(Kitco Commentary) -
Strengths:
- Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the year was Moonwell, rising 724.03%. Bitcoin also had an exceptional run in 2024.
- Bitcoin entered 2024 prices around $40,000 and by March had surged past $70,000 for the rest of the year. However, after the U.S. presidential election results in November, bitcoin took off. Donald Trump’s decisive victory took the digital currency to $100,000 for the first time, marking a 120% increase since January, according to an article published by Bitcoin Tax.
Bitcoin futures ETFs have been around for a while, both in the U.S. and other countries, but getting a spot Bitcoin ETF felt almost impossible until January 2024. After years of rejections, the SEC finally approved 11 spot Bitcoin ETFs this year, marking a huge milestone for the industry. Just a few months later the SEC approved 8 spot Ethereum ETFs.
Weaknesses
- Of the cryptocurrencies tracked by CoinMarketCap, the worst performer for the year was UwU Lend, down 96.24%.
- While complete data for 2024 is still coming in, it’s clear that crypto scams have risen compared to 2023. By September 2024, crypto hacks caused $2.11 billion in losses, a 72% jump from the same period in 2023, according to Bitcoin Tax.
The altcoin market faced significant challenges in 2024, with widespread downturns and shifting priorities among investors. Analysts predict this trend may persist into early 2025, writes CCN.com, with established cryptocurrencies gaining more favor.
Opportunities
- The 2024 Bitcoin halving makes it more likely that the digital asset’s value will rise. This is a huge contrast to fiat currencies, which typically decline in value over time via inflation. The halving event is one of the ways Bitcoin’s protocol maintains scarcity, and scarcity is one of the reasons why Bitcoin is sought after by millions of people, explains a Coinbase article.
- President-elect Donald Trump has plans to create a U.S. bitcoin strategic reserve, stoking the enthusiasm of the crypto bulls. Trump could create the reserve via an executive order directing the U.S. Treasury Exchange Stabilization Fund. The reserve has the potential to include bitcoin that the government has seized from criminal actors, reports Reuters, which is about 200,000 tokens worth $21 billion.
Institutional adoption accelerated in 2024 as corporations and institutional investors are turning to Bitcoin as an investment. In fact, the world’s largest money manager, BlackRock, has recommended a weight of 2% of your portfolio to bitcoin, according to a report by Nasdaq.
Threats
- Starting January 1, 2025, the IRS is changing how you track the cost basis for cryptocurrency. Instead of grouping all your wallets and exchanges together, you will need to track each one separately rather than in one big bucket, explains Bitcoin Tax.
- Exchanges play a critical role in the crypto ecosystem, but 2024 tested their credibility. Legal challenges and operational issues left many users questioning the reliability of these platforms, writes CCN.com. High profile cases exposed weakness in compliance and operations and loss of trust pushed traders toward decentralized options.
- There were a handful of high-stakes legal battles and arrests this year in the crypto ecosystem, starting with Sam Bankman-Fried’s sentencing of 25 years in prison in March of 2024. CZ pleaded guilty to AML laws and was sentenced to four months in prison along with a $4.3 billion fine. French authorities arrested Pavel Durov, the CEO of Telegram, in August of 2024 accusing him of enabling criminal activities through the messaging platform. Montenegrin authorities approved extraditing Do Kwon in February 2024 to face charges for the collapse of the Terra Luna cryptocurrency.
