2024 in review and Arch's predictions for 2025.

It’s that time of the year when we look back on the months gone by and hastily throw together our bingo cards for 2025….

Remember, this is categorically not investment advice - please don’t sue us.

This Year in Crypto

I’ll start with an important, albeit tricky graph to read (get your magnifying glass out) - asset YTD performance:

BTC came in at 118.33% (as of 27/12). The others, in descending order…

MSTR (397.77%), DOGE (255.97%), NVDA (190.50%), SOL (91.80%), TSLA (82.81%), COIN (74.92%), AMZN (51.44%), ETH (43.57%), AAPL (39.53%), SPX (27.30%), GOLD (26.85%), DXY (5.64%), OIL (-0.14%), MARA (-15.83%).

There are a few standouts and surprises in there for me:

• The S&P500 index had a stellar year, its strongest since 2019, with a 27.3% gain.

  • This is now most people’s real cost of capital, given the S&P is effectively the world’s saving account, nearly all of our other selected tickers outperformed - a great year for markets

    • Of course, we believe that Bitcoin should be your benchmark - if you’re underperforming, you’re losing. This will be apparent in the long run. Much fewer assets outperformed BTC this year, and on a long enough time horizon, none will. 

• If you had asked us at the start of the year, there are a few surprises from the data here:

  1. $MSTR had a monster year, the Bitcoin MNAV (multiple of net asset value) has also been increasing.

  2. $NVDA outperformed Bitcoin (we doubt this continues into next year).

  3. $ETH and $SOL were lower beta trades, relative to BTC. ETHBTC absolutely tanked -35%, while SOLETH went +20%. These dynamics matter as they’re indicative of both institutional and on-chain flows and attention.

  4. $MARA (representative of other miners too) had a red year, despite Bitcoin’s gains.

I’m trying to keep these brief, but let’s quickly surmise some takeaways from 2024:

1. Bitcoin was indisputably embraced by Traditional Finance.

I bang on about this literally every week - so I’ll give it a rest for now. I think the picture above gives you the jist though. c.5.3% of all Bitcoins are held in the ETF complex.

2. Ethereum’s ETF approval and launch was a major landmark, but did not hold a candle to the Bitcoin ETF’s.

The Ethereum ETF complex saw $12.1B AUM and around $2.1B in net flows. For the vast majority of the year, attention has all been on Bitcoin.

3. The Bitcoin Halving takes its annual inflation rate below Gold’s and Bitcoin flips silver to become the 7th most valuable asset in the world.

Okay, I kind of combined 2 in 1 here. I actually forgot the halving was this year until I was writing this column. How time flies…

Anyway, we’ve covered this before, but Bitcoin is at least an order of magnitude a better asset than Gold, and the trade of our generation is the journey to parity and beyond.

4. Bitcoin and Crypto became a key political issue.

Honestly, this one even surprised me. It’s all rather barmy…

• Crypto became a central issue in the U.S. presidential election. Two of the three candidates (Trump and RFK Jr) appeared at Bitcoin Nashville to give keynote speeches. Both pledged to implement a Strategic Bitcoin Reserve - however what this exactly entails, is unclear.

• The President elect bought some Pubkey burgers in Bitcoin (I highly recommend the hotdogs fwiw), and several key members in his administration have spoken overtly favourably about Bitcoin and Crypto.

  • Including but not limited to Vivek Ramaswamy (founded Strive Asset Management looking to provide exposure to BTC via investing in convertible securities , Elon Musk (owns BTC via Tesla), RFK JR and Howard Lutnick.

• Trump has also promised to reshuffle the SEC, historically known for its hostility toward crypto, and has nominated Scott Bessent as Treasury Secretary - a vocal supporter who once stated, "crypto is about freedom, and the crypto economy is here to stay."

• Congress goes into the new administration extremely pro-crypto, with candidates across parties having won many key races having voiced positive sentiment for the industry.

• The House passed the bipartisan Financial Innovation and Technology for the 21st Century (FIT21) Act, aiming to clarify crypto regulations, pending Senate approval.

• The EU implemented the Markets in Crypto Act (MiCA), the first comprehensive crypto regulatory framework, set to take full effect by year-end.

5. Monthly active addresses booms as Solana solidifies itself as retail’s most popular chain driven by meme-coin mania and AI agents.

The most popular narrative in alt coins this year was certainly memecoins - $DOGE, $PEPE, $WIF, $PNUT and $FARTCOIN (yes, I know, don’t say it) were a few that really stole the show. In part, this was thanks to the emergence of Pump.Fun on Solana as one of the most profitable (>$1B annualised rev) and popular protocols in crypto.

However, some may argue we’ve not seen unique innovative protocols built on Solana yet, as developer activity still favours Ethereum, which garners around 21% of builder activity, followed by Solana (11.2%) and Base (10.7%) (A16Z).

One of the possible exceptions here are the AI agents that we’ve seen on Solana (and also Base), including $GOAT, $ZEREBRO $AI16Z (and Virtuals on Base).

• Earlier this year Marc Andreessen engaged with an autonomous chatbot known as Truth Terminal, which unexpectedly began endorsing a lesser-known memecoin called $GOAT that went on to hit a $1.3B market-cap.

With AI having massive mindshare outside of crypto, many are looking forward to the intersection of the two.

5. Stablecoin’s continued to be crypto’s breakout use-case.

Total stablecoin supply rose over 50% this year to eclipse $200BN. This comes along a myriad of intriguing developments:

• The US appears to have realised that stablecoins in-fact further their rather enjoyable exorbitant privilege and entrench the dollar as the global reserve currency- 99% of stablecoin activity is denominated in USD.

  • Expect bipartisan legislation to be accommodative of stablecoin proliferation.

  • Howard Lutnick, who was co-chair of the Trump’s transition team has subsequently been appointed the Secretary of Commerce. Lutnick is CEO of Cantor Fitzgerald who own c.5% of Tether and is one of the key custodians for their treasury holdings.

• Stablecoin issuer’s are a Top 20 holder of U.S government debt too - that’s more than France!

• Silicon Valley is recognising the importance of stablecoin's for fast (near-instant), cheap (near-free), global payments.

  • Stripe acquired Bridge, a stablecoin platform, and BVNK, stablecoin payment infrastructure raised a $50M Series B.

• I could bore you to death all day with metrics and states, but one rather epic graphic. Stablecoin’s settled over 2x the $ value in Q2 as Visa.

Predictions for 2025:

1. Trump launches a Strategic Bitcoin Reserve within 100 days, launching BTC above $150k and above the market cap’s of Google and Amazon to become a top 5 global asset. (Started off bold here, I know).

2. Bitcoin ETF AUM surpasses $250BN and ETH ETF AUM surpasses $40BN.

3. At least two more nation-states are revealed to be buying (not just holding) Bitcoin.

4. Total stablecoin supply doubles to >$380B (currently $190B)

5. ETHBTC has a green yearly candle >25%. We see BTC dominance in both the 60%’s and the 40%’s.

A couple more for good measure:

1. $COIN and $MSTR make new ATHs (I realise this is boring so I will loosely throw out $600 and $800).

2. A Web 2 company airdrops a token in some fashion to users as the regulatory environment gathers clarity.

This Year in TradFi

The theme of 2024 across the world was inflation. The first half of the year was spent trying to ensure the curtailment of inflation after the rate hikes of 2023. Much of the world started to cut rates throughout the second half of the year, which provided a much needed boost to economic activity and markets across the world. While much of the world followed this pattern, each country had it’s own specific focus area:

• The eurozone struggled more than most on re-accelerating economic activity.

• The U.S. ran at higher inflation levels than targeted.

• China spent the year trying to clean up its monstrous real estate disaster to no avail.

• Japan started seeing positive signs in it's economy as they ended the 8-year period of negative interest rates.

• India remained a growth story, with some signs of slowing growth.

Other notable events to highlight throughout the year include:

• Evergrande’s liquidation marked the beginning of China’s real estate woes.

• Taylor Swift aided economies around the world with her global concert tour.

• Japan's tourism boomed as a result of the weak yen.

• Middle East tensions escalated with the Israel-Hamas war.

Predictions for 2025

1. S&P continues to surge and crosses $6,600.

2. FED mostly holds rates static and cuts a maximum of 50bps.

3. Germany will re-open at least one nuclear power plant.

4. Trump rolls back his tariff plan.

5. India’s GDP growth falls well short of projections (~3% vs projected 7%).

This Year in Tech

The tech world was mostly dominated by all things AI and saw a massive return in funding activity. OpenAI kicked things off by announcing $1.6B in annualized revenue. Tech layoffs continued en-masse as the larger tech companies sought to trim the fat and really focus on economics.

The AI-wars subsequently kicked off stemming from OpenAI’s attrition issues alongside various LLM companies raising multiple billion dollar rounds in subsequent fashion. VCs flooded the market by plowing hundreds of millions of dollars collectively into all types of AI companies from GPT wrappers to vertical specific SaaS businesses. We saw many high profile AI companies essentially shut down in a structure where a large tech company “acquihires” the founders and much of the team but does not acquire the company.

From the macro side, rate cuts provided a much needed tailwind to tech. Multiple VCs raised large funds during the second half of the year. IPO markets started to open back up with Klarna and Chime both filing for IPO. Secondary activity picked back up, growth fundraising re-emerged, and Masa decided take a seat at the AI funding table!

Other notable events to highlight throughout the year include:

• ByteDance moved beyond social media and into Biology, Chemistry, Drug Discovery, and Pharmaceuticals.

• Carta severely damaged its reputation amongst its customer base.

• General Catalyst bought an Ohio-based health system, Summa Health.

• Tesla moved its incorporation to Texas after Delaware shot down Elon’s pay package.

• Capital One bought Discover Financial.

• A16z launched a private equity fund.

Predictions for 2025

1. xAI ends the year as the frontier model.

2. Two of the following three companies IPO: Databricks, Stripe, SpaceX.

3. Meta shuts down its VR division (Meta Reality Labs).

4. An AI-generated movies goes mainstream.

5. We will see a $100M ARR company with 10 or fewer employees.

Arch is building a next-gen wealth management platform for individuals holding Alternative Assets. Our flagship product is the crypto-backed loan, which allows you to securely and affordably borrow against your crypto. We also offer access to bank-grade custody, trading and staking services, powered by BitGo.

Disclaimer: None of the above is financial advice, seriously.