Few were expecting 2024 to be the defining year for bitcoin.
Following the annus horribilis that was 2022 (apologies to those experiencing PTSD), bitcoin spent most of 2023 in recovery mode.
Numerous high-profile collapses experienced throughout 2022, from TerraUSD to Three Arrows to Celsius and, most epically, FTX, continued to weigh on market sentiment.
While the world’s largest cryptocurrency did indeed bounce back from a very steep morass to gain some 150% by the end of 2023, the sense of unbridled hype that defined bitcoin’s record run in 2021 appeared to be missing.
Yet, as 2024 comes to a close, it’s safe to say that bitcoin has put its post-FTX quagmire thoroughly in the dust.
From a groundswell of institutional adoption to unprecedented political support, 2024 has been the year of bitcoin.
Bitcoin ETFs approved in January
The first big bitcoin event happened just a few weeks into the new year when, on 11 January, the US Securities and Exchange Commission (SEC) approved spot-bitcoin exchange-traded funds for the first time.
SEC chair Gary Gensler, a renowned crypto sceptic, made the approval with extreme caution.
“While we approved the listing and trading of certain spot bitcoin ETP (exchange-traded products) shares today, we did not approve or endorse bitcoin,” he stated. “Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.”
He reiterated his contention that, unlike ETPs holding tangible commodities like precious metals, bitcoin remains “a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing”.
Nonetheless, the approval was a big deal for bitcoin.
Major asset managers including BlackRock, VanEck, Fidelity and Grayscale were finally able to list their bitcoin investment products on the New York Stock Exchange, opening the spot market up to billions of dollars worth of traditional investment capital.
Such was the rapid uptake of bitcoin ETFs, that they very nearly surpassed gold ETFs in assets under management (AUM) in December.
The halving happens in April
Bitcoin halving can be a tricky concept for casual bitcoin investors to their their heads around, but it is a fundamental part of its anti-inflationary economics.
In essence, bitcoin halving a once-in-every-four-years event programmed into the network that cuts the reward for mining new blocks in half.
This mechanism ensures that the total supply of Bitcoin will approach, but never exceed 21 million coins.
As a result, Bitcoin mimics a deflationary economic model, contrary to traditional inflationary currency, which can be printed in unlimited quantities.
The last bitcoin halving occurred this April, on the 19th to be precise.
At the time of the halving, Malcolm Palle, founder and executive chairman of Aquis-listed Web3 investor Coinsilium, said: “In previous cycles the impact of the halving on the market was never instant, and I don’t expect any difference on this occasion.
“That said, the halving has always created a very positive set up for the beginning of the next bull phase and that is something many in the sector are expecting to happen this time around as well.”
Clearly, when you look back at bitcoin's price appreciation since April, his prediction was the right one.
Trump trumps Democrats in November
Politics and crypto haven’t historically traversed in the same circles, but incoming president-elect Donald Trump made it his goal to court the crypto vote in the run-up to the November presidential elections.
His campaign promises included making the US a crypto hub with the help of pro-crypto advocates, building a federal bitcoin reserve, and sacking Gensler.
It stood to reason then, that Trump’s sweeping victory over Democrat hopeful Kamala Harris kicked off what has been called the great ‘Trump trade’.
Indeed, the vast majority of bitcoin’s 150%-plus yearly gains occurred following Trump’s victory.
In early December, Trump announced the appointment of former PayPal chief operating officer David Sacks as his ‘White House A.I. & Crypto Czar’.
An ardent Trump supporter who reportedly raised millions for the president-elect’s campaign, Sacks “will guide policy for the Administration in Artificial Intelligence and Cryptocurrency, two areas critical to the future of American competitiveness”, Trump wrote on Truth Social.
Gensler quickly tendered his resignation to avoid open hostilities from the incoming president, after which Trump named Paul Atkins, chief executive of consultancy firm Patomak Partners, as the new chair when Gensler departed in January.
Many other members of Trump’s inner circle, including Elon Musk and Vivek Ramaswamy, have pro-crypto leanings.
So, how did bitcoin perform?
Exceptionally well.
On the spot markets, the BTC/USD pair hit an all-time high of $108,353 on 18 December. Although it fell back below $100,000 in the days since, it was still 125% higher at the time of writing.
In comparison, the S&P 500 added 25%, gold 26% and everyone’s favourite AI stock Nvidia Corp 175% (can’t win them all).
In short, bitcoin was one of the best-performing asset classes of the year.
The ETF market was even more buoyant.
As the year came to a close, total assets under management (AUM) across the ETF space approached $120 billion. That’s only slightly below the total AUM of the gold ETF market, despite gold ETFs having a 21-year head start.
While no one truly knows where bitcoin is heading in 2025, a lot will rest on sustained ETF flows and political tailwinds.
As is always the case with crypto, it is sure not to be boring.