2024 Outlook for the Encryption Industry: Market Recovery, Bitcoin Dominance, Emerging Fields Rising

The cryptocurrency market is showing a strong recovery trend in 2024, with Bitcoin's fourth halving serving as a catalyst for a new bull market. Multiple factors have driven the market's upward movement, including adjustments in macroeconomic policies, the approval of spot ETFs, and changes in the political landscape. These changes have made encryption assets a focal point of investor interest, with the market's total market capitalization reaching new highs.

This report provides a comprehensive analysis of the development trends in the encryption industry for 2024, covering multiple aspects such as market overview, performance of mainstream coins, dynamics in emerging sectors, and the landscape of trading platforms. Here are seven key findings:

1. In the fourth quarter of 2024, the total market value of the encryption market will grow by 45.7%, reaching $3.91 trillion, with an annual increase of up to 97.7%.

2. The dominance of the Bitcoin market has further solidified, accounting for 53.6% of the total market value.

3. Bitcoin's performance in 2024 and the fourth quarter surpasses that of other major asset classes.

4. The market value of AI proxy projects soared by 322.2% in the fourth quarter, increasing from 4.8 billion dollars to 15.4 billion dollars.

5. The Ethereum Layer 2 ecosystem continues to expand, with the top ten projects' trading volume increasing by 48.3% in the fourth quarter, of which a certain platform accounts for 48.3% of the share.

6. The centralized exchange platform's spot trading volume in the fourth quarter reached 6.45 trillion USD, a quarter-on-quarter increase of 111.7%, setting a new historical high.

7. A certain public chain has surpassed Ethereum to become the dominant chain for decentralized trading in the fourth quarter, accounting for over 30%.

Market Overview: Strong Rebound, New Highs

In the fourth quarter of 2024, the total market capitalization of the cryptocurrency market surged by 45.7%, increasing by $1.07 trillion to reach $3.40 trillion. Although market momentum slightly weakened in the third quarter, after a brief adjustment, a strong rebound began in the mid-fourth quarter, especially after the results of the US elections were announced.

Looking at the whole year, the total market value of the encryption market doubled, increasing by 97.7%. In mid-December, the market value once reached a historic peak of 3.91 trillion USD, and then slightly retreated. The average daily trading volume in the fourth quarter reached 200.7 billion USD, up 128.2% from 88 billion USD in the third quarter.

Bitcoin Dominance Strengthens

The market share of Bitcoin continues to rise, although the growth rate has slowed, it still increased by 0.9% in the fourth quarter. XRP performed particularly well, with its market share rising to 3.5% (an increase of 2.0%), jumping from 7th place to 4th place, surpassing some well-known coins.

It is worth noting that a popular meme coin has entered the top seven by market capitalization for the first time, replacing a certain stablecoin's position. This is the first time the stablecoin has fallen out of the top seven since April 2021. At the same time, Ethereum's market share continues to decline, dropping from 13.4% to 11.8% in the fourth quarter, reaching a new low since April 2021.

Bitcoin Leads Mainstream Assets

In the fourth quarter of 2024, Bitcoin first broke through the $100,000 mark, reaching a record high of $108,135 on December 9, and closing the year at $93,508, with an annual increase of 121.5%.

The Bitcoin rally began from a low of $54,000 in the third quarter and accelerated again after the announcement of the U.S. election results. The Federal Reserve's interest rate cut expectations further boosted market sentiment. The average daily trading volume in the fourth quarter soared from $31.1 billion to $62.6 billion, a quarter-on-quarter increase of 101.3%. On December 6, when Bitcoin broke $100,000, the single-day spot trading volume exceeded $190 billion, setting a new high for the year.

During the same period, the Nasdaq Index rose by 8.0%, and the S&P 500 Index rose by 3.0%. The US Dollar Index increased by 7.0%, mainly due to the weakness of other major currencies. The Japanese Yen performed the worst, falling by 8.0% in the fourth quarter, almost offsetting previous gains.

Rise of AI Agency Projects

The AI agent project will experience explosive growth in the fourth quarter of 2024, with its market value skyrocketing from $4.8 billion to $15.5 billion, an increase of 322.2%. This category has rapidly gained popularity since a certain project launched on a public chain at the beginning of October.

Currently, AI agent projects are mainly concentrated on two major public chains. By the end of the year, a certain Layer 2 platform significantly increased its market share through multiple new projects. However, another public chain began to regain some market share after launching a new project at the end of December.

The Layer 2 ecosystem is flourishing

In the fourth quarter of 2024, the Ethereum Layer 2 ecosystem continues to expand, with the top ten projects achieving an average daily transaction volume of 15 million. One platform stands out, with its average daily transaction volume increasing from 4 million to 7.2 million, a month-over-month growth of 78.7%. In contrast, the average daily transaction volume of the Ethereum mainnet is about 1.2 million. This platform occupies 48.3% of the Layer 2 transaction share in the fourth quarter.

Another emerging Layer 2 project has performed remarkably, becoming the second-largest active platform, surpassing a well-known project. The former accounted for 20.6% of the trading share in the fourth quarter, while the latter was 13.7%. The trading volume of the emerging project increased by 85.5% month-on-month, whereas the established project only grew by 14.0%. This is primarily attributed to the deployment of multiple DeFi protocols on the new platform.

Centralized Exchange Sets Record

In the fourth quarter of 2024, the spot trading volume of the top ten centralized exchanges (CEX) reached $6.5 trillion, a quarter-on-quarter increase of 111.7%, breaking the $6 trillion mark for the first time. The annual trading volume reached $17.4 trillion, a significant increase compared to $7.2 trillion in 2023.

A leading exchange continues to maintain its dominance, with a market share of 34.7% in December. The platform's trading volume exceeded $1 trillion in December, marking the second time it has reached this milestone in 2024.

A certain South Korean exchange has become the fastest-growing platform in the fourth quarter, with trading volume surging from $135.5 billion to $561.9 billion, a quarter-on-quarter increase of 314.8%. This was mainly influenced by South Korea's announcement of special measures on December 3rd, during which the daily average trading volume skyrocketed to about $21 billion, six times the usual level.

Changes in the Decentralized Trading Landscape

In the fourth quarter of 2024, a certain public chain surpassed Ethereum to become the dominant chain for decentralized exchange platforms (DEX), with a market share exceeding 30%. The transaction volume of this chain in the fourth quarter reached $219.2 billion, a quarter-on-quarter increase of 152.0%. In contrast, Ethereum's transaction volume was $184.3 billion, with a market share between 25% and 28%. However, for the whole year, Ethereum still leads, accounting for 33.5% of DEX transaction volume, while this public chain accounts for 25.2%.

At the same time, a certain Layer 2 platform successfully surpassed another well-known platform in the fourth quarter, with a market share exceeding 14%. The former reached a market share of 19.0% in December, a month-on-month increase of 206.5%, with a trading volume of 116.7 billion dollars, while the latter had 79.2 billion dollars.

A certain public chain has become the fastest growing chain, with a month-on-month growth of 232.7%. The trading volume increased from 2.9 billion USD in the third quarter to 9.6 billion USD in the fourth quarter. By December 2024, the market share of this chain reached 2.1%, jumping to sixth place.