mining projects may arise to alleviate environmental problems. Regarding technology and innovation, the success of Bitcoin may further promote the research and development and application of blockchain technology, especially in financial technology, logistics, medical and other fields.

(4) Future Outlook

After Bitcoin exceeded $100,000, short-term market fluctuations The price will increase, and after breaking through $100,000, profit-taking may lead to short-term price fluctuations. And the high price of Bitcoin may trigger countries to further strengthen supervision. On the long-term trend, Bitcoin prices may rise further. If institutional adoption and global acceptance continue to increase, Bitcoin could reach $150,000 to $200,000 in the next few years.

Bitcoin's breakthrough of $100,000 is a major milestone for the crypto industry and marks a new stage of global recognition of this decentralized asset. This event was driven by multiple factors such as macroeconomics, the Federal Reserve's interest rate cuts, Trump's election, and technological upgrades. Its impact is not limited to the financial market, but also affects many fields such as the encryption industry, asset recognition, macroeconomics, and technological innovation. Although it may face regulatory and market volatility challenges in the future, Bitcoin's scarcity, decentralization and anti-inflation properties give it great potential for future development.

5. Summary and Outlook

1. Market Summary in 2024

The overall encryption market in 2024 After experiencing the coexistence of strong rises and adjustments, the crypto market this year has shown some key trends and characteristics that are different from previous cycles:

(1) Regulation, currency and Influenced by triple drivers of strong rise

The legalization of spot BTC ETFs and the positive effects of the election have become the biggest catalysts for the market in 2024. Combined with the liquidity brought about by the Federal Reserve's shift to monetary easing in the third quarter, Bitcoin will Coin prices hit new highs in the first and third quarters. The U.S.'s turn is the most important factor throughout the year.

(2) The admission of institutional funds is accelerating, and the proportion of ETFs is increasing

The launch of ETFs Attracting widespread participation from institutional investors, asset management companies and mainstream funds have significantly increased their allocation to crypto assets, and institutionsThe proportion of wallet addresses continues to increase, and the total net asset value of ETFs and the total market value of BTC/ETH have increased to 5.76% and 2.94% respectively.

(3) Divergence of the track and the rise of new narratives

With Bitcoin and Ethereum Related assets have received the most financial attention, while the DeFi and NFT tracks, which have performed well in past cycles, are facing growth bottlenecks and have mediocre performance this cycle. More capital has flowed to Meme and AI, which have popular narratives. sector, while real-world asset tokenization (RWA) and stablecoins are also on the rise.

2. Outlook for 2025

Looking back at the historical cycle and looking forward to next year, the market may be The following staged development path is presented:

(1) The first stage: shock consolidation (December 2024-January 2025)

The market will experience a short-term shock correction from the end of 2024 to the beginning of 2025. The high profit capital at the end of the year will be partially realized. In addition, the market needs time to digest the Federal Reserve's possible hawkish turn and reduction in the number of interest rate cuts early next year. There is a lack of funds in the short term. With new driving forces, prices may fluctuate in the range of $90,000 to $105,000.

(2) Second stage: accelerated rise (January 2025-June 2025)

After the consolidation phase is over, funds have re-entered the market, and bad news has been gradually digested, the market in the first half of the year will usher in a new round of rise in the first quarter. The price of Bitcoin may break through the US$120,000 mark at this stage, and may even reach US$150,000 to US$200,000 under optimistic circumstances.

(3) The third stage: peak adjustment (July 2025-December 2025)

Looking at the historical cycle, the Bitcoin bull market usually enters the adjustment period about 15 to 18 months after the halving, which also means that the market is likely to enter the adjustment stage after hitting a new high in the middle of the year or the second half of the year.

Optimistic path

The favorable macro-liquidity environment continues, regulatory and other favorable conditions are realized and implemented as scheduled, level Bitcoin reserves and institutional adoption rates continue to rise, and market buying demand continues to push up spot prices, ranging from 200,000 to 25 After forming a top between $110,000 and $150,000, it fell back to $110,000 to $150,000.

Neutral path

The benefits are gradually coming to fruition, but the global macroeconomic environment is still uncertain. Liquidity will not tighten, but overall risk assets may be under pressure. Bitcoin prices may fall back to a new high of 150,000 to 200,000. Fluctuating between $100,000 and $120,000

Pessimistic path

If there is a positive release. Less than expected, currency A shift in the path to tightening or a deterioration in the macroeconomic environment may lead to a larger market adjustment in the second half of 2025. In a pessimistic scenario, the spread of fear after the bursting of the market bubble may lead to a sharp decline in the market in the short term, and the price of Bitcoin may fall back to 80,000. to the $100,000 range

Conclusion

The crypto market in 2025 will be dominated by the following key drivers:

Supervision Implementation: The process of legalization and institutionalization of the crypto market will continue to deepen, especially in the context of the gradual clarity in the United States

Macroeconomics and interest rates: Currency will still. It is relatively loose and provides liquidity support for risky assets, while the weakness of the US dollar index may attract more safe-haven capital flows to Bitcoin.

Institutional adoption: ETF. and the compliance of stablecoins will attract more traditional financial capital to enter the crypto market. At the same time, attention can be paid to new narratives and new growth points that may be brought about by the linkage between on-chain assets and traditional finance.

New narrative detonates the altcoin season and key tracks: The trend of the cryptocurrency market in the fourth quarter of 2024 shows that Bitcoin and Ethereum continue to dominate the market, except for Bitcoin and Ethereum, which have a clear upward trend. Technological upgrades in the future, DeFi and NFT The application demand in the field continues to increase and the ecosystem is expanding, which may usher in new growth.

BTC's breakthrough of 100,000 marks indicates that the encryption market has officially entered a new era.The environment has changed at the macro, meso and micro market levels. Although the BTC market may face short-term adjustments in 2025, the mid- to long-term trend of the market is still good, and the bull market will continue to follow the rhythm of the bull market in the first half of the year. However, after the middle of the year and the third quarter, we need to be wary of the risk of peaking and callbacks, and grasp the opportunity to exit. opportunity. From the perspective of cyclical characteristics, with the continuous entry of institutional funds in this cycle and the continuous standardization of supervision in the future, the overall market cycle may be lengthened in terms of time latitude. However, at the same time, the astonishing changes brought about by previous cycles The fluctuations will also be partially smoothed