Crypto Invesment: Main Trends of 2024

After a prolonged bearish trend in 2022-2023, the crypto market started a new growth cycle in 2024, marked by structural changes, liquidity inflows, and new crypto investment opportunities for users.

The investment climate in the crypto market in 2024 was influenced by various factors such as macroeconomic uncertainties, political changes, and actions of major players, largely determining the market dynamics.

We have compiled the top crypto investment outcomes in 2024 that are important to mention in the outgoing year and worth paying attention to in 2025.

Bitcoin as an Investment Instrument

Bitcoin, traditionally the main driver of price dynamics in the crypto market in 2024, strengthened its position as the leading cryptocurrency. The most important event of the year was the approval and launch of Bitcoin spot exchange traded funds (ETFs).

ETFs have been a growth catalyst for the first cryptocurrency, attracting huge attention from institutional investors. Since the beginning of the year, inflows into BTC ETFs have totaled $35.49B and the value of assets under management of the ETF issuer has been $110B (5.71% of BTC's market capitalization).

Inflows and outflows into ETFs largely determined the price dynamics of BTC in 2024, which indicates the increased role of investors from traditional finance in the crypto market.

BTC price and inflows into BTC ETFs. Source: SoSoValue

BTC itself has significantly outperformed the leading investment assets, such as gold and stock indices. Thus, the buy and hold strategy for BTC brought investors 116% annualized returns, while gold shows a return of 26.3%, NASDAQ and S&P500 indices 33.4% and 26.6% respectively.

Yield of BTC and other assets in 2024. Source: Artemis

The adoption of ETFs allows Bitcoin to be perceived as a legitimate investment vehicle that can be used alongside traditional asset classes.

The ability to invest in BTC through regulated ETFs significantly increases investor confidence in the crypto industry, which serves as a basis for new liquidity to flow into the crypto market, stimulating the growth of not only BTC, but other crypto assets as well.

DeFi Protocols' Yield Increase

DeFi sector remains the leading and dynamically developing segment of the crypto market. One of the advantages of DeFi protocols is the construction of a new financial system in which investors can invest and receive returns on various crypto assets, without complex KYC procedures and third-party intermediation.

Traditionally, the returns of DeFi protocols depend on the current state of the crypto market: in a bear market they decrease and in a rising market they increase. In 2024, against the backdrop of rising crypto asset prices, DeFi direction began to show attractive returns for investors.

If in the period of crypto market decline 2022-2023 the yield of leading DeFi protocols was less than the yield of US Treasury bonds, considered one of the most reliable investment instruments in the world, in 2024 it significantly exceeded the threshold of the “risk-free” rate.

By the end of the year, leading DeFi protocols offer yields on stablecoins of up to 20-30% p.a., which is undoubtedly an attractive opportunity for investors.

Yield Bearing Stablecoins

One of the most interesting trends in 2024 is the emergence of new types of stablecoins that use different collateral models and allow generating yield for their owners. For example, the USDe steblecoin from the Ethena project(ENA) is secured by using other crypto assets (BTC and ETH) in delta neutral strategies.

The assets backing the stablecoin are hedged by taking short positions in the futures market, thus keeping the overall balance unchanged and ensuring the USDe is pegged to the US dollar. In addition, the collateral generates returns by staking placements and receiving funding for holding short positions in the futures. Current capitalization of USDe is $5.91B.

Another example of a stablecoin that uses a market-neutral strategy to support collateralization and generate yield is USR from the Resolv project. USR is pegged to the US dollar and is fully backed by crypto assets (ETH) used in a delta-neutral strategy similar to USDe. USR's current capitalization is $216M.

The distinctive mechanics of Resolv is the handling of USR depeg risk. To maintain price stability, a separate insurance pool, Resolv Collateral Pool (RLP), has been created. Users contributing liquidity receive an RLP tokenwhose price changes depending on the profitability/loss of the protocol. To compensate for RLP drawdown risks, RLP holders receive a higher yield compared to USR staking.

Mixed Results of the Year for Drop Hunters

Drophunting has been one of the most profitable strategies throughout the entire existence of the crypto market, whenfor activity in new projects, depositing funds or simply subscribing to social networks, users received significant amounts in the form of project tokens.

However, 2024 showed that the drop sphere is experiencing a certain crisis and is no longer as profitable as it used to be. The most anticipated projects by drophunters, such as LayerZero (ZRO), zkSync (ZK), and Scroll (SCR)disappointed most of the participants of the drop companies, who spent months performing various onchain tasks in these projects.

The criteria for distributing drops from the projects looked unconvincing, the projects failed to find a balance between rewarding the team, advisors, and the community, which led to a huge amount of backlash towards the project teams. For most users, drops from these projects were a huge disappointment. All of this was compounded by token price drops after listing, and constant selling pressure from big players and project teams.

Hyperliquid (HYPE) Case

On the other hand, several drops took place at the end of the year, which can be safely called some of the most successful in history.

For instance, the main discovery of 2024, the decentralized derivatives exchange Hyperliquid, held one of the largest drops in history. The HYPE token was received by users interacting with Hyperliquid as traders or liquidity providers.

At the peak of HYPE's value, the total value of tokens distributed (31% of the total supply) was $10.8B, which is a record for a single token drop. HYPE showed excellent price performance after listing and grew from $3.56 to $35.05.

HYPE token price change

Pudgy Penguins (PENGU) Case

Another successful year-end drop was the largely unexpected PENGU token giveaway from the Pudgy Penguins project. The project is known for its NFT collections Pudgy Penguins and LylPudgys. Holders of the collections, as well as participants with a long history of onchain interactions with various networks and protocols, were able to receive PENGU tokens. The token is currently capitalized at $2.11B. The PENGU drop was able to please many crypto market participants, especially crypto industry veterans with a long history of onchain wallet activity.

Overall, we can conclude that the drop segment remains one of the interesting and profitable areas of the crypto market. However, with the influx of new users into the industry, the competition here becomes noticeably higher and it becomes more difficult to earn large sums here without having at least a small starting capital.

Nevertheless, drops continue to be one of the key features of the crypto market and in 2025 we can expect the release of many projects that will please drop hunters with a generous distribution.

We’d like to remind you that you can get any cryptocurrency for fiat or crypto on SimpleSwap.

Summary

The year 2024 brought crypto investors a plethora of opportunities to make money, ranging from a simple buy-and-hold strategy for Bitcoin, to yield bearing stablecoins. One of the main outcomes of the year can be called the institutionalization of the crypto market, as crypto assets have become truly recognized investment tools used by large investors from traditional finance.

The approval of spot ETFs on BTC and ETH played a crucial role here. Inflows into ETFs, as well as the prospect of the adoption of new ETFs on other altcoins (e.g. SOL and XRP) will largely determine the state of the crypto market in 2025.

The DeFi sector is booming amid a bull market and huge interest in the sector from retail and institutional investors. By the end of the year, major DeFi protocols offer yields well above bank deposit rates or US Treasuries yields, allowing investors to utilize stablecoins and other crypto assets in a variety of yield strategies.

The integration of DeFi with RWA, the emergence of new investment models and liquidity inflows will allow the DeFi sector to reach new heights as early as 2025.

Drop hunting as a specific area of profit making in the crypto market that has not lost its relevance in 2024. Despite the disappointments in drops from anticipated projects, users could get even more generous rewards from other projects that were not considered contenders for giving out big drops.

This shows that there is always an element of luck in the field of drop hunting, which, combined with the ability to analyze the crypto market intelligently and allocate your funds, can bring huge profits.

On the other hand, it can be said that the drop hunting industry has become much more competitive compared to previous crypto market growth cycles. Nevertheless, it remains an interesting field and in 2025 it is likely to bring investors and drop hunters good profits.