Key Insights:
- Bitcoin has surged 124% since September 2023, outpacing almost every major asset class and gaining a dominant market share in crypto.
- Miners have faced a tough year, with a 52% drop in transaction fees and a significant decline in hash price profitability.
- Bitcoin’s growth stems from institutional adoption and sovereign involvement, signaling a shift from retail-driven market trends seen in 2023.
Bitcoin has done better than almost all the classes of assets for the past year. As opined by VanEck in its latest report, For instance, the dollar price in Bitcoin has increased by a whopping 124% since September this year, thereby establishing it as the market leader. VanEck further pointed out that at this time, Bitcoin is $ 1. 25 trillion, which will be 56% of overall cryptocurrency trade. This growth is a 15% rise compared to last year, placing Bitcoin as one of the best-performing digital assets.
Bitcoin’s Shift from Retail to Institutional Adoption
The report stated that Bitcoin’s bull market is more persistent as it is said to continue. However, this growth is not a result of the factors that led to growth in the past. While the use of Bitcoin was relatively dominated by the retail class in 2023 through the use of inscriptions, a way of storing media data on the blockchain in 2024 has shifted. The demand for inscriptions has significantly reduced, as is evidenced by a 52% annual decline in Bitcoin transaction fees. The value that people are coming to associate with bitcoins is more and more affording them for storing and transferring wealth.
Matthew Sigel, the self-driving head of digital asset research for VanEck, argued that an institutional effect has been triggered. This trend can be attributed to the approval by U.S. regulators in January 2024 of spot Bitcoin exchange-traded funds (ETFs). These ETFs’ current collective net assets stand at $55 billion, thus representing the fastest-growing ETFs in the financial market among wealth advisors.
Miners Face Challenges in a Changing Landscape
While Bitcoin, in general, has been experiencing increased popularity, miners have had a challenging year. The Bitcoin halving in April 2024 decreased block rewards from 6. 25 BTC to 3. 125 BTC, drastically reducing miner profitability. To put things into perspective, VanEck pointed out that the Bitcoin Hashprice, arguably important to determining miners’ profitability, has declined by 97%.
These three reductions have additionally put more pressure on miners and made it one of the most unfavorable years for anyone involved in Bitcoin mining. However, its long-run perspective is more promising, as it is often described as the first decentralized digital currency. As highlighted by VanEck, the major growth drivers include increased institutional involvement, decentralized network requirements, and sovereign interest in mining.
Personal Note From MEXC Team
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