2024 Crypto Market Review: Bitcoin ETF Leads Bull Run, Solana Ecosystem Explodes

1. Market Overview

1.1 Cryptocurrency Market Fundamentals

In 2024, the total market capitalization of the cryptocurrency market rose from $2.31 trillion to $3.33 trillion, an increase of 44.2%. This growth was mainly driven by the approval of spot Bitcoin ETFs and the election victory of Donald Trump. Bitcoin's dominance rose to 56.8%, largely due to the doubling of ETF assets under management. The performance of Ethereum ETFs remained relatively flat, with institutional investors still showing a clear preference for Bitcoin.

Solana has performed remarkably well, with the price of SOL rising by 29.3% and a net inflow of $2 billion into its ecosystem. The DeFi market share has expanded, with the total locked value more than doubling. The ratio of DEX/CEX trading volume has increased from 9.37% to 11.05%, with an annualized trading volume reaching $2.67 trillion. Both Solana and Base have more than doubled their market shares in DeFi TVL, reaching 7.17% and 3%, respectively.

The market capitalization of stablecoins has grown by 26.8%, exceeding $205 billion, reaching a new all-time high. New entrants like Ethena have further driven this trend with competitive yields. Looking ahead, the potential approval of ETFs for other institutional preferred assets such as XRP and SOL will bring positive catalysts to the market.

1.2 Macroeconomic Environment and Politics

Politics

Trump wins the US election, and the Republican Party secures a majority in Congress. The Trump administration will gain greater executive power, and its America First and isolationist policies may trigger uncertainty in the international situation. Trump had a friendly attitude towards cryptocurrency during his campaign, but actual policies remain to be seen.

Europe is affected by the Russia-Ukraine war, leading to rising energy prices and increased military spending. The discourse power of right-wing parties has strengthened. Europe is in a following state regarding cryptocurrency regulation, with the MiCA legislation to be implemented by the end of the year, clarifying the regulatory framework for stablecoins and cryptocurrencies.

Geopolitics in Other Regions

The situation in the Middle East is tense, with ongoing conflicts between Israel and Hamas. Several countries in South America are advancing the legalization of cryptocurrencies.

Economy

In 2024, global GDP growth is 2.6% and the inflation rate is 2.5%. Inflation in the United States has been partially controlled, and interest rates are beginning to be cut. The Eurozone is experiencing slow economic growth due to the impact of geopolitical wars. China is facing issues such as sluggish consumption and export obstacles. Emerging market countries are affected by the US dollar's interest rate hikes, leading to severe depreciation of local currencies in some countries.

The three major U.S. stock indices surged, with technology companies performing exceptionally well. The Nikkei index reached a 30-year high, benefiting from low interest rates and export advantages.

2. Bitcoin

2.1 Product and Protocol Design

In the second half of 2024, Bitcoin will have some important software upgrades, such as Bitcoin Core 28.0 introducing flexible transaction forwarding strategies and the Lightning Network launching BOLT12. The community is discussing soft fork proposals, mainly including new opcodes and the LNHANCE plan, but consensus has not yet been reached. BitVM is making steady progress, focusing on the design and implementation of cross-chain bridges.

2.2 Layer 2 - Lightning Network

The total locked amount in the Lightning Network remains around 5000 BTC. The number of nodes is stable, but the number of channels is decreasing, which may indicate liquidity concentration or early channel closures. New features such as BOLT12 are being widely adopted, improving user experience. Some Layer 1 networks are developing Layer 2 solutions compatible with the Lightning Network.

The ability of the Lightning Network to support payment services makes it a promising solution for widespread adoption. Service-oriented projects, especially those utilizing the Lightning Network as a settlement layer for cross-border transactions, may receive more attention. Future development depends on the issuance of stablecoins on the Lightning Network.

2.3 Layer 2 - Side Chains

Layer 2 sidechains show mixed performance. The main challenge facing Bitcoin's second layer is building a robust ecosystem to ensure sustained liquidity. BTCFi can achieve better liquidity abstraction and protocol layer stacking by leveraging existing infrastructure.

The key to the success of Bitcoin L2 lies in ensuring asset security and pursuing a vertical integration strategy.

On-chain Assets

The overall performance of on-chain Bitcoin assets is mediocre. Assets from meta-protocols like BRC20 and Runes have performed poorly recently. RGB is still being promoted, mainly focusing on issuing stablecoins in cooperation with Tether. Taproot Assets, launched by Lightning Labs, has seen Tether announce the issuance of stablecoins based on this scheme.

On-chain asset tracks face challenges such as insufficient DEX experience and liquidity, and CEX also encounters difficulties in integrating new asset types.

2.5 BTCFi

BTCFi can provide additional returns for Bitcoin holders, and the overall locked value is expected to grow. Babylon has attracted a large amount of Bitcoin-denominated TVL. Various LST projects have emerged, drawing on mature DeFi design concepts. The challenges faced by BTCFi include issues such as the method of calculating TVL and how to fulfill promised returns.

Protocols that can more flexibly mobilize Bitcoin liquidity and support a wider range of asset classes will have a better chance of success.

Ethereum

Despite the launch of the ETH ETF, its performance has not replicated the success of the Bitcoin ETF. The ETH/BTC ratio has dropped to 0.037, highlighting institutional investors' preference for Bitcoin. Since the Dencun upgrade, Layer 2 gas fees have decreased significantly, leading to more funds flowing into Layer 2 projects.

The Pectra upgrade in the first quarter of 2025 will further enhance blob capacity. We expect that L2 networks with unique positioning and value propositions will further integrate and increase user stickiness, becoming significant competitors to alt-L1 networks.

3.1 L2s

After the Dencun upgrade, rollup transaction fees have decreased by over 90%, and usage has significantly increased. Leading L2s such as Base, OP Mainnet, and Arbitrum have seen a large net inflow.

Base performs outstandingly, with daily active users reaching 1.6 million. DeFi activity has significantly increased, and an important partnership has been established with Stripe. Arbitrum has launched Stylus, supporting multiple programming languages. The OP Superchain continues to grow, with the total number of chains based on the OP-Stack reaching 56 by the end of the year.

We expect the competition between OP Stack, Arbitrum Orbit, and zkSync's Hyperchain to intensify further in 2025.

3.2 Re-staking

The amount of staked Ethereum has generally increased, but the yield has dropped to 3%. The TVL of the re-staking protocol has decreased, mainly due to the delay in the launch of the reduction mechanism. The TVL of Symbiotic has seen a significant increase, growing by more than 5 times.

The future catalytic factors will depend on the successful implementation of the reduction mechanism, as well as the flexibility offered to AVS, stakers, and node operators.

3.3 Ethereum Future Roadmap and EIP Proposals

The 2025 Pectra upgrade plan implements several important EIPs:

• EIP-7691: Expand Blobs capacity, reduce L2 fees
• EIP-7702: Implement EOA account smart contract functionality
• EIP-7251: Optimize validator management to reduce network load

The Ethereum core team has reorganized its long-term development roadmap, aiming for a major upgrade in 2029, introducing technologies such as zero-knowledge proofs and post-quantum cryptography.

In the future, Ethereum needs to adjust the staking reward issuance curve while attracting high-throughput applications to create greater value for holders.

Other Infrastructure

• Sorter: The decentralized shared sorting concept has gained attention, with several mainstream L2 projects decentralizing their sorters.
• Data Availability: Solutions such as Celestia, Avail, and EigenDA are continuously evolving, deeply integrating with RaaS providers.
• Intent and Chain Abstraction: The Chain Abstraction Coalition has been established to promote the adoption of chain abstraction solutions. The ERC-7683 proposal has been launched to support a shared liquidity layer.
• AI Agents and Intent-Driven DeFi Trading: LLMs and AI agent technology bring new breakthroughs to the DeFi trading experience.

4. Solana

In 2024, Solana performed exceptionally well, with a price increase of approximately 75%, and the SOL/ETH ratio rising to 0.06. Solana offers lower transaction fees and higher throughput, attracting many high-performance applications. The market capitalization of stablecoins has more than tripled, reaching $5.1 billion. Institutional adoption has become increasingly evident, with partnerships established with Shopify and Visa.

In 2024, the Solana ecosystem will mainly focus on areas such as DePIN, memes, and PayFi.

DePIN

Leading projects like Helium and Render Network are migrating to Solana, driving ecological prosperity. New projects such as io.net are gaining attention.

Meme

Platforms like Pump.fun are driving a significant increase in Meme coin trading volume on Solana. The analysis platform GMGN.ai offers more features to meet investment needs.

PayFi

Solana Pay collaborates with Shopify and VISA to open online and offline payment channels.

Looking to the Future

Firedancer activation will further enhance network performance. The Solana plugin provides more flexible token issuance capabilities. The approval potential of the Solana ETF, growth in the stablecoin market, institutional adoption, and increased DeFi activity will all bring positive catalysts to the ecosystem.

Directions worth paying attention to:

• Solana itself: SOL ETF and Firedancer client
• SVM and Layer 2: Addressing scalability issues as an ecological bridge
• Applications: Community-driven applications and out-of-circle applications

5. Alt-L1s

Berachain

Introducing a liquidity proof mechanism, the BeaconKit modular consensus client supports EVM compatibility. After launch, TVL exceeded $1.5 billion, rising to become the eighth largest network.

TON

Relying on deep integration with Telegram, it has a natural user advantage. Daily active users have grown to 293,000, and DeFi TVL has increased more than tenfold. However, since Q4, interest has declined, and growth in 2025 will depend on closer collaboration with Telegram.

Kaia

Formed by the merger of Klaytn and Finschia, integrating LINE and KakaoTalk. It offers optimization measures such as account abstraction and Gas fee proxy payments. The Kaia Wave program has been launched to promote ecological development.

Move

The Move ecosystem has gained broader adoption, with over 1,500 active developers per month. Sui outperforms Aptos in several metrics, with its native token price rising by nearly 500%. Aptos has also seen significant growth, but focuses more on institutional directions such as RWA tokenization.

MegaETH

High-performance blockchain compatible with EVM, enhancing overall performance through node specialization. Pay attention to its competition with rivals like Monad and Solana.

Monad

Achieve optimistic parallel transaction execution across multiple EVM instances while maintaining compatibility with Ethereum bytecode. The MonadBFT consensus mechanism reduces latency, and MonadDB optimizes data storage.

6. Other Tracks

6.1 Meme

The overall increase in the Meme track is 218%. Ethereum, Base, and Solana are the three most active public chains. The launch of Pump.fun has become a milestone, greatly releasing retail demand. New