2024: The Extraordinary Year When Bitcoin Went Mainstream

History will remember 2024 as the year bitcoin transformed from a niche investment to a mainstream asset. With its dollar exchange rate breaking the symbolic $100,000 mark, and the largest financial firms in the world embracing a bitcoin strategy, the orange coin can no longer be dismissed. You can still think whatever you want about bitcoin, you just can’t ignore it.

The new year promises many exciting possibilities such as adoption at the highest levels of government, expansion of bitcoin’s use as an institutional treasury asset, an overhaul of regulation to make the U.S. more friendly to financial innovation, and geopolitical dynamics that propel bitcoin into a new era.

A Regulatory Turning Point

In January, the U.S. Securities and Exchange Commission (SEC) approved 11 spot bitcoin ETFs – a moment that will likely be viewed as a watershed in financial history. For years, the SEC resisted bitcoin ETFs, citing concerns over market manipulation and investor protections. The approval marked a decisive shift in the agency’s stance, sending billions of dollars in liquidity into the market and boosting confidence in bitcoin as a legitimate asset class. Their launch was the most successful in the history of ETFs and now hold more assets under management than gold ETFs.

These ETFs have provided an open door for new sources of liquidity to enter into the bitcoin markets, since certain pools of capital cannot be converted to physical bitcoin, but can purchase regulated financial products like ETFs. Perhaps even more crucially, bitcoin ETFs have normalized bitcoin as an investment. Pension funds, retirement accounts, and institutional portfolios – and the financial advisors that manage them – now have a way to achieve bitcoin exposure with the same ease as stocks, bonds, and other instruments.

Is Lower Volatility in the Cards for 2025?

Institutional adoption of bitcoin reached unprecedented levels in 2024. BNY Mellon, America’s oldest bank, gained SEC approval to offer bitcoin custody services, a move signaling that even the most conservative institutions now recognize bitcoin’s staying power.

Meanwhile, BlackRock, the world’s largest asset manager, received approval for the iShares Bitcoin Trust to offer spot bitcoin ETF options. This paved the way for more efficient price discovery, which may dampen price volatility in 2025.

Although volatility is not inherently bad, it does prevent certain types of investors from entering the market. A meaningful reduction in volatility may lead in turn to higher confidence in the asset, leading to yet more inflows, and thus more price discovery, further dampened volatility, and so on, establishing a virtuous cycle of adoption and appreciation of bitcoin as an asset class.

Corporate Pioneers Lead the Charge

Bitcoin’s mainstream moment was also catalyzed by visionary corporate leaders. MicroStrategy, already renowned as a bitcoin pioneer, announced an audacious plan to raise $42 billion over three years to expand its bitcoin holdings. Since that announcement, the company has already filed additional paperwork with the SEC to issue yet more shares, to buy yet more bitcoin. Microstrategy’s treasury operations are a fascinating financial innovation that will be studied for years to come.

Inspired by MicroStrategy’s leadership, a handful of other companies followed suit in 2024, including Semler Scientific, Metaplanet, and others. In fact, in just the past few days, new filings with the SEC reveal several new bitcoin ETFs on the horizon:

• Bitwise filed for something it calls a “Bitcoin Standard Corporations” ETF, which would contain stock shares of companies that hold bitcoin in their treasuries.
• Strive Asset Management, a firm closely associated with Vivek Ramaswamy, filed for a “bitcoin bond” ETF, which would aim to offer exposure to MicroStrategy’s convertible bonds.
• Following a similar approach, the REX Shares Bitcoin Corporate Treasury Convertible Bond ETF would invest in convertible bonds issued by companies that hold bitcoin on their balance sheets.
• ProShares filed for a hedged ETF that would “strategically pair long positions in stocks or gold with short positions on the U.S. dollar, complemented by long positions in Bitcoin through futures contracts.”

A Pro-Bitcoin Administration

There’s no other way to say it – in one of the most contentious presidential elections in U.S. history, Americans elected a pro-bitcoin president in a landslide. On his path to retake the White House, Donald Trump spoke openly of his support for bitcoin, and even delivered a historic keynote speech at the Bitcoin Conference in Nashville.

Key Trump administration members have vocalized support for bitcoin, including RFK Jr., Tulsi Gabbard, Don Jr., Vivek Ramaswamy, and others. At the same time, congress is getting into the game, with U.S. Senator Cynthia Lummis championing a proposal to create a Strategic Bitcoin Reserve (SBR).

An SBR would position the United States as a global leader in sound money, leveraging bitcoin as both a hedge and an asset of geopolitical significance – and could even help restore separation of powers within the federal government. With the incoming administration facing significant economic challenges, it is a good thing that bitcoin is rightly viewed as a tool for meeting them.

Where Will Bitcoin Go in 2025 and Beyond?

As we approach the end of 2024, bitcoin’s market capitalization has surpassed silver and even Saudi Aramco, one of the world’s most valuable companies. With the momentary passing of the $100,000 price milestone, questions naturally arise about what the price will be a year from now.

The events of 2024 suggest that the momentum is far from over. Institutional adoption continues to accelerate, regulators are becoming more bitcoin-friendly, and public interest is growing. With these tailwinds, 2025 may well see continued price appreciation. Numbers like $250,000 and $475,000 are often shared. Chamath Palihapitiya has modeled a price for bitcoin of $500,000 to $1.14 million over the course of the current halving epoch, which ends in 2028.

With so many variables affecting the price, it’s hard to set any solid expectations. Luckily, we don’t have to – bitcoin is an asset that is best used to build generational wealth slowly and steadily over the long term. Bitcoin’s CAGR is about 25% to 40% over a five year period. This means that price action, even over the course of two or three years, should be considered short-term. The best way to build wealth with bitcoin is to put aside money you do not need to access for at least five years, and set up a savings strategy that’s customized to your needs.

The extraordinary events of 2024 have made one thing abundantly clear: bitcoin is a household name that’s here to stay. Its monetary properties offer a resilience and reliability that no other asset can.