The cryptocurrency market saw remarkable momentum in 2024, highlighted by Bitcoin’s continued ascent, consistently setting new all-time highs. Enthusiasts remain optimistic that the resurgence can be sustained with anticipated regulatory reforms under a potential second term for Donald Trump, along with a macroeconomic landscape conducive to risk asset appreciation.
In 2024, Bitcoin (BTCUSD) experienced a substantial increase of 119.6% and an impressive 464.2% over the last two years. This performance marks Bitcoin’s best two-year rally since 2021 when it climbed 542%. According to Dow Jones Market Data, Bitcoin crossed the $100,000 threshold for the first time in early December 2024, closing the year at $93,413.90 as the broader stock market recorded its most substantial gains since the late 1990s. Conversely, Ethereum (ETHUSD), despite its less vigorous performance compared to Bitcoin, saw a notable rise of 46.5% in 2024, concluding the year at approximately $3,344.72.
XRP (XRPUSD), categorized as the fourth-largest cryptocurrency by market capitalization, faced a decline of 3.45%, while Tether (USDTUSD) also reported a modest decrease of 0.02% despite a remarkable overall gain of 238.4% in 2024, finishing at $2.09 and achieving its best yearly performance since 2021. Meanwhile, Solana (SOLUSD) faced a slight decline of 0.94%. MicroStrategy (MSTR) and Coinbase (COIN) showed resilience, with stock prices increasing by 13.22% and 5.23%, respectively, indicating a positive sentiment surrounding companies closely associated with the cryptocurrency sector.
As the year unfolds, the ongoing potential for cryptocurrency growth is tethered not only to market dynamics but also to a favorable regulatory environment and economic conditions that encourage risk-taking among investors. As 2024 drew to a close, Solana’s token, SOLUSD, often recognized as a formidable contender to Ethereum, witnessed substantial growth, soaring by 85.5% to reach a value of $192.65. The broader cryptocurrency market reflected similar positive sentiment, with several crypto-related stocks experiencing impressive gains, some even outpacing Bitcoin. Notably, MicroStrategy, which holds 446,400 bitcoins—approximately 2% of the total Bitcoin supply—saw its shares increase by 13.22%, culminating in an extraordinary 358.5% rise throughout 2024.
This marks MicroStrategy’s most successful year since 1999, when its shares skyrocketed by an astonishing 566.7%. Meanwhile, shares of Coinbase, denoted by the ticker COIN, rose by 5.23% and closed the year up a solid 42.8%. Looking ahead to 2025, the continuation of this cryptocurrency bull run hinges on key factors, including potential regulatory shifts and the fulfillment of promises made to the industry by former President Donald Trump. Throughout his campaign, Trump consistently expressed his support for the cryptocurrency sector, garnering endorsements from influential figures within the space.
Sean Farrell, the head of digital assets at Fundstrat, emphasized the significance of the initial days of Trump’s prospective term, stating, “The first 100 days in Trump’s term will be very, very important.” This timeframe is traditionally utilized as a benchmark to gauge the effectiveness and consequences that new U.S. presidents may have.
Investors will keenly observe whether Trump will take actionable steps toward establishing a “strategic bitcoin reserve” for the United States, a commitment he has yet to elaborate on comprehensively. Additionally, the crypto community is anxious for clear definitions regarding which cryptocurrencies may be classified as securities—an issue highlighted by Alex Thorn, head of research at crypto asset manager Galaxy Digital.
Under the leadership of Gary Gensler, the Securities and Exchange Commission (SEC) has initiated enforcement actions against several crypto firms, including Coinbase and Consensys Software Inc, for non-compliance regarding registration. This has prompted complaints from industry stakeholders, who argue that the SEC’s regulatory strategy has predominantly been punitive rather than guidance-based.
Another focal point for investors will be the regulation surrounding accounting practices—specifically, the current directive known as SAB 121, which requires public companies, including banks, to treat the cryptocurrency they hold in custody as liabilities on their balance sheets. This requirement mandates that banks maintain assets equivalent to the value of the crypto to mitigate potential losses, complicating their ability to manage cryptocurrency custody.
Furthermore, market watchers are poised to see how the Federal Reserve’s interest rate policies evolve in 2025. Recent communications from Fed officials suggest that fewer rate cuts may occur than previously anticipated. The decisions made by the central bank concerning interest rates play a critical role in shaping the economic landscape and influencing all risk assets.
Currently, Fed-funds futures traders estimate a 14% probability that the Fed will maintain its key interest rate within the existing range of 4.25% to 4.5% in 2025. They also foresee a 33.2% likelihood of a 25 basis point cut in the policy rate next year, as well as a 31.5% chance of two quarter-percentage-point cuts occurring in 2025.
In summary, as the cryptocurrency market gears up for the new year, numerous factors will play pivotal roles in determining its trajectory, from regulatory clarity to monetary policy, all under the watchful eye of investors and industry participants alike.
