Dominating all investment categories in 2024, Bitcoin’s rise was fueled by the introduction of ETFs and optimism around potential regulatory changes from an incoming administration. The cryptocurrency soared from around $40,000 to approximately $94,000, more than doubling its value.
Yet the digital currency maintained its reputation for volatility, as evidenced by recent market fluctuations. While Bitcoin led the charge, other cryptocurrencies also saw significant gains, with Ether climbing nearly 50% to reach $3,355.
Bitcoin’s most powerful surge came post-U.S. election, when it reached an unprecedented $108,000 in mid-December. This rally was driven by expectations that Trump’s victory over Harris would create a more crypto-friendly regulatory environment, attracting fresh capital.
However, the momentum has since cooled. The cryptocurrency retreated this month, pressured by predictions of delayed Federal Reserve rate cuts. Year-end trading has been marked by volatility and investors cashing in their gains.
The year kicked off on a high note with January’s launch of bitcoin ETFs, offering investors an easier path to cryptocurrency exposure. These investment vehicles have attracted massive inflows, with the iShares Bitcoin Trust ETF (IBIT) alone accumulating over $50 billion in assets.
The cryptocurrency market expanded in July with the introduction of Ether ETFs. While not matching Bitcoin’s popularity, these funds still drew over $2 billion in investments within their first six months, FactSet data shows.
The crypto surge lifted related companies to new heights. Digital asset holder Microstrategy saw its value soar by more than 360%, boosted further by its recent addition to the Nasdaq 100. Meanwhile, trading platforms Coinbase and Robinhood gained 43% and 196% respectively.
However, mining companies faced challenges, with Mara Holdings and Riot Platforms suffering double-digit declines. These losses largely stemmed from the bitcoin halving event, which reduced mining rewards – a crucial revenue stream for these operations.
