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Industry Reports
18 Dec 2024

2024 - Year in Review

Bitcoin crossed $100,000 in 2024, driven by the approval of U.S. Bitcoin ETFs, corporate acquisitions, and favorable political endorsements, notably from Donald Trump
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2024 - Crossing the Rubicon

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Allow me to take a step back and reminisce. Two years ago, crypto became a global laughing stock after the industry’s entire lending complex collapsed. Bitcoin was, by many, perceived as unownable in any serious portfolio and extremely risky. It took two small years from this to flip into the largest asset managers in the world offering Bitcoin products, Bitcoin ETFs representing 3.5% of all U.S. flows, and the coming U.S. president endorsing crypto while pursuing a Strategic Bitcoin Reserve. We’re wrapping up a momentous year. ETFs have ushered in absurd flows, and the train shows no sign of stopping. These ETFs needed less than a year to surpass the AUM of U.S. gold ETFs. Investors happily allocate parts of their portfolios to BTC, either in a well-reasoned diversified spice to enhance risk-adjusted returns or due to conviction of the implications of peer-to-peer scarcity. ETFs have played a massive role in facilitating BTC’s upside in 2024 and have thus deservedly earned a spot as a topic we highlight in detail in this report. Public company purchases of bitcoin have further elevated prices. MicroStrategy and peers have, together with ETFs, absorbed 4.3% of the circulating BTC supply in 2024 alone. Some purchases are made with leverage, and miners with income dependent on BTC’s price may once again see their hands forced toward the sell button. Regarding MicroStrategy, risks are low for forced selling. With shareholders happily accepting dilution, the stage is set for more BTC purchases in 2025. When we summarized last year, we deemed politics as a potential price mover throughout the year. However, Trump’s endorsements have taken us by surprise. His involvement has taken a complete 180 from his 2019 stance and escalated throughout the year. At Bitcoin 2024, Trump promised that his administration would build a national bitcoin stockpile, that he would fire Gary Gensler, that he would make the U.S. the crypto capital of the world by fostering a pro-crypto regulatory environment, that he would support bitcoin miners and that he would pardon Ross Ulbricht.Following Trump’s courting of the industry, bitcoin moved intact with Trump’s election odds throughout the year. After his election, bitcoin’s rally and $100k breakout formalized. A question we, and many others, had after the election was whether or not the promises would be held. The fact of the matter is that we don’t know, but Trump’s post-election actions suggest that he will put words into action. He continues to make favorable crypto comments, his administration is very pro-crypto, and he has made new crypto purchases post-election. This all points toward Trump aiming to pursue the promises made. Expectations for Trump’s presidency and its impact on the crypto market are huge. Prices have rallied, risk has been heavily rewarded, and we’re seeing several signs of euphoria. It’s highly likely that the market has delusional expectations for the pace of policy changes and will overprice the impact running into the inauguration. We expect the current rally to peak in mid-January before the inauguration and view that area as a natural area to reduce risk and realize profits for the short term. Bitcoin’s history is riddled with speculative peaks tied to major events: CME futures in 2017, Coinbase’s listing in 2021, and El Salvador’s adoption. Even the launch of BTC ETFs in 2024 saw a three-week selling spree before extraordinary supply absorption throttled markets higher. All these news events have been monumental in pushing BTC to its current highs. ETFs would not have happened without the CME futures launch, and CME is now the dominant derivatives market in Bitcoin and its key source for price discovery. Coinbase went public and showcased the maturing crypto industry, allowing asset managers to get exposure to the crypto industry and being a testament to sound business models originating in the market. El Salvador’s adoption was a pilot for other governments to follow and highlighted that adopting Bitcoin treasuries is not as far-fetched as once thought.Policies are due to be the key market mover in 2025; a timeline for the progress of these policies is complicated to make on the spot. We expect the market to be attentive to U.S. policies throughout the year. SAB-121 will be overturned promptly, leading BNY Mellon and Goldman to launch crypto custody solutions, further engraining the institutional takeover of the market. We expect a more hands-off approach from the SEC after the removal of the crypto grinch and the industry to prosper in the U.S. However, we don’t see this acting as a material price mover in the early stages of the year.Bitcoin is entering an era where the four-year cycle playbook is less relevant. Halvings are becoming less material in their relative impact, and BTC adoption is happening at an institutional level. Bubbles and drawdowns are due to remain a common feature, but they emerge from new developments. Macro, policies, institutional offering expansions, and leverage are rigged to be the key forces ahead.Strategic Bitcoin Reserves is the honeypot and the catalyst for a robust post-election recovery and new all-time highs to be met. Its implementation remains highly uncertain and involves congressional approval or an executive order leveraging the Exchange Stabilization Fund (ESF). The latter approach is the most easily attainable but would make enacting a 1 million BTC buying plan complex and mainly act as a means to stockpile current holdings. That in and of itself is very bullish; it telegraphs lower selling pressure and communicates BTC’s validity as a national treasury asset.The Rubicon is already crossed, and the wheels are in motion. The global perception of BTC has changed with the chain of events in the past years. The world is more fractioned and tense than a few years ago. Assets have been seized from one global superpower, leading countries to stockpile gold and sell U.S. treasuries. Bitcoin reserves are a natural progression, allowing a country to cheaply hold onto sovereign assets that may promptly be used as payments for large global trade. You may not like it, but Bitcoin is a tremendous apolitical store of value that allows nations and individuals to secure self-sovereignty. We expect nation-state adoption of BTC to take off in 2025. Enjoy the read; merry Christmas, and a happy new year!- Vetle LundeRead the report
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