2024: The year Bitcoin went mainstream — Part 1 | by James McKay | The Capital | Jan, 2025

Bitcoin reached an inflection point in 2024, definitively leaving behind its reputation as a speculative asset and cementing its position in institutional portfolios and global financial systems. Regulatory clarity, coupled with major developments like the approval of the US-based spot Bitcoin ETFs and the introduction of strategic reserve proposals, signaled a shift in how Bitcoin is integrated into traditional markets. Additionally, this year underscored the growing recognition of Bitcoin’s role as a hedge against macroeconomic volatility and a key driver of innovation in the evolving digital economy.

In this two-part series article, we revisit some of the big events that shaped the year in Bitcoin.

The year kicked off with the SEC approval of 11 spot Bitcoin ETFs on January 10, 2024. And it did not take long for these bitcoin-focused ETFs to make a splash in the markets and invalidate charges of “no demand” that were common prior to their launch.

Collectively, these products saw flows of $4.6 billion on their first trading day and surpassed the value held in silver ETFs after a single week.

Figure 1: Spot Bitcoin ETFs overtake Silver ETFs in a single week

After nearly a full month of trading, the jury was no longer out on their performance, with two spot Bitcoin ETFs making the top10 of all ETF inflows in, January.

Figure 2 shows the top 25 performing ETFs from the total pool of 5,535 launches over a 30-year period in terms of AUM. Four of the Bitcoin ETFs now feature in the top 25 on this list, with BlackRock’s IBIT and Fidelity’s FBTC the most successful ETF launches in 30 years as each has accumulated over $3 billion in assets within a month.

Figure 2: Top performing ETFs after 1 month, by AUM

Despite periodic periods of outflows, Bitcoin ETFs momentum remained strong throughout the year, and in December, US-based Bitcoin ETFs collectively broke $129 billion in net assets, surpassing gold ETFs for the first time. As a reminder, gold ETFs have been trading since 2004.

Figure 3: Bitcoin ETFs (spot and futures) have surpassed gold ETFs in AUM

Historically, halving events are precursors to significant price surges due to the reduced supply. April 19, 2024, marked Bitcoin’s fourth halving event, with mining rewards reduced from 6.25 BTC to 3.125 BTC per block, cutting the rate of new Bitcoin creation in half. Historically, halving events are precursors to significant price surges due to the reduced supply with patterns observed in 2012, 2016, and 2020.

Figure 4: The Bitcoin price surpassed its previous all-time high prior to the halving in 2024

2024 marked the first time Bitcoin eclipsed its previous high prior to the halving itself and there were also other differences. This year’s halving coincided with the rise of Runes which resulted in a dramatic spike in network usage and transaction fee levels. In the 130 blocks post-halving, bitcoin miners earned 1,675 BTC ($109 million), of which 75% (1,262 BTC worth approx $82 million) came from transaction fees (as a direct result of the wave of minting operations from heightened speculation around Runes).

For context, the transaction fee peak at an average of $127.97 on April 20 was more than 7x of the previous day and approximately double the previous record from three years ago. As a result, the total revenue for Bitcoin miners (block rewards + txn fees), soared to a record single-day total of $107.8 million.

Furthermore, the halving coincided with the emergence of “Rare Sats,” unique satoshis with inscribed metadata. This introduced a dynamic where miners were incentivised to “front-run” each other to mine the block containing these valuable sats, akin to numismatics.

Figure 5: Bitcoin network transaction fees spike amid Runes activity at the halving

Although it did not take long for fees to return to pre-halving levels this phenomenon did raise questions about base layer usage vs L2 development. Ultimately, the future success of Ordinals or Runes will depend on future development, community adoption, and integration with existing Bitcoin technologies — all of which must be guided by user needs.

In July 2024, Bitcoin and Ethereum ETFs officially started trading in Hong Kong only weeks after their Securities and Futures Commission (SFC) announced a likely approval. This made Hong Kong the first city in Asia to approve a mainstream investment tool for major cryptocurrencies.

Though the total market for ETFs in Hong Kong is under 1% of the US market, the implications of these launches seen in the context of global competition for crypto dominance remain important. Not only did Hong Kong launch the spot crypto ETFs ahead of the US, their spot ETFs allowed for in-kind creations and redemptions. This means Authorised Participants (APs) provide the issuers with actual crypto when additional shares need to be created which allows investors to use bitcoin and eth to invest in ETFs through eligible dealers instead of US dollars or local currency. This is reflected in a degree of political & regulatory willingness to get out of investors’ way and not unduly impede the process given the rising global competitiveness in the space (unlike the SEC).

Figure 6: Hong Kong Crypto ETFs experienced rising interest in Q4

MicroStrategy has continued its aggressive strategy of accumulating Bitcoin, and anyone paying attention will know that MicroStrategy (MSTR) is the largest institutional holder of Bitcoin by quite some margin as it continues its evolution into a full-blown Bitcoin company.

Since the beginning of 2024, MicroStrategy’s bitcoin hoard has risen from 189,150 BTC ($8.1 billion) to 446, 400 BTC ($41.7 billion) as of December 31, as seen in the chart below. The company has an average purchase price of $62,500 and MSTR stock price has increased by approximately 369% for the year, far outpacing Bitcoin’s returns.

Their approach has been to use both equity and debt to finance its Bitcoin acquisitions. The company has issued convertible notes, some with interest rates lowered to 0% due to the high demand for Bitcoin exposure through MicroStrategy stock. This strategy reflects confidence in Bitcoin’s long-term value appreciation.

Figure 7: MicroStrategy continues to stockpile BTC via ATM mechanism and bond issuance

Of course, Microstrategy is not the only company to pursue this strategy. Japanese Web3 infrastructure provider, Metaplanet, saw its share pricehas seen its share price rocket 90% after announcing the addition of $6.6 million in bitcoin to its balance sheet back in April as part of a partnership with Sora Ventures, Morgan Creek Capital’s Mark Yusko, and others. Similarly, Reddit disclosed that its excess cash reserves had been invested in Bitcoin and Ethereum as well as Polygon “as a form of payment for sales of certain virtual goods.”

Figure 8: Metaplanet’s share price jumps immediately following its bitcoin treasuries announcement

Now, this ‘cryptofication’ of major corporates — which is the act of firms drawing down dollar-denominated cash balances in favour of holding Bitcoin as a reserve asset, is developing into a trend. It not only reflects efforts to shore up their cash positions amid the continual debasement of the dollar, but it’s also an explicit recognition of Bitcoin’s investment potential.

Moreover, the recent Financial Accounting Standards Board (FASB) update that will allow corporations to report the “fair value” cost-basis of assets they’re holding means that digital asset capital appreciation can now be reported, and not just capital losses as was the case previously. This will incentivise corporations to adopt Bitcoin as a treasury asset — the benefits of which Michael Saylor hasn’t at all been quiet at pointing out.

These factors taken together mean we’re unlikely to have even scratched the surface of what this could mean for Bitcoin’s longer-term adoption.

The US election results brought renewed optimism for Bitcoin enthusiasts. It’s no secret that the cryptocurrency community largely supported Trump during the election, citing his regulatory-friendly posture compared to the Harris campaign, which had struggled to shed its anti-crypto reputation.

Bitcoin’s reaction to the election was everything but a sell the news event as some had predicted, with the premier cryptocurrency surpassing $75,000 for the first time fuelled by investor confidence in Trump’s perceived pro-crypto stance.

Figure 9: Divergent market reaction immediately following the election result

Bitcoin’s rally was not limited to election day and continued to rise for six consecutive days and recorded its biggest-ever daily increase on November 11 where it gained $8,343, a huge 10.4% rise.

One of the biggest talking points around the new administration’s stance on crypto is the potential introduction of the Bitcoin Strategic Reserve (BSR) which would see the US government hold Bitcoin just as it does gold and other commodities. The goal of an SR is to safeguard economic stability and national security during emergencies, influence exchange rates, and maintain international payments and financial market liquidity in times of stress.

The adoption of Bitcoin as a bedrock reserve asset would open the door to large purchases and Senator Cynthia Lummis has already introduced a bill for a “Bitcoin Purchase Program” of up to 200K yearly BTC purchases over five years. This would in part be financed by revaluing the country’s gold reserves and signal a permanent shift in the regulatory climate toward digital assets across the board. That’s a big deal when you’re talking about the largest economy in the world that has so far been all over the map regarding its stance on bitcoin.

Further, Trump’s vow to end Operation Chokepoint 2.0 would have broadly positive impacts on the regulatory landscape for digital assets. Operation Chokepoint 2.0 is a crackdown on the banking and lending practices as they relate to crypto businesses and represents a significant threat to the crypto industry.

Look out for Part 2 coming soon!