2024 Annual Report on the Encryption Industry: Bitcoin Leads the Market, Emerging Trends Emerge

In 2024, the cryptocurrency market will welcome the fourth round of a bull market, although the development trajectory differs from expectations. Market dynamics are significantly driven by changes in macroeconomic policy, including the approval of the US spot ETF, interest rate cuts by central banks in various countries, and factors such as Trump's re-election. These changes have brought cryptocurrency back into focus, with ETFs opening new channels for capital inflow. Bitcoin reached a historic high of $108,135 on December 17, driving the total market capitalization of the cryptocurrency market to a new record of $3.91 trillion.

This report provides a comprehensive analysis of the development of the encryption industry in 2024, covering aspects such as market landscape, Bitcoin and Ethereum analysis, DeFi and NFT ecosystems, and the performance of trading platforms. Here are the seven main highlights:

1. In the fourth quarter of 2024, the total market capitalization of the encryption currency market increased by 45.7%, reaching $3.91 trillion by the end of the year, a year-on-year growth of 97.7%.

2. The dominant position of Bitcoin in the market has strengthened, accounting for 53.6% of the total market value of encryption.

3. Bitcoin outperformed major asset classes for the entire year of 2024 and in the fourth quarter.

4. The market value of AI agents is expected to grow by 322.2% in the fourth quarter of 2024, from 4.8 billion dollars to 15.4 billion dollars.

5. In the fourth quarter of 2024, the trading volume of the top ten Ethereum Layer 2 solutions increased by 48.3%, with a certain platform accounting for 48.3% of the trading volume.

6. In the fourth quarter of 2024, the spot trading volume of centralized trading platforms reached $6.45 trillion, a quarter-on-quarter increase of 111.7%, setting a new historical record.

7. In the fourth quarter of 2024, Solana will surpass Ethereum to become the dominant chain for DEX trading, accounting for over 30% of all DEX transactions.

1. The total market capitalization of the cryptocurrency market has increased significantly

In the fourth quarter of 2024, the total market capitalization of the cryptocurrency market increased by 45.7% (1.07 trillion dollars), closing at 3.40 trillion dollars at the end of the year. Although market momentum weakened in the third quarter, a rebound was welcomed in the mid-fourth quarter after a brief adjustment, especially after Trump won the U.S. presidential election.

In 2024, the total market capitalization of the cryptocurrency market grew nearly twice, reaching 97.7%. In mid-December, the market capitalization reached a historical high of $3.91 trillion, before falling back to $3.40 trillion. The average daily trading volume in the fourth quarter of 2024 was $200.7 billion, an increase of 128.2% compared to $88 billion in the third quarter.

2. Bitcoin market share continues to rise

The market share of Bitcoin continued to grow slightly by 0.9% in the fourth quarter of 2024. XRP performed the best, with its market share rising to 3.5% (an increase of 2.0%), jumping from 7th place to 4th place, surpassing BNB and Solana.

Dogecoin has become the new coin ranked seventh by market capitalization, replacing USDC. This is the first time since April 2021 that USDC has failed to make it into the top seven. At the same time, Ethereum continued to decline in the fourth quarter, with its market share dropping from 13.4% in the third quarter to 11.8%, marking its lowest level since April 2021.

3. Bitcoin outperforms major asset classes

The fourth quarter of 2024 is a milestone for Bitcoin, as it first broke through the $100,000 barrier, reaching a peak price of $108,135 on December 9, before a slight pullback, closing the year at $93,508. The annual increase was 121.5%.

The rise of Bitcoin began from the low point of $54,000 in the third quarter, with another significant increase following Trump's victory in the U.S. presidential election. This upward momentum was also supported by the Federal Reserve's interest rate cuts, with the market generally expecting that loose monetary policy will continue into 2025.

The average daily trading volume in the fourth quarter soared to $62.6 billion from $31.1 billion in the third quarter, a quarter-on-quarter increase of 101.3%. On December 6, when Bitcoin broke $100,000, the spot trading volume exceeded $190 billion, setting a new annual high.

The stock market performed strongly in the fourth quarter, with the Nasdaq index rising by 8.0% and the S&P 500 index increasing by 3.0%. The dollar index rose by 7.0%, primarily driven by the depreciation of other major currencies. The yen performed the worst, dropping by 8.0% in the fourth quarter, almost erasing the gains brought about by the end of yen carry trades.

4. The market value of AI agents has increased significantly

AI agents, as a category, rapidly emerged after the launch of Solana in early October. Although the "Truth Terminal" pioneered AI agent KOLs in the X prototype, this narrative trend has largely faded. However, the market value of this category has seen astonishing growth in the fourth quarter of 2024, increasing by 322.2%, from $4.8 billion to $15.5 billion.

Currently, Solana and a certain Layer 2 platform are the only blockchains with significant AI agents. By the end of 2024, this Layer 2 platform significantly captured Solana's market share through multiple projects. However, after Solana launched new projects at the end of December, it has begun to regain some market share.

5. Ethereum Layer 2 transaction volume has significantly increased

Ethereum Layer 2 continues to grow in Q4 2024, with the top 10 Layer 2s averaging 15 million transactions per day. The increase in transaction volume is mainly driven by a certain platform, which averaged 7.2 million transactions per day in Q4, a 78.7% increase from 4 million in Q3. In contrast, the Ethereum mainnet processed an average of about 1.2 million transactions per day in Q4.

At the same time, Taiko has become the second most active Layer 2, surpassing Arbitrum, with a 20.6% share of transactions in the fourth quarter, ahead of Arbitrum's 13.7%. Taiko's trading volume increased by 85.5% compared to the previous period, while Arbitrum only grew by 14.0%. Taiko's significant growth can be attributed to the launch of several DeFi protocols on this relatively new chain.

6. Centralized Exchange Trading Volume Hits Record High

In the fourth quarter of 2024, the spot trading volume of the top 10 centralized exchanges reached $6.5 trillion, a quarter-on-quarter increase of 111.7%, breaking the $6 trillion mark for the first time. The total trading volume for the entire year of 2024 is $17.4 trillion, compared to $7.2 trillion in 2023.

A certain trading platform continues to maintain its dominant position, with a market share of 34.7% among the top 10 CEXs at the end of December. Notably, the platform's trading volume exceeded $1 trillion in December, marking the second time this milestone has been reached in 2024.

A certain South Korean exchange platform is the fastest-growing CEX in the fourth quarter, with its trading volume increasing from $135.5 billion to $561.9 billion, a quarter-on-quarter growth of 314.8%. Following the announcement of martial law in South Korea on December 3, the platform's trading volume surged, with the average daily trading volume reaching about $21 billion during this turbulent period, six times its usual average daily trading volume.

7. Solana Becomes the Dominant Chain for DEX Trading

In the fourth quarter of 2024, Solana became the dominant chain for trading on decentralized exchanges, with a market share exceeding 30%. In the fourth quarter, Solana's trading volume reached $219.2 billion, a quarter-on-quarter increase of 152.0%. In comparison, Ethereum's trading volume was $184.3 billion, with a market share between 25% and 28%. However, Ethereum still leads Solana on an annual basis, accounting for 33.5% of DEX trading volume, while Solana's market share is 25.2%.

At the same time, a certain Layer 2 platform successfully surpassed Arbitrum in the fourth quarter, securing the third position. Its market share exceeded 14% in the fourth quarter, while Arbitrum's market share remained between 10% and 11%. This Layer 2 platform reached a market share of 19.0% in December, with a month-on-month growth of 206.5%. The platform's trading volume was $116.7 billion, while Arbitrum's was $79.2 billion.

Tron is the fastest-growing chain among the top ten chains, with a month-on-month growth of 232.7%. Its trading volume increased from 2.9 billion dollars in the third quarter to 9.6 billion dollars in the fourth quarter. By December 2024, Tron holds a market share of 2.1%, becoming the sixth-largest chain.