2024 Crypto Assets Market Review and 2025 Outlook: Bitcoin ETF Drives Market Trends, Solana Emerges Strongly

1. Market Overview

1.1 Cryptocurrency Market Fundamentals

In 2024, the total market value of the cryptocurrency market increased from $2.31 trillion to $3.33 trillion, a growth rate of 44.2%. This growth is primarily attributed to the approval of spot Bitcoin ETFs in the first half of 2024 and Trump's victory in the elections in the second half of the year. Bitcoin's dominance rose from 53.4% to 56.8%, mainly due to the doubling of assets under management for Bitcoin ETFs.

Despite the launch of the Ethereum ETF in the second half of 2024, its performance has been relatively flat. Institutional investors' preference for Bitcoin remains evident, as seen from the continuously declining ETH/BTC ratio.

Solana has performed well, with the SOL price rising by 29.3%. The Solana ecosystem is expected to see a net inflow of $2 billion in 2024.

The market share of DeFi continues to expand, with the total locked value ( TVL ) growing more than double since the beginning of the year. The ratio of DEX/CEX trading volume has increased from 9.37% to 11.05%, with an annual trading volume reaching $2.67 trillion. The DeFi TVL market shares of Solana and Base have reached 7.17% and 3%, respectively.

Stablecoins have seen significant acceleration, with a market cap growth of 26.8%, exceeding $205 billion. New entrants like Ethena have further driven this trend with competitive yield rates.

1.2 Macroeconomic Environment and Politics

Politics

In the November 2024 U.S. election, Trump defeated Harris to be re-elected as president, and the Republican Party won a majority in both houses of Congress. Trump's America First and isolationist policies may bring uncertainty to the international situation. Trump's policies towards the cryptocurrency market are relatively friendly, but it is still necessary to observe his actual policies after taking office.

Europe is mainly affected by the Russia-Ukraine war, with the discourse power of right-wing parties significantly strengthened. Europe's policies in the crypto market are more in a state of following, with the MiCA regulatory framework officially implemented by the end of 2024.

Geopolitics in Other Regions

The Middle East is engulfed in continuous warfare, and the conflict between Israel and Hamas is reaching its final stages. Several countries in South America are advancing the legalization of cryptocurrencies.

Economy

In 2024, the global GDP growth rate is 2.6%, and the inflation rate is 2.5%. The United States will begin a series of three consecutive rate cuts of 25 basis points starting in September. The Eurozone is experiencing slow economic growth due to the impact of geopolitical conflicts. China is facing issues such as weak consumption and export obstacles. Emerging market countries are affected by the U.S. dollar's interest rate hikes, leading to severe depreciation of some countries' local currencies.

All three major U.S. stock indexes rose sharply, with the Nasdaq up more than 28%. The development of AI technology is advancing rapidly, with AI tech companies represented by Nvidia performing exceptionally well. The Nikkei index reached a 30-year high, mainly benefiting from carry trades and the depreciation of the yen.

2. Bitcoin

2.1 Product and Protocol Design

In the second half of 2024, there are some important software upgrades for Bitcoin, such as Bitcoin Core 28.0 introducing flexible transaction forwarding strategies, and the BOLT12 for the Lightning Network. These upgrades may impact various application scenarios, such as supporting zero-fee transaction forwarding, etc.

Discussions on the design of the Bitcoin protocol layer are ongoing, mainly focusing on soft fork proposals. The discussions are roughly divided into several camps: achieving more flexible functions by adding new opcodes, improving the LNHANCE scheme of the Lightning Network, and promoting the "large script recovery movement." No consensus has been reached yet, and it is expected that some form of consensus and development may be seen in 2025.

The implementation of BitVM is still progressing steadily, with a current focus on the design and implementation of cross-chain bridges. Some test versions of cross-chain bridges based on BitVM have already started running.

2.2 Layer 2 - Lightning Network

The number of publicly accessible Lightning Network channels has not changed much, maintaining a total of about 5000 BTC. The number of nodes remains basically stable, but the number of channels continues to decrease, which may indicate that liquidity is gradually concentrating in the hands of large node service providers.

The Lightning Network protocol and application ecosystem are still under development. BOLT12 has been adopted by numerous clients, supporting static payment methods. Some Layer 1 networks are developing Layer 2 solutions that comply with BOLT specifications to achieve compatibility and interoperability with the Lightning Network.

The main focus in this field is still on assessing the feasibility of business models. Service-oriented projects, especially those utilizing the Lightning Network as a settlement layer for cross-border transactions, may receive more attention.

2.3 Layer 2 - Side Chains

Layer 2 sidechains have shown mixed performance. Some projects have declined since their peak, while others continue to grow. The challenges faced by Bitcoin Layer 2( and BTCFi include reliance on unsustainable TVL surges and airdrop incentives.

The main driver for depositing Bitcoin into L2 solutions is to obtain Bitcoin-denominated, low-risk return opportunities. BTCFi can achieve better liquidity abstraction and protocol layer stacking by leveraging existing infrastructure.

The key to the success of Bitcoin L2 lies in: 1) ensuring asset security; and 2) pursuing a vertical integration strategy.

![A Comprehensive Review of the Crypto Market from the Macroeconomic Environment to the Vertical Track in the Second Half of 2024])https://img-cdn.gateio.im/webp-social/moments-b99fb3aa4b927ee1401e2a8d921c6c77.webp(

)# On-chain assets 2.4

On-chain assets of Bitcoin are generally divided into two categories: meta-protocols and CSV### client verification(. Overall, these assets have not shown significant appreciation alongside the rise in Bitcoin prices and have low activity.

BRC20, Runes and other meta-protocol assets have recently underperformed. RGB is still being promoted, and there are some technical implementations supporting integration with the Lightning Network. Taproot Assets allow for minting stablecoins at lower costs and enable instant settlement on Bitcoin.

For the on-chain asset track, due to the insufficient experience and liquidity support of Bitcoin on-chain DEX, CEX is still important for such assets.

)# 2.5 BTCFi

BTCFi can provide Bitcoin holders with additional Bitcoin-denominated returns. As the infrastructure continues to improve, the overall locked value is expected to grow. The type of returns pursued by BTC assets has shifted from L2 to staking, liquid staking, and liquid re-staking, which can compound multiple returns.

After several phases of controlled testing, Babylon has attracted a large amount of TVL denominated in Bitcoin. Various LST projects have also emerged successively to unlock liquidity and promote DeFi activities. The designs of these LST projects generally draw from established DeFi design concepts.

An important focus this year is finding ways to efficiently utilize and circulate staked assets rather than leaving them idle. Protocols that can flexibly mobilize Bitcoin liquidity and support a broader range of asset classes will have a greater chance of success.

![A Comprehensive Review of the Crypto Market in the Second Half of 2024 from Macroeconomic Environment to Vertical Tracks]###https://img-cdn.gateio.im/webp-social/moments-307be43a7eb13b025b34dcda109eac83.webp(

) 3.Ethereum

Despite the launch of the ETH ETF in the United States in July 2024, its performance has not replicated the success of the Bitcoin ETF, with the ETH/BTC ratio dropping from 0.054 in January to 0.037 in December. Since the Dencun upgrade, gas fees on Layer 2 have been significantly lower than those on Ethereum, leading to more funds flowing into Layer 2 projects.

EVM remains the most dominant and active virtual machine in the ecosystem, prompting many developers to continue building EVM-compatible networks and applications. We believe that Ethereum and its EVM ecosystem will continue to maintain a dominant position in 2025, although competitive alternatives may gradually erode its market share.

3.1 L2s

Since the introduction of blob data storage in the Dencun upgrade, the transaction fees for rollups have decreased by over 90%. The daily transaction volume of Layer 2 has increased from 5.18 million to 16.86 million, an increase of over 325%, and the number of daily active addresses has risen from 989,000 to 2.18 million.

The significant influx of funds into Base can be attributed to multiple factors, including a smooth consumer experience, a strategic partnership with Coinbase, and the launch of popular consumer applications. The number of daily active users has surged from 68,324 to 1.6 million.

The launch of Arbitrum Stylus enables developers to write smart contracts using a variety of developer-friendly languages. The future development roadmap of the protocol includes measures such as multi-client support, adaptive pricing, chain clustering, and the decentralization of sequencers.

In the second half of 2024, OP Superchain continues to gain strong momentum, with the total number of chains based on OP-Stack reaching 56 by the end of the year, accounting for 43% of all L2/3 chains, while Superchain's trading volume accounts for over 56% of all L2 trading volume.

We expect that L2 networks with unique positioning and value propositions will further integrate and enhance user stickiness, thereby becoming important competitors to alt-L1 networks.

![A comprehensive review of the cryptocurrency market in the second half of 2024 from the macro environment to vertical tracks]###https://img-cdn.gateio.im/webp-social/moments-8737c161d79212d8a9315ff8e0a0386a.webp(

)# 3.2 Re-staking

In 2024, the total amount of staked Ethereum shows an upward trend, reaching a peak of 34.5 million coins as of November 10; meanwhile, the yield has been declining, dropping to 3% by the end of the year.

The re-staking protocol ###, like Eigenlayer (, attracted a large amount of TVL, although its growth momentum weakened in the second half of 2024, with TVL dropping from 5.11 million ETH to 4.44 million ETH by the end of the year. Symbiotic's total locked value ) TVL ( achieved substantial growth, skyrocketing from $307 million to $2.12 billion.

The future catalysts will depend on the successful implementation of the reduction mechanism and the flexibility offered to AVS, stakers, and node operators, which can achieve the best balance between economic security and the yields provided.

![A Comprehensive Review of the Crypto Market in the Second Half of 2024 from the Macroeconomic Environment to Vertical Tracks])https://img-cdn.gateio.im/webp-social/moments-b403864e1699d18dfb8e0b4d8cd1a77e.webp(

)# 3.3 Ethereum Future Roadmap and EIP Proposals

2025 will be one of the most important years in the development of Ethereum, with plans for the significant upgrade of Pectra. Several key EIP proposals include:

• EIP-7691: Expand Blobs target capacity, reduce L2 costs
• EIP-7702: Implementing smart contract functionality for EOA accounts
• EIP-7251: Optimize validator management, reduce network load

The Ethereum core research team has reorganized its long-term development roadmap, aiming for a major upgrade in 2029 that will introduce core technologies such as zero-knowledge proofs and post-quantum cryptography.

Other Infrastructure

• Sorter: The concept of decentralized shared sorting aims to enhance network resilience and redistribute value capture. Greater growth is expected in this field by 2025.

• Data Availability and Modular Blockchains: The data availability track is still dominated by Ethereum Blobs, Celestia, Avail, and EigenDA. The demand for data availability solutions continues to grow.

• Intent and Chain Abstraction: The Chain Abstraction Coalition has been established to promote the adoption of chain abstraction solutions. The ERC-7683 proposal has been launched to support shared liquidity layers.

• AI Agents and Intent-Driven DeFi Trading: The maturity of large language models and AI agent technology brings new breakthroughs to the DeFi trading experience.

![A comprehensive review of the crypto market in the second half of 2024 from the macro environment to vertical tracks]###https://img-cdn.gateio.im/webp-social/moments-e9bccd49e97a365dde9a28326819fb25.webp(

) 4. Solana

In 2024, Solana performed exceptionally well, with a price increase of approximately 75%, and the SOL/ETH ratio rising from 0.04 to 0.06. Leveraging its unique SVM architecture, Solana offers lower fees and higher