Bitcoin (BTC): Market Report for 2024

Foreword: This article is partly based on our 2024 year-end report on the cryptocurrency market. We encourage you to read it for free or get a physical copy to support our work.

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Financial Review of Bitcoin in 2024

In 2024, Bitcoin once again solidified its position as the benchmark of the cryptocurrency market, both in terms of price and global adoption. The BTC price started the year at approximately $42,200, riding on an optimistic note after a 150% increase in 2023.

We anticipated that 2024 would bring catalysts capable of driving the market to new heights, confirming Bitcoin’s growing stature and role. This expectation was fulfilled early on, on January 10, when the Securities and Exchange Commission (SEC) approved 11 Bitcoin spot ETFs.

These new investment products were an instant success, achieving the best launches in the history of BlackRock and Fidelity. With record weekly inflows of billions of dollars, they propelled Bitcoin to new all-time highs. On March 11, BTC surpassed its previous ATH from November 2021, reaching a new record on March 14 at $73,700.

The year was also marked by a highly anticipated event: the Bitcoin halving on April 20. For the fourth time in its history, Bitcoin successfully halved its block rewards, reducing them from 6.25 BTC to 3.125 BTC per block. Adding to the milestones, on May 6, the Bitcoin network surpassed one billion transactions after 15 years and 4 months of operation.

However, the introduction of Bitcoin spot ETFs created an unexpected market anomaly. For the first time in history, BTC reached a new ATH before the halving, rather than months later as in previous cycles. This temporal disruption caused Bitcoin to trade sideways between $70,000 and a local low of $49,000 on August 8 for several months.

After this consolidation phase, a major macroeconomic uncertainty was resolved. The U.S. Federal Reserve indicated its readiness to lower interest rates, signaling a potential return of liquidity to risk markets. Finally, on November 5, the announcement of Donald Trump’s election as President of the United States lifted the final veil, enabling Bitcoin to climb to new highs.

In November, Bitcoin broke free from the $70,000 range, reaching new price records above $90,000. On December 5, as if to further cement its standout year, Bitcoin surpassed the symbolic $100,000 mark, just over seven years after crossing $10,000. Ultimately, Bitcoin set a new all-time high around $108,000 before closing the year at $93,500, a 121% increase.

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Bitcoin Mining Review for 2024

The Fourth Halving

Bitcoin's fourth halving occurred on the night of April 19–20, 2024, marking another major milestone in the network's history. This event, which took place at block 840,000, reduced the block rewards distributed to miners from 6.25 BTC to 3.125 BTC per block.

In the competition among mining pools, ViaBTC (accounting for approximately 15% of the global hashrate at the time) mined the first post-halving block. This block carried a record reward of 40.75 BTC, including 37.62 BTC solely from transaction fees. Many users paid astronomical fees, sometimes in the tens or hundreds of thousands of dollars, solely to be forever included in this historic block.

Additionally, with the rising popularity of the Ordinals protocol—discussed later in this report—the first post-halving block gained added significance. Since each satoshi (sats) is now numbered, those mined in this block are considered collectible items, rare digital relics, some of which have already been traded for millions of dollars.

Historically, halvings have played a crucial role in cryptocurrency market cycles, often signaling the start of bullish phases. This trend held true in 2024, as Bitcoin's price increased by 50%, climbing from $63,800 at the time of the halving to $96,000 by early January 2025. For context, the next halving is expected in 2028, at block 1,050,000, further reducing miner rewards to 1.5625 BTC per block. As of this writing, only 1,091,900 BTC remain to be mined, representing 5.2% of the total supply.

The Hashrate

The year 2024 was a pivotal one for Bitcoin miners, testing their adaptability and resilience. With the fourth halving in April cutting mining rewards in half, participants in this highly competitive sector were forced to adjust their strategies.

During the first quarter of 2024, Bitcoin’s hashrate surged by 19%, reaching an all-time high of 650 EH/s. This increase reflected miners’ efforts to maximize output ahead of the reward reduction. However, in the weeks following the halving, the global hashrate dropped by approximately 9.6%, falling from 640 EH/s in April to around 580 EH/s in early May. Despite Bitcoin's “high” price of around $63,000, less efficient miners were forced to shut down their machines—a logical and expected capitulation.

After hitting a temporary low of 556 EH/s in June, the network’s hashrate quickly rebounded, showcasing remarkable resilience. By late November, a new record was set at approximately 780 EH/s.

Mining

In anticipation of the halving, major mining players ramped up their investments to maximize operational efficiency. In 2024, the mining industry raised $1.8 billion, 75% of which was secured by the three largest publicly traded companies: Marathon Digital Holdings, CleanSpark, and Riot Platforms.

These fresh funds facilitated the acquisition of next-generation ASIC machines, which are up to twice as powerful as their predecessors. These machines, introduced shortly before the halving by major suppliers like Bitmain and MicroBT, were offered at particularly competitive prices. Additionally, industry giants developed new infrastructure, upgraded existing mining farms, and consolidated their market positions by acquiring smaller players.

The Future of Mining: Bitcoin and AI

In 2025, the Bitcoin mining industry is expected to continue evolving in line with the trends observed in recent months. Notably, many miners have started repurposing their infrastructure to meet the growing demand for computing power in artificial intelligence (AI) applications.

This new model provides an additional revenue stream for industry players. According to Matthew Sigel, Head of Digital Asset Research at VanEck, in an August 16 report, AI applications generate an estimated $2 to $3 per kWh, compared to $0.15 to $0.20 per kWh from Bitcoin mining.

Key examples include:

• Core Scientific, which secured energy contracts dedicated to the AI sector, boosting its stock price by 200% in a matter of weeks.
• Hive Digital Technologies, which diversified into high-performance computing (HPC), generating $2.6 million in sales with a utilization rate exceeding 80%.
• Hut 8, which raised $150 million to double its energy capacity and focus on AI-related applications.
• Other players, such as Bitdeer and Iris Energy, with a combined energy capacity of 2,500 MW, also stand to benefit from this diversification.

Bitcoin Mining Remains Core

Despite these promising diversifications into AI—with theoretically higher returns—Bitcoin mining remains at the heart of operations. Demand for mining remains consistent regardless of BTC price fluctuations. Miners who successfully balance their primary operations with innovative strategies like AI integration are likely to emerge as industry leaders in the coming years.

It is also worth noting miners’ growing interest in holding Bitcoin. For example, RIOT integrated Bitcoin into its treasury, mirroring MicroStrategy’s $500 million BTC purchase in December. This shift illustrates a significant change in mindset, as Bitcoin miners traditionally derive their income from selling, not holding, BTC.

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Bitcoin Spot ETF Review

One of the key themes that defined Bitcoin in 2024 can be summed up in a single term: institutionalization. The introduction of Bitcoin spot ETFs in January 2024 marked a turning point for Bitcoin adoption in the United States, providing institutional players with a regulated investment product for the market’s leading digital asset.

This decision triggered unprecedented capital inflows. While regulated Bitcoin products held $28 billion in January (primarily due to the Grayscale Bitcoin Trust, since converted into a spot ETF), by December, this figure had risen to over $107 billion. The quantity of BTC under management increased from 620,000 to over 1.12 million, representing 5.6% of the total circulating supply.

This turning point in Bitcoin adoption also influenced the perception of traditional financial giants toward the asset. Perhaps the best example is Larry Fink, CEO of BlackRock. After years of likening Bitcoin to monkey money, fit only for laundering, Fink publicly admitted he had been wrong:

“As you know, I was skeptical and proud to be so [...] I researched the subject [...] I’ve come to the conclusion that this opinion was outdated. Bitcoin can have legitimate value as a financial instrument.”

In 2024, major U.S. financial institutions, corporations, and even pension and retirement funds announced Bitcoin holdings in their treasuries. For instance, Goldman Sachs now holds over $1 billion in various Bitcoin spot ETFs, while Morgan Stanley reportedly invested nearly $200 million. In recent 13F regulatory filings, financial heavyweights such as JPMorgan Chase, the Bank of Canada, HSBC, Bank of America, UBS Group, and the Michigan State Pension Fund revealed Bitcoin investments.

Beyond banks, many companies incorporated Bitcoin into their operations and treasuries. MicroStrategy and its CEO Michael Saylor were, of course, pioneers, with massive investments throughout 2024, totaling over 439,000 BTC. This strategy has since been emulated by dozens of companies in the U.S. and globally, establishing or expanding their Bitcoin positions.

If crypto investors are optimistic about Bitcoin’s future, so too are institutional players. Bernstein Research projects Bitcoin reaching $200,000 by the end of 2025. Cathie Wood, CEO of ARK Invest, maintains a bold long-term forecast of $1 million per Bitcoin by 2030. Standard Chartered predicts the total cryptocurrency market capitalization could reach $10 trillion by 2026, fueled in part by the Trump administration.

The final piece of this puzzle may still seem distant, but recent events suggest it could fall into place by 2025: the adoption of Bitcoin by nation-states.

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Review of Ordinals, Runes, and BRC-20

A few reminders

At the start of 2023, a groundbreaking innovation shook the Bitcoin ecosystem: Ordinals. Developed by Casey Rodarmor, a former Bitcoin Core developer, Ordinals is a protocol that allows permanent and immutable data inscriptions on the Bitcoin blockchain by associating them with satoshis, the smallest unit of bitcoin.

Rodarmor's initial idea was to introduce a numbering system for satoshis. Since Bitcoin’s issuance follows a first-in, first-out model, the numbering of satoshis follows a natural order, hence the name “ordinal.” Rodarmor constructed rarity systems based on the origin of satoshis. For example, the first satoshi from a newly mined block is rarer than a regular satoshi but less rare than the first satoshi from the first block mined after a difficulty adjustment or halving.

However, what truly captivated investors wasn’t this numbering system but the inscription mechanism. This innovation enabled the creation of NFTs on Bitcoin and fungible tokens (dubbed BRC-20), which quickly became speculative assets. By the end of 2023, over 50 million inscriptions had flooded the Bitcoin blockchain.

In 2024, Rodarmor announced a new protocol far more efficient than Ordinals for creating fungible tokens. Named “Runes,” it officially launched on Bitcoin’s halving day, partially explaining the significant rise in transaction fees on that date.

Impact on fees

As the year progressed, the initial enthusiasm waned, and activity drastically declined, raising questions about the impact of these technologies. Ordinals and Runes, by consuming a large portion of block space, increased congestion on the Bitcoin network and reduced its efficiency for standard transactions. For instance, following the launch of Runes in April 2024, they dominated daily network activity, surpassing one million transactions per day. However, by July, Bitcoin accounted for about 90% of network activity, with Ordinals, BRC-20, and Runes sharing the remaining 10%.

On the other hand, Ordinals and Runes collectively generated over 6,900 BTC in fees (approximately $670 million) and consumed 2,700 BTC (roughly $250 million) in just seven months. This nearly $1 billion total directly benefited miners, significantly contributing to their revenue, especially post-halving.

Although Ordinals, BRC-20, and Runes have been criticized by Bitcoiners for causing network congestion and being “useless and speculative,” they also demonstrated Bitcoin’s capacity for innovation. Moreover, they provided miners with an additional revenue stream at a time when the halving raised concerns.

Since Bitcoin’s late-year rally, on-chain activity has somewhat revived. While 2024 was mixed for these sectors, particularly between March and October, some observers expect Ordinals and Runes to regain momentum in early 2025, supported by significant miner investments, particularly in Asia.

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Bitcoin in 2025: A Strategic Asset for Nations?

Looking ahead to 2025, Bitcoin could take on an increasingly strategic role on the global stage, particularly if the United States moves in this direction. The possibility of Bitcoin adoption by the world's leading power, potentially through the establishment of a strategic reserve, could redefine its global status.

A few nations have already adopted Bitcoin. El Salvador, for instance, implemented a daily purchase strategy to accumulate over 6,000 BTC, with an unrealized profit exceeding $300 million as of December 13, 2024. However, while their initiative deserves recognition for its boldness and pioneering spirit, it has had little impact on other countries. The same holds true for Bhutan, the fourth-largest Bitcoin holder globally, with 11,791 BTC (valued at approximately $1.16 billion) mined within its borders.

In contrast, if the United States were to seriously consider Bitcoin, the implications could be far-reaching. Since Donald Trump’s election, this prospect has gained credibility. At the state level, Pennsylvania has proposed allowing its treasury to hold Bitcoin. This initiative could pave the way for other states to follow suit, diversifying their reserves and adopting Bitcoin as a strategic asset.

On a national scale, the game-changing move could come in the form of the Bitcoin Act, a flagship proposal championed by U.S. Senator Cynthia Lummis. This bill aims to establish a national strategic reserve in Bitcoin, akin to the existing gold reserve, with a target of accumulating up to 5% of the total Bitcoin supply—approximately 1 million BTC.

Such an initiative would permanently elevate Bitcoin to the status of gold, long touted as its digital counterpart. Prominent Bitcoin advocates, including Michael Saylor, have even suggested divesting gold holdings to acquire more Bitcoin.

What could be the impact of such a move by the United States? A domino effect, quite simply. The reaction from other nations has already begun to take shape: Anton Tkachev, a State Duma deputy in Russia, recently proposed creating a strategic Bitcoin reserve. Vladimir Putin himself has made several favorable comments on the matter: “Who can ban Bitcoin? No one! And who can ban the use of such decentralized digital payment methods? No one.”

Similarly, according to German lawmaker Joana Cotar, if the U.S. were to establish a strategic Bitcoin reserve, it could trigger a FOMO effect among European nations. In such a scenario, it’s easy to imagine European countries following the U.S. example by integrating Bitcoin into their national reserves to strengthen their economic position. This development could transform Bitcoin into a geopolitical asset, used not only as a means of exchange or investment but also as a strategic reserve or a free trade tool in international relations.

However, the United States could face another obstacle: funding. According to Cynthia Lummis’s proposal, the Federal Reserve’s surpluses would be used to acquire Bitcoin. Yet, the Fed is currently running a deficit.

Any future profits generated by the Fed would first need to cover this accumulated deficit since 2022. As a result, creating a strategic Bitcoin reserve may prove more challenging than anticipated. One potential, albeit unlikely, solution would involve converting a portion of the country’s gold reserves into Bitcoin.

This raises a key question for other nations: should they wait for the United States to begin accumulating Bitcoin, or take the lead to benefit from potential price increases following a major U.S. announcement? The year 2025 will likely provide the first answer to this question.