2024 Crypto Market Panorama: Bitcoin ETF, Layer 2 Explosion and Emerging Tracks

1. Market Overview

1.1 Cryptocurrency Market Fundamentals

The total market capitalization of the cryptocurrency market in 2024 increased from $2.31 trillion to $3.33 trillion, a growth of 44.2%. This growth was driven by factors such as the approval of a spot Bitcoin ETF and Trump's re-election as president. Bitcoin's dominance rose to 56.8%, and ETF assets doubled. The Ethereum ETF performed relatively flat. Solana shone, with the SOL price rising by 29.3% and a net inflow of $2 billion into its ecosystem.

The market share of DeFi has expanded, with the total locked value doubling compared to the beginning of the year. The ratio of DEX to CEX trading volume increased from 9.37% to 11.05%, with an annual trading volume reaching $2.67 trillion. Solana and Base have achieved DeFi TVL market shares of 7.17% and 3%, respectively.

Stablecoins accelerated, with a market cap growth of 26.8% to $205 billion. New entrants like Ethena further drive this trend. The potential approval of ETFs for assets like XRP and SOL will have a positive impact on the market.

1.2 Macroeconomic Environment and Politics

Trump has been re-elected as president, and the Republican Party has won a majority in Congress. Trump's America First and isolationist policies may trigger global trade protectionism. Europe is affected by the Russia-Ukraine war, with right-wing parties gaining more influence. The situation in the Middle East is tense, with conflicts occurring between Israel and multiple parties such as Hamas. The new government in Argentina is implementing many reforms, including dollarization of the currency.

Global GDP growth rate is 2.6%, and the inflation rate is 2.5%. The Federal Reserve has cut interest rates by 25 basis points three times in a row. The economic growth in the Eurozone is affected by rising energy prices and interest rates. China is facing issues such as weak consumption and export obstacles. Emerging market countries are impacted by the U.S. dollar interest rate hikes.

The three major U.S. stock indices rose significantly, with the Nasdaq gaining over 28%. The development of AI technology has become a hot topic. The Nikkei index hit a 30-year high, benefiting from low interest rates and a depreciating yen.

2. Bitcoin

2.1 Product and Protocol Design

In the second half of 2024, there will be important software upgrades for Bitcoin, such as Bitcoin Core 28.0 introducing flexible transaction forwarding strategies and the Lightning Network launching BOLT12. Discussions regarding soft fork proposals are ongoing, mainly focusing on new opcodes and improvements to the Lightning Network. The implementation of BitVM is steadily progressing, with a focus on cross-chain bridge design.

2.2 Layer 2 - Lightning Network

The number of Lightning Network channels remains stable, with a total of about 5000 BTC. The number of nodes has basically not changed, but the number of channels has decreased. BOLT12 is widely adopted, supporting static payment methods. Some Layer 1 networks are developing Layer 2 solutions compatible with the Lightning Network.

2.3 Layer 2 - Side Chains

Layer 2 sidechains exhibit uneven performance. BTCFi faces the challenge of relying on unsustainable incentives and needs to build a robust ecosystem. The key to success lies in ensuring asset security and pursuing a vertical integration strategy.

On-chain Assets

The performance of meta-protocol assets such as BRC20 and Runes has been poor. RGB promotion continues, but specific implementation remains to be seen. Taproot Assets was launched by Lightning Labs, and Tether announced that it will issue stablecoins based on it.

2.5 BTCFi

BTCFi can provide additional returns for Bitcoin holders, and the total locked value is expected to grow. Staking, liquid staking, and liquid re-staking have become the main sources of income. Babylon attracts a large amount of TVL. LST projects are emerging, drawing on mature DeFi design concepts.

3. Ethereum

Despite the launch of the ETH ETF, its performance has not managed to replicate the success of the Bitcoin ETF. The ETH/BTC ratio has fallen to 0.037. Gas fees on Layer 2 are significantly lower than those on Ethereum, leading to capital inflows into projects like Base. EVM remains the most dominant and active virtual machine.

3.1 L2s

After the Dencun upgrade, rollups transaction fees decreased by over 90%. Base, OP Mainnet, and Arbitrum achieved net inflows of 3.5 billion, 2.1 billion, and 1.7 billion USD respectively. The daily transaction volume of Layer 2 grew by 325%, reaching 16.86 million transactions.

3.2 Re-staking

The amount of staked Ethereum has increased overall, with the yield dropping to 3%. Re-staking protocols like Eigenlayer are attracting significant TVL. Symbiotic's TVL has grown more than 5 times, reaching $2.12 billion.

3.3 Ethereum Future Roadmap and EIP Proposals

The Pectra upgrade is expected to be completed in the first quarter of 2025, including key proposals such as EIP-7691, EIP-7702, and EIP-7251. The long-term roadmap aims for a major upgrade in 2029, introducing technologies like zero-knowledge proofs and post-quantum cryptography.

4. Solana

The price of Solana has increased by about 75%, with the SOL/ETH ratio rising to 0.06. In terms of DeFi, incentive programs like cbBTC and PYUSD have been launched. The market capitalization of stablecoins has grown more than threefold, reaching $5.1 billion. The number of developers has surpassed Ethereum for the first time. Institutional adoption is increasing, with partnerships established with Shopify and Visa.

DePIN, meme, PayFi and other areas have become the focal points of the Solana ecosystem in 2024. Projects like Hivemapper, Cudis, Grass, and XNET have emerged in the DePIN space. Platforms like Pump.fun are promoting the development of Memecoins. The PayFi concept integrates the advantages of crypto payment and DeFi, with Solana Pay collaborating with multiple partners.

5. Alt-L1s

Berachain

Introducing a liquidity proof mechanism, compatible with EVM. The TVL exceeded 1.5 billion USD before launch and jumped to become the eighth largest network after launch.

TON

With over 900 million monthly active Telegram users. Daily active users increased to 293,539, and DeFi TVL grew more than 10 times.

Kaia

Merged from Klaytn and Finschia, integrating LINE and KakaoTalk. TVL increased from $37 million to $60 million.

Move

The number of monthly active developers for Move language has increased to over 1,500. Sui outperforms Aptos in several metrics, recording a net inflow of $1.2 billion.

MegaETH

EVM compatible, with a transaction throughput of 100,000 TPS. Performance is enhanced through node specialization.

Monad

Supports optimistic parallel transaction execution, maintaining Ethereum bytecode compatibility. Up to 10,000 transactions per second can be achieved.

6. Other tracks

6.1 Meme

The overall increase in the Meme sector is 218%. Ethereum, Base, and Solana are the three most active public chains. Pump.fun has launched and become a milestone.

6.2 AI

AI development in the crypto field covers upstream and downstream industries. Agents will see an explosion in the second half of the year, and the Virtuals Protocol has successfully transformed.

6.3 RWA

The RWA market value has increased by 63%, reaching $13.67 billion. Private credit and U.S. Treasuries are the main asset classes.

6.4 Trading Robot

The market share of emerging trading robots like Trojan and GMGN.AI is rising, intensifying competition.

6.5 DeSci

Nearly 100 DeSci projects are distributed across fields such as biotechnology and space. They still face challenges such as insufficient funding and legal risks.

6.6 DePIN

The total market value of DePIN has reached 50 billion USD, with an increase of 176%. The number of projects has risen to 295. Energy networks, wireless networks, geospatial networks, and computing networks are the main segments.

6.8 Game

The average daily active wallet count exceeds 7.6 million. opBNB, Ronin, Xterio, and others have become major gaming chains. Funding still faces challenges, but the industry remains resilient.