Nov 2024 Market Commentary: Global Crypto Momentum
Author: Hillroute Date: November, 29, 2024
Executive Summary:
Bitcoin’s 2024 performance underscores its growing institutional role, with U.S. Bitcoin ETFs holding over $101B and Bitcoin’s market cap reaching $1.8T, making it the 7th largest global asset.
Institutional support is on the rise, with MicroStrategy expanding its holdings. Bhutan uses Bitcoin profits for public initiatives, showcasing BTC’s integration into national development, while El Salvador has benefited from significant gains, highlighting BTC’s role in strengthening national reserves.
Crypto-friendly regulations are evolving globally- Japan introducing tax reforms to boost investment, while the U.S. is set for pro-crypto leadership shifts that could shape the industry.
Technological advancements, such as ENS Labs’ “Namechain” and BlackRock’s blockchain projects, enhance scalability and real-world use. The rise of institutional products, along with traditional finance embracing tokenized assets, signals crypto’s rapid integration into the global financial ecosystem.
Bitcoin’s Performance & Institutional Appeal
Bitcoin’s 2024 performance underscores its growing institutional role. U.S. spot Bitcoin ETFs now hold 1.04M BTC ($101.2B), about 5% of Bitcoin’s $1.8T market cap. ETF inflows of $3B in two weeks reflect strong institutional confidence, bolstered by bullish market factors such as the U.S. presidential election, the Fed’s rate cuts, and Russia lifting its Bitcoin mining ban.
In the U.S., Florida’s CFO proposed adding Bitcoin to state pensions, aligning with anti-CBDC policies and joining other states like Wisconsin and Michigan in supporting Bitcoin adoption. Internationally, Bhutan exemplifies Bitcoin’s economic role, by using profits from its $1.1B BTC holdings (35% of GDP) for public initiatives.
Institutional players like MicroStrategy, holding 386,700 BTC worth $37.6B, continue aggressive accumulation, aiming to raise $42B more over three years. Bitcoin’s $90K+ surge has made it the 7th largest asset globally, surpassing giants like Saudi Aramco and silver. The broader crypto market, now $3.4T, ranks as the world’s 8th largest economy, with Ethereum also surpassing major traditional assets like Bank of America.
Regulatory Landscape
Cryptocurrency regulations are rapidly evolving globally. At Switzerland’s PlanB event, Tether CEO Paolo Ardoino dismissed rumors of a U.S. investigation, highlighting Tether’s strong reserves, including 80.3% in U.S. Treasuries and 3.8% BTC. He also pointed to Tether’s recovery of $109M from illicit activities and criticized U.S. regulations for stifling innovation. Despite challenges, Tether’s rising market cap shows strong investor confidence, expected to grow further after the recent 2024 U.S. elections.
Japan is introducing a 20% flat tax rate for crypto investments, aiming to create a more predictable and investor-friendly environment by late 2024 and further boost its Web3 leadership.
In the U.S., regulatory shifts are expected with SEC Chair Gary Gensler’s departure in January 2025. Teresa Goody Guillén, a blockchain advocate, is likely to steer the SEC towards a pro-crypto agenda under President-elect Trump, easing the agency’s stance on the industry.
From Tether’s resilience and Japan’s tax reforms to the pro-crypto stance of the upcoming Trump administration, these developments highlight the complex interplay of policy, innovation, and investor confidence shaping the global crypto landscape.
Technological Advancements Shaping the Blockchain Ecosystem
The blockchain industry continues to progress in scalability, efficiency, and adoption. ENS Labs is set to launch “Namechain” by late 2025, a layer-2 blockchain using zero-knowledge rollups to offer faster, cheaper transactions while preserving Ethereum’s security. This move reflects the growing industry trend toward scalable blockchain solutions capable of supporting the increasing demand for faster, cheaper transactions.
Solana has outpaced Ethereum in key metrics, with its Real Economic Value (REV) now at 111% of Ethereum’s, up from 1% last year. Its Total Application Revenue (TAR) surpassed Ethereum’s by 109%, fueled by memecoin activity. While Solana’s Total Value Locked (TVL) has hit a two-year high, concerns about its memecoin-driven growth and past outages persist.
Institutional innovation is also on the rise. BlackRock is expanding its tokenized USD money-market fund (BUIDL) to multiple blockchains, tapping into the $30T tokenized real-world asset market. Meanwhile, Fireblocks and NongHyup Bank in South Korea are tokenizing tax refunds to streamline VAT and GST processes, showcasing blockchain’s real-world utility.
Global Trends
Global cryptocurrency adoption continues to accelerate, driven by macroeconomic and political shifts. China’s $1.4T debt issuance plan to address local debt risks is a possible catalyst for Bitcoin demand, mirroring its 2015 surge during the yuan devaluation. In the U.S., pro-crypto political wins in the 2024 elections—247 House and 15 Senate representatives supported by $200M in campaign funds—signal growing institutional support. Key victories include Bernie Moreno’s Senate win in Ohio, though critics like Elizabeth Warren also remain influential.
On the adoption front, nations like El Salvador and Bhutan have profited significantly from Bitcoin’s price rise, with El Salvador’s 5.9K BTC gaining $570M in value. Bhutan’s Bitcoin reserves also highlight its economic benefits for smaller nations. In the US, post-election trading volumes exceeded $1B in BTC Spot ETFs, with growth poised to rival gold ETFs as Bitcoin prices are expected to head toward $100K–$150K by year-end.
Globally, institutional backing, political shifts, and recognition of Bitcoin as a hedge against economic uncertainty are paving the way for mainstream acceptance and continued growth.
Institutional and Market Developments
The cryptocurrency market is seeing rising institutional engagement, highlighted by Binance’s launch of “Binance Wealth” for HNWIs in Asia and Latin America. This service offers asset custody, trading, staking, and Proof of Reserves, positioning Binance to attract affluent investors despite regional restrictions like in the U.S. Paxos has also partnered with DBS Bank to launch USDG, a fully compliant stablecoin backed 1:1 by U.S. dollar reserves, addressing institutional demands for stable, regulated digital assets.
Institutional confidence is growing, as shown by a Sygnum survey where 57% of professional investors plan to increase crypto allocations. Bitcoin remains the top choice, with Solana and stablecoins following closely. Preference for single-token investments and managed strategies signals a shift toward crypto and Web3 infrastructure.
Ethereum ETFs have seen inflows of nearly $650M recently, with BlackRock’s iShares Ethereum Trust drawing $131.4M in one of its largest-ever inflows. ETH’s price surged 57% YTD over $3,600, reflecting strong investor confidence. Similarly, Solana (SOL) soared 131% YTD, surpassing $235 and becoming the 4th-largest cryptocurrency by market cap.
These developments highlight crypto’s increasing integration into the financial ecosystem and expansion of institutional portfolios.
In traditional finance, Goldman Sachs announced plans to spin off its crypto platform to develop tokenized real-world assets (RWAs) like U.S. Treasury bills, reflecting increasing institutional demand. Tokenized U.S. Treasury debt has grown to $2.4B, and Goldman is partnering with Tradeweb Markets to strengthen its position in the space.
These developments emphasize the expanding influence of crypto across sectors, from traditional finance’s embrace of blockchain and the growing presence of crypto-friendly political figures.