2024 Crypto Market Mid-Year Review: BTC ETF Approved, Trump Wins Election, Ecosystem Continues to Prosper

1. Market Overview

1.1 Cryptocurrency Market Fundamentals

Since the first half of 2024, the total market capitalization of the cryptocurrency market has increased from $2.31 trillion to $3.33 trillion, a rise of 44.2%. This growth is attributed to several key milestones, including the approval of a spot Bitcoin ETF and the policy expectations brought about by Trump's election victory. Bitcoin's dominance has risen to 56.8%, primarily due to the doubling of ETF assets, reflecting increased interest from institutional investors.

The Ethereum ETF has performed relatively flat, while institutions still show a clear preference for Bitcoin. Solana has performed brilliantly, with SOL prices rising by 29.3% and a net inflow of $2 billion into its ecosystem.

The DeFi market share has expanded, with TVL growing more than double. The DEX/CEX trading volume ratio has increased to 11.05%, with an annual trading volume reaching $2.67 trillion. Solana and Base have increased their DeFi TVL market shares to 7.17% and 3% respectively.

Stablecoins have accelerated, with a market capitalization increase of 26.8% to $205 billion. New entrants like Ethena are driving this trend. The potential approval of ETFs preferred by other institutions in the future will bring positive catalysts.

1.2 Macroeconomic Environment and Politics

Politics

The US election has been won by Trump, and the Republican Party has gained a majority in both houses. Trump's policies may bring uncertainty to the international situation. Whether his crypto-friendly policies can be implemented remains to be observed.

Europe is influenced by the Russia-Ukraine war, with the discourse power of right-wing parties increasing. Cryptocurrency policies follow the United States, and the MiCA legislation clarifies the regulatory framework.

The Middle East is experiencing ongoing conflict, with the Israel-Hamas clashes entering a concluding phase. Many South American countries are advancing the legalization of cryptocurrency.

Economy

In 2024, the global GDP growth rate is 2.6%, and the inflation rate is 2.5%. The U.S. economy lands steadily, while the Eurozone experiences slow growth due to geopolitical conflicts, and China faces challenges such as sluggish consumption. All three major U.S. stock indices surge, with technology stocks performing particularly well. The Nikkei index reaches a 30-year high.

2. Bitcoin

2.1 Product and Protocol Design

In the second half of 2024, there will be significant software upgrades for Bitcoin, such as the introduction of flexible transaction forwarding strategies in Bitcoin Core 28.0. Discussions on protocol layer design are ongoing, primarily focusing on soft fork proposals like OP_CTV and OP_CAT. The implementation of BitVM is still progressing steadily, with a focus on the design and implementation of cross-chain bridges.

2.2 Layer 2 - Lightning Network

The number of Lightning Network channels has not changed much, maintaining a total of about 5000 BTC. BOLT12 has been adopted by multiple clients. Some Layer 1 networks are developing Layer 2 solutions that comply with BOLT specifications.

2.3 Layer 2 - Side Chains

The performance of Layer 2 sidechains is uneven. The challenges faced by BTCFi include reliance on unsustainable TVL surges and airdrop incentives. The key to success lies in ensuring asset security and pursuing a vertical integration strategy.

2.4 On-chain Assets

BRC20, Runes and other meta-protocol assets are performing poorly. RGB is being promoted, and technical implementation of integration with the Lightning Network has been achieved. Taproot Assets was launched by Lightning Labs, and Tether has announced that it will issue stablecoins based on it.

2.5 BTCFi

BTCFi can provide additional收益 for Bitcoin holders, and the overall locked value is expected to grow. Babylon has attracted a large amount of TVL denominated in Bitcoin. Various LST projects have emerged, drawing on mature DeFi design concepts.

3. Ethereum

Despite the launch of the ETH ETF in July 2024, its performance has not been able to replicate the success of the Bitcoin ETF. The ETH/BTC ratio has fallen to 0.037. Layer 2 gas fees are significantly lower than Ethereum, leading to a capital inflow into Layer 2 projects.

3.1 L2s

After the Dencun upgrade, rollup 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 respectively. The daily transaction volume on Layer 2 increased by 325%, and the number of daily active addresses rose to 2.18 million.

3.2 Re-staking

The amount of staked Ethereum has increased overall, while the yield has dropped to 3%. Re-staking protocols attract a large amount of TVL, but the growth momentum in the second half of 2024 is weakening. Symbiotic's TVL has increased 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, incorporating several important EIP proposals. The long-term development roadmap aims for a major upgrade in 2029, introducing core technologies such as zero-knowledge proofs and post-quantum cryptography.

4. Solana

Solana performed excellently in 2024, with a price increase of about 75%, and the SOL/ETH ratio rising to 0.06. With low transaction fees and high throughput, it has attracted many high-performance decentralized applications. The market value of stablecoins has more than tripled, reaching 5.1 billion USD. The adoption by developers has significantly increased, surpassing Ethereum for the first time.

In 2024, the Solana ecosystem will focus mainly on areas such as DePIN, meme, and PayFi. In the future, attention will be given to the development of Solana itself, SVM and Layer 2, community-driven applications, and applications that go beyond traditional boundaries.

5. Alt-L1s

In 2024, Alt-L1 continues to receive strong attention. Notable mentions include:

• Berachain: Introduces a proof of liquidity mechanism, compatible with EVM, with a TVL exceeding $1.5 billion after launch.

• TON: Relying on the Telegram user base, daily active users increased to 293,539, and DeFi TVL grew more than 10 times.

• Kaia: Formed by the merger of Klaytn and Finschia, integrating LINE and KakaoTalk, with TVL increased to $60 million.

• Move Ecosystem: The number of monthly active developers has increased to over 1,500, and Sui outperforms Aptos on multiple metrics.

• MegaETH: EVM compatible, with a transaction throughput of up to 100,000 TPS.

• Monad: Achieving optimistic parallel transaction execution across multiple EVM instances while maintaining compatibility with Ethereum bytecode.

6. Other tracks

6.1 Meme

The overall increase in the Meme sector in 2024 is 218%. The launch of Pump.fun has become a milestone, greatly releasing retail demand. New tools are constantly emerging, such as Kaito, Photon, and GMGN.AI.

6.2 AI

AI has become one of the hottest fields in 2024. Agents are set to explode in the second half of the year, and the successful transformation of Virtuals Protocol has catalyzed this trend. Development frameworks such as ElizaOS and RIG framework continue to maintain their popularity.

6.3 RWA

The RWA market value grew by 63%, reaching $13.67 billion. Private credit and U.S. Treasuries are the main asset classes. Institutional issuers include Franklin Templeton, BlackRock, and others.

6.4 Trading Bot

The competition in the trading bots market will intensify in 2024. The Trojan trading bot will become the largest bot, with a market share stabilizing at 30-40%. GMGN.AI's trading volume will grow rapidly, reaching two-thirds of Trojan's by early 2025.

6.5 DeSci

There are nearly 100 DeSci projects distributed across fields such as biotechnology, space, and humanities. Bio Protocol has gained more attention after receiving investment from Binance Labs. However, DeSci still faces challenges such as insufficient funding and legal risks.

6.6 DePIN

The total market value of DePIN has reached 50 billion USD, an increase of 176%. The number of projects has risen to over 295. Energy networks, wireless networks, geospatial networks, and computing networks are noteworthy sub-sectors.

6.8 Game

The gaming industry demonstrated significant resilience and growth in 2024, with an average daily active wallet count exceeding 7.6 million. Major gaming chains include opBNB, Ronin, Xterio, Skale, TON, and XAI. Despite financing difficulties, the industry remains resilient.