The Bitcoin (BTC) market is experiencing impressive levels so far in 2024, reaching all-time highs.
“Although 2024 has been a very good year for the Cryptocurrency markets, there is no reason, in our opinion, why 2025 cannot be as good or better,” says one investigation from the investment firm Grayscale Research.
However, the company believes that This boom could be prolonged if certain economic and political conditions are met clue.
Among the determining factors are the monetary policies of the Federal Reserve (Fed), the macroeconomic environment in the United States and the regulatory advances promoted by the new US administration.
Specifically, if the US economy avoids a recession and the Fed continues to reduce interest rates, bitcoin could continue to benefit from increased demand for scarce assets as an alternative to fiat money.
The Fed has already made two interest rate cutsthe first since March 2020, marking a significant turnaround after years of aggressive monetary policies. These moves have created a more favorable environment for investors..
A clipping of interest rates by the Fed generally means it is cheaper to borrow. When borrowing costs decrease, investors have more incentive to borrow money and put it into “risky” assets, like bitcoin. This can boost demand for BTC, which tends to be reflected in an increase in its price.
“Before November, bitcoin had already appreciated by 57% in 2024, but the gains of the last month have raised its annual profitability to 110%,” says the research.
The favorable market environment in November extended far beyond bitcoin. According to Grayscale’s Cryptocurrency Sector Market Index (CSMI), which measures the returns of a wide range of digital assets, This gained 59% during the month and now also has positive returns for the yearas seen in the following graph.
Bitcoin appreciation in the year. Source: Grayscale.
The impact of the elections in the United States
The recent Donald Trump’s victory in the presidential elections has generated optimism among cryptocurrency enthusiasts.
With a favorable approach towards the industry, the new administration could be a turning point for digital assets.
The elected president has promised benefits for the sector, while his administration plans to implement comprehensive legislation for cryptocurrencies and appoint key regulators aligned with digital asset innovation.
“Therefore, we see Republican control of the White House and Congress as a positive outcome for the cryptocurrency markets.”
Grayscale, investment firm.
For example, names like Scott Bessent for Treasury Secretary, Howard Lutnick for Secretary of Commerce and Paul Atkins to chair the SEC, who were nominated by Trump, These are encouraging signs, given his track record and support for cryptocurrencies..
Howard Lutnick, President-elect Donald Trump’s next Secretary of Commerce. Source: Bitcoin Conference 2024/YouTube.
These decisions could foster progress in areas such as tokenization of real-world assets (RWA)the use of stablecoins and application integration DeFi with traditional financial systems, says Grayscale.
While many assets appreciated after the US elections, bitcoin and cryptocurrencies in general were among the best performing market segments in risk-adjusted terms, as seen in the following image.
The crypto asset market outperformed traditional assets in November. Source: Grayscale.
The broader stock market also appreciated, possibly due to expectations of lower tax rates and the deregulation of certain industries, such as cryptocurrencies, promised by Trump.
For its part, the Chinese yuan depreciatedpossibly due to threat of higher tariffs designated by the president-elect.
Price cycles and historical events
Historically, bitcoin prices have shown cyclical patterns influenced by events such as the halvingwhich halves the issuance of BTC every four years.
“As bitcoin matures and is adopted by a broader range of traditional investors, and as the impact of the halving offer diminishes, recurring cycles in the price of bitcoin may decrease,” the research highlights.
The price of bitcoin hit a cyclical low in November 2022 and has since been in a bull cycle spanning approximately two years.
The periodicity of bitcoin cycles has shown a tendency to lengthen in recent years. While the average of the four previous cycles was 2.2 years, the two most recent cycles extended almost three yearsas seen in the following graph.
Bitcoin cycles have decreased in intensity over time. Source: Grayscale.
Grayscale highlights that, Although these cycles have decreased in intensity over time, they still offer some guidance on market behavior..
“While fundamental variables such as the state of the economy and the strength of the US dollar will ultimately drive the price of bitcoin, history suggests that the latest price rally could continue.”
Grayscale, investment firm.
Evolution of accessibility to the bitcoin market
The market has also evolved in terms of accessibility and structure. A notable example is the growth of bitcoin ETFs spot issued in the United States at the beginning of this year.
The case of the ETF managed by the company BlackRock is the most notable. Just this week surpassed the mark of half a million BTC in custodybecoming the largest bitcoin ETF on the US Stock Exchange.
Now this financial instrument controls the 3% of total supply of 21 million bitcoin, as reported by CriptoNoticias.
The arrival of spot bitcoin ETFs intensifies competition in the digital currency investment market. Grayscale notes that this could have “impacts on indirect investments,” such as MicroStrategy shares, which have been a popular form of exposure to this asset.
Precisely, the company announced this Monday, December 2, the acquisition of 15,400 bitcoin, raising its total reserve to 402,100 BTC. This is part of an aggressive bitcoin buying strategy by the company, led by maximalist bitcoiner Michael Saylor.
Now MicroStrategy controls about 2% of the total bitcoin supply. This has benefited MicroStrategy shares which have reached all-time highs due to its BTC reserves, rising more than 55% in one month and more than 650% in the last year.
MicroStrategy stock price. Source: TradingView.
This increase reflects investor confidence in the company’s strategy of holding bitcoin as a reserve asset in his treasury.
Diversification in the cryptocurrency sector
The rise of bitcoin has not been an isolated phenomenon. Other cryptocurrencies such as dogecoin (DOGE), Ripple’s XRP and solana (SOL) They have also posted impressive gains in 2024.
“From the point of view of the cryptocurrency sectors, the best performing market segment was consumer and culture,” explains Grayscale.
Doge led the consumer and culture sector. Source: Grayscale.
DOGE token, for example, benefited from media attention following the advertisement of a Department of Government Efficiency (DOGE) by Trump, which boosted its price 161% in November.
The new department aims to reduce government waste and promote structural reforms. It is important to clarify that there is no direct relationship between the proposed department and the cryptocurrency.
Besides bitcoin and dogecoin, the biggest increases in market capitalization last month were for Ripple’s cryptocurrency XRP and Stellar (XLM), two related projects in the cryptocurrency sector that originally focused on cross-border remittances but have since expanded to other use cases.
The resurgence of XRP, an asset that It is called a “dinosaur” for its longevity, It is also because Ripple entered into the issuance of stablecoins.
The company is very close to get approval of the New York Department of Financial Services (NYDFS) to launch its new stablecoin, RLUSD. This movement would position Ripple as a major competitor in the regulated US cryptocurrency market.
The RLUSD stablecoin would allow the Ripple company to offer its users a less volatile alternative to XRP.
It must also be taken into account that four companies have already submitted requests for authorization to create and trade an ETF based on XRP. The first to do so were Canary Capital, Bitwise, 21Shares, the most recent was WisdomTree. All of this is also a bullish catalyst for XRP.
Ethereum“>Solana and Ethereum
In the case of solana, its performance surpassed that of ether (ETH), Ethereum cryptocurrencythanks to its growing use in the memecoin trading and innovative applications such as decentralized physical infrastructure (DePin), as seen in the following graph.
Yeah Solarium can continue to expand adoption beyond the memecoinsin categories such as DePin or payments with stablecoins, for example, Grayscale Research believes it may continue to experience further rate growth and better price performance of your cryptocurrency.
Ethereum, although it had a more modest performance than BTC and SOL this year, continues to lead in areas such as tokenization of real world assets and institutional adoption, the research indicates.
In this sense, Grayscale believes that Ethereum is “playing the long game,” boosting network effects by keeping rates low for Base and other Layer 2s.
“In a post-election regulatory environment, trends in institutional adoption of digital assets may help determine whether Ethereum’s scaling strategy will support its leadership position among smart contract platforms over time.”
Grayscale, investment firm.
Innovation in the world of cryptocurrencies
The cryptocurrency sector It has also been fertile ground for decentralized artificial intelligence projects (DeAI) and decentralized science (DeSci), which seek to revolutionize scientific research and AI development through cryptocurrency networks.
In the case of AI, this is a diverse category, but many projects focus on using economic incentives to develop the components of AI technology in a decentralized way, including data collection and reporting, computing and training and inference of models, says Grayscale.
For its part, in decentralized science, projects take advantage of cryptocurrency networks to help create a transparent, accessible and collaborative environment for scientific research.
Grayscale Research concludes that there is no reason why next year shouldn’t be as good as 2024or even better.
If macroeconomic conditions remain favorable and the new US administration’s policies encourage the adoption of digital assets, the bull market could continue to consolidate. Bitcoin, along with the broader cryptocurrency ecosystem, is showing signs of maturity and resilience, reinforcing its role as a key asset in global finance.
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