As 2024 comes to an end, analyzing major trends is essential to understanding the direction of the market. Overall, we saw immense success across the industry, from the meme coin supercycle to the battle for L2 dominance. Let’s take a look at some notable on-chain data around the year’s most impactful events.
Bitcoin Dominated The Market
Bitcoin set a robust pace early in the year, bolstered by the successful launch of Bitcoin ETFs. Surpassing its previous all-time high in April, which coincided closely with the Bitcoin halving, this event marked the shortest interval between reaching an all-time high and a halving in Bitcoin’s history. The hype around this milestone was justified as the halving cut Bitcoin’s annual inflation rate to just 1.1%, far below the inflation targets of most fiat currencies.
The rise of Bitcoin initially sparked a brief alt season, but soon it created a liquidity vacuum, pulling value from altcoins, which plummeted close to their all-time lows against Bitcoin by Q3. Bitcoin’s dominance against top altcoins has continued spiking since, reaching a yearly high of 67% in November.
Amid Bitcoin’s ascent, long-term holders began to reduce their holdings, a common trend when Bitcoin surpasses all-time highs. This shift in behavior redirected capital towards altcoins, fueling the meme coin frenzy of 2024.
The Meme Coin Supercycle
Meme coins have emerged as one of the most rapidly expanding categories in 2024, with enthusiasts heralding this period as the “Meme coin Supercycle.” The explosion of meme coin trading on Solana has served as a pivotal catalyst, effectively tripling this category’s market capitalization early in the year. The trend gained further momentum with the recent surge in AI-themed meme coins and autonomous on-chain agents, elevating the total market cap to approximately $110 billion—a fivefold increase this year alone.
Despite this remarkable growth drawing widespread interest within the crypto community, meme coins still represent only about 4% of the total market share compared to other major asset categories like BTC, ETH, and stablecoins. This disparity highlights a substantial potential for further expansion, especially if the bullish sentiments extend into 2025.
The Battle for L2 Dominance
The battle for L2 dominance is far from something new. However, this year marked an interesting development. The amount of deployed L2s grew at a near-exponential rate. L2 transaction shares (Arbitrum, Base, and Optimism) now account for nearly 90% of all transactions on Ethereum and now contribute 20% of all ETH fees. This will likely continue to grow in 2025 as blob space in blocks becomes more scarce. Despite the success of L2s, some networks grew significantly more than others. Base, an Ethereum Layer 2 without a token, took charge in the L2 space this year.
Coinbase’s retail-focused strategy paid off, and Base quickly transformed into the go-to L2 for trading meme coins. Currently, Base dominates all key performance metrics like TVL, transaction count, volume, and active users.
This success can be shown clearly when analyzing the DEX volume across different chains. Currently, with $13.3 billion, Base stands behind only Ethereum and Solana in terms of monthly DEX volume. An impressive feat, considering it settled just $180 million in the first week of 2024.
Aeroswap, Base’s main DEX, also cemented its position as a leading DEX. With its explosive price growth, it stands as the best-performing DEX token of the year. It was not surprising since it served as the main trading hub on Base, capitalizing on the explosive surge in speculative trading.
Institutions Are Here: The Year of the ETFs
The launch of the BTC and ETH ETFs marked a key shift in the momentum of the market this year and have seen billions of dollars in inflows from traditional finance institutions. This drove Bitcoin prices to a new high early in the year, as capital flowed into the market through these new ETFs.
The Bitcoin ETF has been particularly successful, with approximately $120 billion worth of Bitcoin held in ETFs currently. Blackrock has been the most successful ETF provider this year, having over 520k BTC and 900k ETH in their wallets.
While the Ethereum ETF was initially slower, it has seen increasing inflows, indicating growing institutional interest that may expand into Ethereum and broader DeFi markets in search of yields.
What’s Next for 2025: ETFs and Meme Coin Resilience
Looking ahead to next year, institutional interest will continue to grow and expand across the broader market. Expect new ETFs targeting assets like XRP, Solana, and Litecoin to emerge. Concurrently, a more substantial influx of institutional capital into Ethereum and the wider DeFi ecosystem can also be expected as they seek higher asset yields.
Regarding meme coins, their popularity is expected to persist as long as the overall cryptocurrency market remains strong. Although smaller meme coins may fluctuate with the shifting tides of meme coin seasons across various chains, certain heavyweight meme coins are likely to solidify their presence and attract significant interest from retail investors.
