CoinShares Crypto Outlook 2025: Next Year Poses to Be the Industry’s Most Transformative Year

Original title:CoinShares' 2025 Outlook

Original author: JEAN-MARIE MOGNETTI, JAMES BUTTERFILL, MAX SHANNON, ALEXANDRE SCHMIDT, MATTHEW KIMMELL, SATISH PATEL, CHRIS BENDIKSEN, MATTHEW KIMMELL, LUKE NOLAN

Compiled by: Scof, Chaincatcher

summary

As we enter 2025, the cryptocurrency landscape continues to evolve at an alarming rate, influenced by political turmoil, technological innovation, and changing market dynamics. Next year promises to be the most transformative year for the industry, with impacts across regulation, adoption and innovation.

CoinShares is committed to analyzing these key developments, and our 2025 Outlook aims to provide the insight and foresight needed to navigate this rapidly changing space. In this report, we take a deep dive into the major forces reshaping crypto today, such as:

• The far-reaching impact of political changes in the United States

• Significant growth in Bitcoin mining

• The Rise of Companies Focused on Bitcoin Yields

• Issues surrounding Solana development

• Ethereum’s Fragile Growth Trajectory

2025: The year cryptocurrencies push their boundaries

By JEAN-MARIE MOGNETTI, CEO, CoinShares

2024 will undoubtedly be a turning point for the cryptocurrency industry. The field has experienced rapid expansion, building on the solid foundation laid during the previous market downturn. At CoinShares, we have witnessed this growth firsthand, with our assets under management (AUM) approaching the important £10 billion mark.

We believe this is just the beginning. Recent market developments prompt us to think cautiously about future trends. In January, the U.S. approved a Bitcoin spot ETF and subsequent approval of Ethereum-related products, which became a key factor in driving market momentum. We expect more altcoin ETFs to become available with SEC approval, although progress may be slower than market expectations. Solana appears to be a strong candidate, but established cryptocurrencies like Ripple’s XRP and Charlie Lee’s Litecoin are also potential contenders.

Regarding Solana, it’s been a big year for the blockchain. After the FTX crash, Solana quickly rebounded and won over retail investors with its user-friendly software, becoming a popular choice for launching meme coins. To compete with Ethereum, Solana will need more than just high throughput. Solana must attract institutional investors and develop a clear strategy to address decentralization and frequent network outages.

Solana’s case highlights the important impact meme coins have had this year. Although some view them as trivial, meme coins have become an important part of crypto culture. Similar to NFT collections in 2020, certain meme coins may gain collectible value or even become "cultural symbols" in the future.

Nonetheless, Bitcoin remains our focus, with analysts predicting significant growth. The adoption strategy pioneered by Michael Saylor’s MicroStrategy company is now widely accepted by miners. Many public companies have begun diversifying their financial assets by purchasing Bitcoin, often at the behest of their boards and shareholders, who view Bitcoin as an ideal hedging tool. Governments are also moving to build Bitcoin reserves, with initiatives by U.S. Senator Cynthia Lummis and President-elect Trump leading the trend. The BRICS countries have proposed similar initiatives, signaling Bitcoin’s growing influence at the top levels of government.

Changes in the industry are also reflected in the entry of many traditional financial companies into the cryptocurrency market. For example, Robinhood recently acquired Bitstamp, or BONY finally launched its custody service. As the U.S. regulatory environment becomes clearer, we expect M&A activity to increase, and valuation gaps and the sufficiency of capital will allow traditional U.S. financial institutions to re-enter the cryptocurrency competition. Europe will continue to be the main destination for these deals.

In technology, the development of AI Agents will redefine the industry. These agents, operating autonomously on the blockchain, are beginning to conduct efficient transactions among themselves, bypassing human intervention. Coinbase has already deployed its AI-based on-chain trading solution, a move that is likely to be followed.

The Bitcoin Trio: Balancing Economic Uncertainty, Geopolitics and

Technological Evolution

By JAMES BUTTERFILL, Director of Research at CoinShares

In recent years, CoinShares has focused on monetary policy, particularly its role in shaping Bitcoin as an emerging store of value, and the historic inverse correlation between Bitcoin and the U.S. dollar. However, focusing solely on these aspects misses Bitcoin’s broader potential. We believe that Bitcoin will eventually play a significant role in global trade, driven by its strong connection to the growth of the Internet and digital infrastructure. Treating Bitcoin as a mere store of value underestimates its potential.

Economic factors remain important, with the Federal Reserve’s recent 50 basis point interest rate cut reflecting a shift toward supportive monetary policy despite continued steady jobless claims and higher market valuations, bolstering investor confidence in Bitcoin. . This move shows that the Federal Reserve has begun to cut interest rates when the economy is stable and is ready to support the market through the economic downturn through monetary policy, creating a "golden middle ground" scenario. However, this optimism has led to a crowded market, with 80% of investors expecting a "soft landing" for the economy. However, this consensus may overlook potential risks.

There are many directions for the future economic direction. In an optimistic scenario, continued growth in government spending could stimulate economic growth and potentially increase inflation, especially if import tariffs are raised, although specific policies remain uncertain. Instead, President-elect Trump has proposed including Elon Musk in a plan to cut government spending and tackle the national debt. During the campaign, Trump suggested appointing Musk to lead a new "Department of Government Efficiency" with the goal of cutting federal spending by about $2 trillion. Musk has acknowledged that these measures could cause "short-term distress," but he believes they are critical to "long-term prosperity." The partnership underscores Trump's determination to push for major fiscal reforms, leveraging Musk's reputation for improving efficiency and cutting costs. In this new political landscape, the delicate balance between economic growth and low inflation remains critical, but fiscal conservatism could lead to looser monetary policy.

Fed policy is likely to stimulate demand through gradual interest rate cuts, possibly to around 2.6%, especially if inflation remains low. However, the lag effect of monetary policy means that such easing may only affect the real economy slowly. Households, especially in the lower-income bracket, face liquidity constraints, limiting potential consumption growth, while the housing market remains sluggish despite interest rate adjustments.

Restrictions on trade and labor supply, as well as increasingly tight lending standards, continue to pose challenges. The slowdown in corporate capital expenditures suggests that businesses, especially smaller companies, are spending more prudently amid financial pressure. Despite gains in productivity, weakness in capital spending is seen as a potential threat to future economic growth.

While the Fed has some room to maneuver in a low-inflation environment, weak job growth and conservative consumer spending suggest any economic recovery is likely to be slower, so patience may be required and the Fed may ease more than expected. measure. Historically, Bitcoin has had a strong inverse correlation with the U.S. dollar, with the correlation coefficient averaging around -20% based on daily data and -0.70 based on weekly data since 2018, although this Correlation sometimes fluctuates, as shown in the chart below.

Bitcoin vs USD vs Nasdaq. Source: Bloomberg, CoinShares, data available as of close 23 November 2024

This inverse correlation makes sense: Bitcoin is a limited-supply asset best classified as an emerging store of value that competes with traditional assets like gold and U.S. Treasuries. Additionally, the correlation between Bitcoin and the Nasdaq suggests an interaction between Bitcoin’s properties as a store of value and its link to risk assets.

Bitcoin’s multidimensional nature stems from its unique role as both a hedge against the U.S. dollar and broader economic uncertainty, and as a technology asset with growth potential. Therefore, we believe that Bitcoin may respond differently to changes in monetary policy in 2025 than stocks, which are more directly affected by corporate earnings and macroeconomic trends. When the U.S. dollar strengthens, both stocks and Bitcoin may experience varying degrees of outflows, depending on the scenario and current economic conditions.

— Key factors affecting the relationship between Bitcoin, the U.S.

dollar, and stocks

Dollar strength vs risk appetite

• When the U.S. dollar strengthens, typically driven by economic uncertainty or “risk-off sentiment,” demand for risk assets such as Bitcoin and stocks tends to fall. This could explain why the correlation between Bitcoin and stocks typically rises during such times.
• Conversely, a weaker dollar typically means higher risk tolerance and potential lower interest rates, which can lure investors into growth or alternative assets, including stocks and Bitcoin.

Bitcoin’s hedging role :

• We view Bitcoin as a hedge against inflation and currency devaluation, similar to gold. When the U.S. dollar weakens, demand for alternative stores of value, such as Bitcoin and gold, tends to rise. However, over-reliance on the U.S. dollar as a reserve currency and safe haven (as viewed by “dollar maximalists”) may be just as risky as the view of Bitcoin maximalists.

• Unlike Bitcoin, stocks are closely tied to economic performance and company earnings. When the U.S. dollar weakens, multinational companies' profits typically rise (in U.S. dollar terms), boosting stock performance. However, when the U.S. dollar strengthens, stocks can struggle as foreign currency revenues shrink, while Bitcoin typically experiences outflows due to the U.S. dollar's appeal.

Liquidity and Macro Trends :

• Bitcoin and stocks generally perform well in an environment of easy monetary policy and high liquidity. However, during periods of inflation or interest rate hikes, liquidity constraints could have a negative impact on equities, while also putting pressure on Bitcoin, as seen in the 2022/23 period.

• Stocks react more directly to changes in interest rates and economic policy, while Bitcoin has a more indirect, but still relevant, relationship with these factors. Bitcoin has occasionally seen divergences during market sell-offs triggered by liquidity constraints or economic concerns, especially when it is viewed as a hedge against traditional markets.

Geopolitical impact on Bitcoin :

• Escalating tensions in the Middle East, such as the conflict between Israel and Iran, could disrupt Middle Eastern oil production and send global energy prices soaring. Bitcoin, as a "digital energy store," is likely to appreciate in value amid inflationary pressures from rising energy prices.

• Historical precedents (such as the 1973 oil embargo) show that hard assets like gold – and potentially Bitcoin – can retain their value during an energy crisis. Additionally, U.S. financial support for Israel could lead to increased debt and monetary expansion, which could drive Bitcoin’s value against fiat currencies. Bitcoin’s decentralized nature also makes it resistant to disruptions at specific mining sites.

In the current economic climate, weak growth may cause Bitcoin to gradually lose its correlation with stocks, and in 2025, Bitcoin may also gradually decouple from the US dollar.

— Will the US dollar lose its reserve currency status in 2025?

The short answer is: not in 2025, but the U.S. dollar’s ​​dominance as the world’s main reserve currency is facing growing challenges stemming from economic, geopolitical and technological factors. Central banks are diversifying their reserves, with the dollar’s ​​share falling from 71% in 2000 to 59% in 2022 (according to the International Monetary Fund), as a way of hedging against the impact of U.S. policy and dollar volatility . Countries like China and Russia are bypassing the U.S. dollar for trade to avoid U.S. sanctions, and the BRICS are exploring a new currency to conduct trade within the bloc, which some believe could be Bitcoin. China’s Cross-Border Payments System (CIPS) offers an alternative to the SWIFT system, while digital currencies and blockchain technology offer more ways to further reduce reliance on the U.S. dollar.

In addition, the United States is facing increasing fiscal pressure, with the federal budget deficit reaching $1.833 trillion in 2024. Concerns about a possible post-election debt ceiling crisis have led credit rating agencies to issue warnings about U.S. fiscal stability. That, combined with falling foreign demand for U.S. Treasuries, could undermine global confidence in the U.S. dollar. As the United States faces difficulties in resolving its debt problem, emerging financial infrastructure such as China's CIPS, Russia's SPFS, and Bitcoin provide alternatives to reduce reliance on the U.S. dollar's centralized system, implying a gradual shift in the U.S. dollar's dominance.

— Bitcoin is more than a store of value

We often talk about U.S. monetary policy, but that’s not the whole story, as Bitcoin’s growth potential is often overshadowed by its properties as a store of value. Bitcoin’s success story is more than a cyclical game of buy and sell; it is an evolution in finance that has attracted individuals, companies, and even governments to its decentralized, verifiable nature. Far from being a “fragile illusion,” Bitcoin’s resilience through multiple economic cycles, as well as continued attention from high-end businesses and investors, reflect what many see as its inherent value as a hedge against traditional financial risks.

Bitcoin's utility goes beyond speculation; it provides a globally verifiable and secure network that requires no central authority. This is not just code, but a network governed by consensus, ensuring transparency and security of transactions. This decentralized model is particularly valuable for individuals and countries seeking financial autonomy, especially in regions with high economic volatility.

While Bitcoin has yet to match the economic productivity of traditional assets, its continued adoption and development (such as the implementation of the Lightning Network) has begun to demonstrate practical applications in remittances, micro-transactions, and financial inclusion. Viewing Bitcoin as merely a speculative asset ignores its potential for future applications in digital finance and technology.

**Bitcoin 's record inflows signal shift, but price surge remains elusive

amid policy and political headwinds**

By JAMES BUTTERFILL, Head of Research, CoinShares

As of the end of November, inflows this year had reached $37 billion. Without a significant market decline in December, this inflow would be nearly triple the record of $10 billion set in 2021. The surge was largely attributed to the launch of the U.S. Spot Bitcoin ETF, which attracted $32.6 billion in inflows. After adjusting to account for outflows from Grayscale, the newly launched ETF has seen record inflows of $50.6 billion so far.

Total global digital asset fund inflows (USD million). Source: Bloomberg, CoinShares, data available as of close 23 November 2024

Assuming total U.S. investable assets are $14.4 trillion, if 10% of investors decided to allocate $37 billion of funds to Bitcoin, this would reflect an average portfolio allocation of 2.6%. This is double our 1% forecast at this time last year, which predicted inflows of $14.4 billion. The U.S.-based ETF provider is now the second-largest Bitcoin holder in the world, holding 1.08 million BTC, a level of demand that is more than double the 191,000 newly minted BTC from the mining industry. Globally, ETP holders currently hold 1.3 million Bitcoins in custody.

Bitcoin ETF demand and supply. Source: Bloomberg, CoinShares, data available as of close 23 November 2024

This marks an extremely positive event in Bitcoin's history, although we have yet to see the price surge that many (including ourselves) expected. Based on the relationship between inflows and price (detailed here), our model shows that at this level of inflows, Bitcoin should have passed the $100,000 mark; however, the price is still hovering at all-time highs Around $70,000. We attribute this to several factors, notably monetary policy and the political climate, which we believe have been the main drivers of Bitcoin price recently.

The U.S. Federal Reserve's monetary policy shift took longer than expected, not arriving until September, although a December 2023 poll expected the shift to occur in March of this year. The delay is likely due to a combination of excess household savings, higher-than-expected economic growth and persistently high inflation. Political developments have also created headwinds, with polls suggesting Democrats may dominate this year, undermining expectations for a looser regulatory stance on digital assets. In addition, investment platforms have taken their time to support Bitcoin ETF trading, and Grayscale’s closed-end Bitcoin funds have brought huge selling pressure, with $18.3 billion worth of funds sold by originally closed holders this year.

Ethereum funds have underperformed Bitcoin this year. Prior to Ethereum’s launch, Ethereum’s total ETP assets under management (AuM) accounted for 20% of Bitcoin. Based on this ratio, an inflow of US$3.2 billion is expected. However, actual inflows were only $1.11 billion, taking into account $3.3 billion of outflows from Grayscale's existing positions. This gap may stem from concerns about Ethereum’s Layer 1 revenue, especially after its Dencun upgrade in June, which we will discuss further here.

We are optimistic about the prospects for capital inflows in 2025. As political transparency increases, especially discussions about the potential impact of the Trump administration, there is a possibility that Bitcoin will be considered a strategic reserve asset, driving prices higher similar to the post-election movement in 2020. Monetary policy also seems poised for continued easing, not only in the United States but also in many major central banks around the world. If the U.S. government acquired 5% of the total Bitcoin supply, it would represent an inflow of approximately $67 billion. That, coupled with clear support from the U.S. government, could encourage hesitant investors to increase their holdings.

Under Trump, the U.S. Prepares for Major Cryptocurrency Reform

By MAX SHANNON, CoinShares Research Analyst

With Donald Trump winning the 2024 presidential election, the United States is poised to make major changes in cryptocurrency regulation as it seeks to become a global leader in digital assets. Along with Vice President-elect J.D. Vance, Trump pledged to promote a pro-crypto environment focused on innovation, investment and financial sovereignty.

— Regulatory reform

Trump has been publicly critical of the U.S. Securities and Exchange Commission (SEC) and its chairman Gary Gensler’s stance, particularly regarding the agency’s approach to regulating digital assets. Gensler has announced that he will resign on the day Trump takes office (January 20). More pro-cryptocurrency SEC commissioners could lead to friendlier cryptocurrency regulation, laying the foundation for a cryptocurrency resurgence.

Fortunately for the cryptocurrency industry, Trump’s Vice President Vance has previously been committed to pushing for regulatory clarity. Vance has drafted proposals aimed at reforming the way Washington's two major regulators regulate cryptocurrencies.

Coinbase, A16Z, and Ripple are the 9th, 10th, and 11th largest donors to the Trump campaign: lower than Citadel or Susquehanna, but higher than companies like Bloomberg and Blackstone. Cryptocurrency-only Super Political Action Committees (SuperPACs) such as Fairshake, Defend American Jobs, and Protect Progress are the 8th, 13th, and 17th largest fundraising organizations respectively. This will help push pro-crypto legislation in the red-majority House and Senate.

Both Trump and Vans support FIT21 to reform the market structure and are willing to end "Operation Chokepoint 2.0" and accept stablecoins to strengthen the U.S. dollar's international dominance. This should have a positive impact on altcoins and mergers and acquisitions (M&A) activity, as traditional financial firms will gain more clarity and confidence in the crypto-asset space.

— Supports Bitcoin mining

The Trump administration plans to turn the United States into a global Bitcoin mining center. Throughout the campaign, Trump met with miners and pledged to protect their operations, emphasizing that Bitcoin mining was critical to financial independence and national security. He sees Bitcoin miners as defenders against central bank digital currencies (CBDCs), which his government opposes. At the Bitcoin 2024 conference, Trump promised to "maintain 100% of the Bitcoin currently held by the United States government or acquired in the future... which will effectively form the core of the national strategic Bitcoin reserve."

Trump’s newly appointed pro-cryptocurrency Treasury Secretary Scott Bessent and successful hedge fund manager and CEO of pro-cryptocurrency financial services firm Cantor Fitzgerald Howard Lutnick ), has been nominated to lead the government's trade and tariffs strategy as Secretary of Commerce. These appointees may support Trump’s ambitious goals for Bitcoin as a fiscal reserve asset. While Trump's comments need to be taken with a grain of salt, they are undoubtedly positive.

In the short term, miners who focus solely on Bitcoin mining are likely to outpace those who have diversified their revenue streams, such as dabbling in artificial intelligence or machine manufacturing.

— Autonomous governance and financial sovereignty

Trump is also a strong supporter of self-government. At the same meeting, Trump noted that he believes individuals should be able to control their own digital assets without government interference. However, Trump's stance on issues such as sanctions and bank secrecy laws has tended to be more neutral or conservative. As a result, his ambitions for autonomous regulation may face challenges, particularly on issues such as financing illegal activities or money laundering. While this policy will not directly affect the price of Bitcoin or individuals, it is a positive step toward private property protection for the United States.

— The economic future of cryptocurrencies

Trump's economic policy leans toward expansionary fiscal and monetary policy, and he supports further tax cuts and wants the Federal Reserve chairman to take a dovish stance, lower interest rates, increase the debt burden, and drive cheap capital into risky assets such as cryptocurrencies.

All in all, Trump’s victory means a pro-cryptocurrency government with policies that support Bitcoin mining, autonomous regulation, banking and market structure regulation, and the legalization of stablecoins, creating a favorable environment for the innovation and growth of digital assets. As the U.S. shifts toward these policies, while Bitcoin may still be one of the best-performing assets in 2025, other altcoins may become more prominent.

The Bitcoin Mining and AI Boom: Debt, M&A, and Clean Energy

By MAX SHANNON, CoinShares Research Analyst

— Miners increase use of debt markets when interest rates fall

As interest rates gradually return to normal levels, Bitcoin miners are expected to return to the debt market. Companies like TeraWulf, Core Scientific, Marathon Digital and Bitdeer Technologies have raised more than $2.5 billion through convertible debt offerings. In the future, this trend is likely to continue, with miners leveraging these tools to reduce capital costs, fund strategic growth, and manage existing debt more effectively. This financing method is particularly attractive given that traditional debt markets are constrained by the high volatility of the industry.

As high interest rates and industry volatility make access to traditional debt markets more difficult, convertible bonds offer a more balanced approach to capital structure management with less dilution. By reducing their reliance on equity financing, these companies are able to pursue diversified strategies, as reflected in differences in the pricing of their convertible debt.

Another form of debt financing also shows some potential. Bitcoin-based financing is expected to grow as miners accumulate more Bitcoin on their balance sheets. We’ve seen this with Marathon’s $200 million credit line, followed by Canaan’s $22.3 million loan, which was secured by 530 Bitcoins. This trend coincides with the rise in the value of Bitcoin, making it a more valuable collateral. As a result, miners can issue more devalued fiat debt against their growing Bitcoin holdings, thereby increasing their financial leverage.

Miner financing ($ million). Source: Bloomberg, CoinShares, data available as of close 01 October 2024

— Further mergers and acquisitions among miners

Acquisition activity among miners, such as Cleanspark's acquisition of Griid, Riot's deal with Block Mining, and Bitfarms' acquisition of Stronghold (both focused on operating facilities), are expected to increase. Acquiring distressed or turnkey mines is more cost-effective than building new facilities from scratch. While greenfield projects often take years to develop, acquiring and upgrading existing infrastructure can be completed in just a few months. This greatly shortens the time to market and accelerates the realization of returns, thus becoming a strategic focus for miners.

Weighted average cost per megawatt ($ million). Source: Industry Sources, CoinShares, data available as of close 17 October 2024

— AI Hyperscale Computing Company Focuses on Clean Energy Triple

Redundancy

Miners will likely continue to enter into land acquisition option agreements to expand their energy portfolios in response to upcoming hash rate and/or GPU computing power. In our opinion, the most desirable site features are Tier 3 clean energy redundancy and gigawatt power supply pipelines. For example, TeraWulf's Lake Mariner site relies entirely on hydroelectric power and, according to management, has a power usage effectiveness (PUE) of 1.2. The site is located in New York, which has a cooler climate than Texas, and by diverting water directly from the lake, they can lower the PUE even further.

Once these high-quality clean energy sites are fully utilized, focus may turn to areas with strong renewable energy mixes, such as the PJM Electricity Interconnection Market (~60-65% renewables). Based on this, Bitdeer's Ohio sites (791 MW by fiscal 2027) and TeraWulf's Nautilus sites (2.5 GW) may gain a competitive advantage.

As a result, we expect that companies with clean energy capabilities or located in attractive locations will be more likely to attract AI partnerships than those that rely heavily on less desirable locations like Texas.

The End of the Big Three Bitcoin Mining ASICs

By ALEXANDRE SCHMIDT, CoinShares CFA - Index Fund Manager

Since the release of the first Canaan Avalon chip in 2013, the ASIC manufacturing industry has been dominated by a handful of key players. China has always been at the heart of the industry, with the vast majority of ASIC designers and manufacturers located there, which has not changed even after the government imposed a mining ban in 2021. Today, the market actually presents a monopoly situation of three giants, of which Bitmain dominates, followed by Canaan and MicroBT (collectively referred to as the "Big Three"), although they are all headquartered in China, but also has manufacturing facilities abroad.

Estimated Bitcoin ASIC market share. Source: Estimated by CoinShares

As Bitcoin has grown in adoption and price, mining has evolved into a more specialized industry. Since the introduction of the first ASIC chip, the Bitcoin network’s hash rate has grown from approximately 1 PH/s to over 600 EH/s today, a 600,000-fold increase. Following Moore's Law, each new generation of mining rigs has significantly improved performance and efficiency, driving down manufacturing costs and price per hash.

The Bitcoin ASIC market has become quite large. Canaan Technology's 2019 IPO documents indicate that the Bitcoin mining machine market grew from US$166 million in 2014 to US$3.2 billion in 2018. Over the past three years, the Bitcoin network’s computing power has grown by 100 EH/s per year to 200 EH/s. While not all growth will come from newly purchased equipment, given current mining economics, only the latest generation of highly efficient mining rigs will be profitable, so we believe almost all growth will come from newly purchased rigs. Based on the current mining machine price of about $15 per TH/s, we estimate that the size of the Bitcoin ASIC market will be between $15 billion and $30 billion in 2024, a figure confirmed by industry insiders.

— New entrants challenge traditional giants

As the market regains momentum in the second half of 2023, new projects

begin to emerge, especially those of Auradine, Bitdeer, and Block Inc. For the first time since the advent of ASICs, several competitors are simultaneously accelerating the launch of new, high-performance mining machines that may eventually challenge existing industry giants, especially Bitmain.

The abscissas are: manufacturer, latest model, efficiency, release date. Source: CoinShares, ASIM Miner Value, company data (as of 16 October 2024)

The big question is whether these new projects will be successful or whether we will once again see the short-lived glory of mining startups. Auradine is a U.S.-based Bitcoin ASIC design company that has received $49 million in investment from Marathon. Marathon CEO Fred Thiel also serves on the company's board of directors. Auradine’s first Teraflux miner was released in Q4 2023, and its latest miner has an efficiency ratio of 15 to 16 Joules per terahash (J/TH), which is almost the same as Bitmain’s latest Antminer S21 XP Pro ( The efficiency is 13.5 J/TH). According to CEO Sanjay Gupta, the company has more than 30 customers, although Marathon appears to be the largest, having made $44.1 million in upfront payments over the past year.

Bitdeer is a public company that was spun off from Bitmain in April 2023 and initially operated only as a Bitcoin mining company. In March 2024, the company announced the launch of its own Bitcoin mining machine, using the SEAL01 chip. By September 2024, Bitdeer completed testing of its SEAL02 chip, achieving an efficiency of 13.5 J/TH at underclocking settings. These chips have been integrated into Bitdeer’s SEALMINER A2 mining machine and mass production will begin in October 2024. Bitdeer's competitive advantage lies in hiring former Bitmain engineers who have successful experience in launching Bitcoin mining machines at scale and have industry connections that can secure supply chain agreements.

The last entrant is Block Inc., which is developing Bitcoin mining chips using a 3-nanometer process. Led by Twitter founder and Bitcoin advocate Jack Dorsey, Block’s goal is to “democratize Bitcoin mining.” While Block is primarily seen as a fintech company, it has extensive ASIC experience by developing chips for Square's point-of-sale systems. In July 2024, Block and Core Scientific announced a cooperation to develop and deploy 15 EH/s mining machines using Block’s new chips. The project is jointly participated by Block’s Proto team, ePIC Blockchain Technologies and Core Scientific. However, unlike Auradine and Bitdeer, Block’s collaboration with Core Scientific has yet to release a working prototype, and it remains unannounced whether Block’s chips or jointly developed mining rigs will be widely commercialized.

— New competitors’ success depends on reliability and scale

Whether these emerging competitors can challenge the dominance of the "top three" players will largely depend on their ability to successfully launch usable products and quickly scale up production. And all of this relies on ensuring production capacity at semiconductor manufacturing plants. In addition, mining operators' skepticism about new products, particularly concerns about their reliability, also poses a challenge. However, the emergence of new competitors is welcome because it has the potential to weaken the pricing power of the top three players, thereby forcing mining machines to become more efficient and ultimately achieve higher profitability.

Bitcoin heads to the U.S. financial industry

Author: MATTHEW KIMMELL, Digital Asset Analyst at CoinShares

The U.S. Bitcoin ETF has been a huge success since its launch in February. Among the 575 ETFs launched in the United States in 2024, the top four in terms of capital inflows are all spot Bitcoin products: IBIT, FBTC, ARKB and BITB. Positive inflows have been seen in nine of the ten months since launch. In less than a year, the total holdings of these spot Bitcoin products has reached nearly 1 million, which is almost as large as any known holding entity

• which is very large, although still slightly less than the estimated holdings of Satoshi Nakamoto. Some 1.1 million Bitcoins. For comparison, it took five years for the gold ETF to reach this level since its launch in 2004, compared to the amount of capital inflows into the Bitcoin ETF in its first year. Such strong demand raises an important question: Who is buying these ETFs? Can their capital inflows be sustained?

— Professional investors account for 20% of U.S. Bitcoin ETF holdings

Through 13-F filings, we can understand the sources of investors who purchase these ETFs. These documents were submitted by investment managers with more than $100 million in assets under management. The content shows that approximately 20% of the assets in U.S. spot Bitcoin ETFs are held by professional institutions and fund managers, which also means that the remaining 80% is mainly from Retail investors or smaller financial professionals.

According to Form 13-F, there are more than 1,200 holders of these ETFs. 984 of these holders are investment advisors, accounting for 78% of all submitters, but they only account for 41% of total assets under management (AUM). Knowing the background of these investment consultants helps to understand the situation more comprehensive. For example, Goldman Sachs may be used as general liquidity providers with a position of $ 741 million, and companies such as ARK Investment Management and VANECK hold 206 million respectively. The dollar and $ 80 million funds have launched their own spot Bitcoin products.

Hedge funds also occupy a considerable share, and the average position scale and investment portfolio weight are large. A total of 138 heps hold these ETFs, accounting for 38%of the total assets of 13-F reporters. Among them, the famous holders include millennial management, Schonfeld strategic consultant and Aristeia capital. We suspect that the stability of these funds inflows is poor, because hedge funds are often more opportunistic in configuration. In addition, the basis trading has always been very attractive this year, which may be an important source of hedge fund demand.

US spot Bitcoin ETF daily transaction volume (USD, one billion US dollars) and annualized rolling benchmark (3 months) -All exchanges. Source: Bloomberg, GlassNode, CoinShares, Data Available as of 22 November 2024

— Bitcoin ETF high probability can continue to succeed

The future development path of Bitcoin ETF depends on several factors. What is encouraged is that the number of submitters in the 13-F report from March to September 2024 increased by 20%. This growth mainly comes from institutions classified as investment consultants, showing that the AdOption of Bitcoin ETF is growing. However, although hedge funds still occupy a large part of management assets (AUM), they are more inclined to trade instead of long -term holding these ETFs. If the market mood changes, or some transactions reverse, these funds may quickly withdraw from the position, causing capital to flow out.

Another factors that need to be considered is that the Bitcoin ETF configuration in the investment portfolio is relatively small. Bitcoin is still widely regarded as a high -risk asset, and many managers regard it as a "alternative investment" category -we also call it digital gold. Compared with stocks and bonds, the scale of alternative investment is usually small, which limits its allocation potential in the investment portfolio. Nevertheless, the Bitcoin ETF has not been listed in the market for less than a year, and many professional investors may still be approved internal approval or through the investment committee for due diligence.

In view of the market size of US financial professionals, even smaller investment portfolios may bring considerable capital inflows, provided that Bitcoin has become a standard component of modern investment portfolios. However, the income of Bitcoin is not common, but it has been recognized as a obvious advantage of decentralized risk tools, and there are already multiple examples of inspiring people. For example, Fidge incorporates its FBTC products into its full -combined conservative ETF; Michigan and Wisconsin have included Bitcoin ETF into the state pension fund; recently, the University of Emery also holds some of its donation fund investment portfolios. Bitcoin ETF.

From the perspective of retail, this seems to be the dominant source of the Bitcoin ETF demand, and there is still room for growth. Some brokers, such as Vanguard, have not yet opened the access rights of Bitcoin ETF. Once they turn on these services, companies such as Fidelity, Robinhood and Interactions Brokers continue to provide access channels, and the number of retail participants may increase further.

— The prospect of the US Bitcoin ETF looks optimistic

The launch of the Bitcoin ETF clearly shows the demand for Bitcoin's opening through familiar financial products. These ETFs do not necessarily cause a urgent evaluation of professional financial managers on the potential of Bitcoin's investment. However, in view of market demand, the progress of internal approval procedures, and the gradually admitting the pressure of Bitcoin as a feasible asset, we expected to have More evaluations follow.

Obtaining access permissions is the first step, and the evaluation is the next step -this process may gradually begin with time. Bitcoin enthusiasts should carefully declare that "institutional funds have arrived", because the ratio of configuration in the investment portfolio is relatively small, and the 13-F report institutions account for only 20%of total asset management. Nevertheless, there are still many exciting places.

The rapid success of these products fully reflects the strong demand for Bitcoin, and if professional investors begin to regard Bitcoin as part of the standard investment portfolio, it may promote greater popularity. The journey of Bitcoin ETF has just begun, and the future is full of light prospects.

Bitcoin income company rises

Author: Satish Patel, CoinShares CFA -Investment Analysts

Bitcoin income companies are reshaping the financial pattern of corporate finance. More and more companies use Bitcoin as capital reserves assets. This trend reflects that Bitcoin not only uses the potential of value storage tools, but also as a means to generate income. The income mentioned here includes:

1. Bitcoin holdings have increased compared to the company's stock;
2. Increase agriculture, that is, to generate returns by borrowing Bitcoin;
3. Use derivatives to create an alternative strategy for income to benefit from Bitcoin reserves.

MicroStrategy became synonymous with Bitcoin investment. As of December 5, 2024, the company held 402,100 Bitcoin, with a market value of about 39.8 billion US dollars. The company introduced its own "BTC income" indicator to measure the effectiveness of its strategy and help investors understand how Bitcoin acquisition creates value for shareholders. For a detailed analysis of the MicroStrategy investment case, see our in -depth analysis.

Similarly, Block promised to use 10%of its profit for Bitcoin products to acquire Bitcoin, which actually adopted the average cost method strategy to enhance its capital reserves. Bitcoin Mining Corporation Marathon Digital also adopts a method similar to Microstrategy to acquire Bitcoin by low interest rate debt. In August 2024, the company issued a US $ 300 million convertible bond with an annual interest rate of 2.125%. In the following November and December 2024, US $ 1 billion and $ 850 million in financing were carried out. . This approach enables Marathon to use favorable borrowing conditions to increase Bitcoin reserves.

The horizontal coordinates are: corporate Bitcoin balance (excluding Bitcoin miners), the total amount of bitcoin held, and the total amount/market value of Bitcoin. Source: BitcointResuries.net, Bloomberg, Coinshares, Data as of 5th December 2024

This year's significant development is that the US Securities and Exchange Commission (SEC) allows BNY Mellon to regard Bitcoin and other cryptocurrency securities as assets rather than liabilities, which allows the bank to provide custody services for cryptocurrency exchanges trading products. This category is consistent with the direction of the MicroStrategy's efforts to improve its Bitcoin holding accounting processing. According to the current GAAP criteria, Bitcoin holds impairment losses. By treating Bitcoin as assets, companies such as MicroslateGy can present a more favorable financial situation, which may alleviate the negative impact of Bitcoin price fluctuations on reporting revenue. In addition, this change may also enhance the ability of MicroStrategy to borrow Bitcoin through typical market interest rates (4-6%) to offset their interest payment.

Semler Scientific is a medical technology company. As of December 5, 2024, the company used Bitcoin as the main funding reserves, holding 1,873 Bitcoin with a market value of about 185 million US dollars. In addition, Metaplanet, a traditional Japanese hotel company, has also begun to accumulate Bitcoin and implements the BTC income index of Microslategy. As of December 5, 2024, the company held 1,142 Bitcoin and actively made a profit generation through the use of Bitcoin options. It is planned to achieve profitability this year. These measures highlight the trend of traditional enterprises and science and technology -oriented companies that generally turn to Bitcoin's revenue strategies. It is expected that this trend will accelerate in 2025.

In 2024, more and more large companies began to accept cryptocurrencies as a payment method, implying that more companies might include Bitcoin into their fund reserves in 2025. For example, luxury car manufacturer Ferrari has begun to accept cryptocurrency payment in the United States and plans to expand to Europe. In addition, Microsoft is assessing shareholders' proposal, considering incorporating Bitcoin into its investment strategy, and is expected to make a decision at a meeting on December 10, 2024. Retailers such as AT & T, Whole Foods, Home DEPOT, and AMC Cinema have also received Bitcoin payment through platforms such as BitPay, Flexa, and SpEDN, and across the industry is increasing. At present, e -commerce giants such as Amazon, SHOPIFY, Nike, Expedia, and Paypal have participated in the cryptocurrency field. Whether it is payment or investment, it may also be considered in 2025 into its capital reserves in 2025.

According to the data of BitcoinTreasuries.net, as of December 5, 2024, the total amount of Bitcoin held by the company reached about 939,190, which was a significant increase from 80,000 in December 2020. The listed company accounted for 528,772. About 2.5%. This strong accumulation trend is expected to continue and may be further strengthened in 2025, especially in the context of the clear supervision and political development that has created a more stable enterprise investment in digital asset framework.

Follow the latest developments of Lightning Network

Author: chris Bendiksen, CoinShares Bitcoin Research Director

Because of its focus on security and simplicity, Bitcoin sacrifice scalability at the basics to maximize decentralization and anti -review capabilities. Therefore, its data processing capacity is strictly limited. During the peak demand, the processing speed is slower and the transaction costs are higher.

In order to alleviate these problems, various second -level (L2) solutions were proposed to transfer small transactions from L1 to provide special space for higher capacity and fast processing.

The most successful solution is the Lightning Network (LN). The Lightning Network aims to supplement the basic layer of Bitcoin. It realizes low cost and instant payment through pre -funded channels. These channels are running outside the Bitcoin main network, but the security of the main chain is still used when needed.

In 2024, the Lightning Network has consolidated its role in the Bitcoin ecosystem, and its adoption rate and development have continued to rise. Next, we will briefly explore the current situation of the Lightning Network, focusing on its adoption, challenges and future development trends.

- Most of the publicly visible network indicators remained smooth in

2024

Observe some standard network indicators, the scale and capacity of the Lightning Network basically remain stable in 2024. In fact, since 2022, many of these indicators have remained stable and even declined. According to Bitcoinvisuals data, the current number of nodes is similar to the end of 2021. The total capacity of the network is about 5,300 BTC, which is basically the same as in early 2023. The total number of channels reached about 84,000 peaks in early 2022, and then decreased by about 35%, currently 55,000. This does not look very optimistic. So, what exactly happened?

In the annual flagship report of Lightning Network last year, River Financial raised some reasons to explain why when analyzing the Lightning Network, simply use and track simple public data points may have problems:

1. Unlike the L1 of Bitcoin, the transaction information on the Lightning Network is not public -only the parties (sending, routing node or receiver) directly participating can know any information about Lightning network transactions.
2. The increase in the number of nodes does not mean more use -many Lightning network users prefer to use Lightning Service Provider (LSPS) instead of managing their own channels. LSPS can use unlimited number of users through a node service.
3. Due to its privacy characteristics, the growth of the use of the Lightning Network cannot be accurately evaluated through simple network indicators. It is best to evaluate through traditional indicators (such as industry funds).

We should briefly introduce why the Lightning Service Provider (LSPS) has become so common recently.

Lightning Service Provider (LSPS) provides some advantages for those who run nodes and those who want to access the Lightning Network through a complete hosting service provider.

For example, users who run their nodes can use LSP to obtain the flow of the channel and pay a certain fee. In this way, users use LSP's balance sheet to use their relationships and capital to provide users with more choices and more efficient payment paths. But even so, running a dedicated lightning node is still costly, and it is necessary to run Bitcoin nodes, manage liquidity (even to relieve LSP), monitor online time, perform software updates, and ensure node security. These are possible. It is time -intensive and requires professional knowledge.

For those who want to outsourcing all outsourcing, the service that uses completely custody has more advantages than running lightning nodes, such as lower cost and less technical complexity. Wallet providers and LSPs can cooperate to handle all technologies and mobility tasks for users, and provide a relaxed and efficient way to access the Lightning Network without the need for hardware or continuous maintenance. For ordinary users, costs may be more cost -effective than their own management nodes, and completely eliminate the concepts of channel management and liquidity.

No matter what kind of outsourcing method, it usually brings faster settings, more reliable online time and better routing efficiency, making it more attractive to those users who value convenience and speed. For those users who occasionally run nodes and use the network, LSP can also avoid tedious settings and caters to those who like simple. This is likely to be the main population who wants to use Bitcoin for small daily payment. They are not highly required to review or confiscate the assets.

—The risk investment funds in the field of lightning networks are

healthy, but highly concentrated

Since 2021, some lightning network companies have obtained considerable venture capital funds for business expansion, but this field is mainly led by two companies, namely Strike and River. Strike received $ 80 million in Series B financing in September 2022, led by TEN31 to enhance its retail and global payment solutions. After completing a round A financing of $ 12 million in 2021, River Financial received another $ 35 million in Series B financing in January 2022, consolidating its status as another major Lightning Service provider (LSP).

Some smaller companies, such as Amboss Technologies, focused on data analysis of Lightning Payment, successfully raised $ 4 million for artificial intelligence research and route optimization. These financing rounds reflect investors' confidence in the potential of lightning networks.

- Lightning network user growth comes from multiple user groups

"River Lightning Report 2023" provides a detailed overview of user growth. The report states that the payment they observed has increased by 1212%in the past two years, which reflects the common adoption of individuals and enterprises. The main driving factors include the ability of low costs, fast settlement and processing micro -transactions, especially in industries such as games and cross -border payment. The report also emphasizes the increase in node participation (not just the existence of nodes), which improves the overall efficiency and liquidity of the network. In addition, the development of more user -friendly wallets and platforms makes the lightning network easier to use and further promotes adoption, especially in areas with limited infrastructure in traditional banks.

Enterprises, especially in industries such as games and cross -border remittances, are using the low transaction costs and fast payment capabilities of the lightning network. Individuals also began to use daily transactions and micro -transactions because of the ease of use and scalability of the lightning network. In addition, users in areas with limited infrastructure in traditional banks have found that the lightning network is particularly valuable because it provides a fast and high -cost alternative alternative, which can enhance financial tolerance.

The report pointed out that the integrated lightning network, such as the application in the social media platform (such as Nostr), has further promoted growth, and users can more conveniently send and receive Bitcoin globally. The combination of commercial use cases and personal access can make the lightning network a practical solution for more and more people who seeks more efficient, low -cost digital payment.

- We believe that the Lightning Network is "looking for self"

The current lightning network status is not as conceived as many enthusiasts envisioned when the original papers were released in 2016. After eight years of development, it is now obvious that most users — we can also see this in a wider range of encryption -do not think that for a small amount of funds, it is very important for a small amount . The stronger adoption of driving factor seems to be an unparalleled availability of payment applications. These applications are based on encryption technology and have the advantages of obviously better than traditional banking systems -not only Lightning Networks, the most important thing is stablecoin.

This makes the future of Lightning Networks in an interesting situation. At present, the lightning network may be completely evolved into a main facing B2B network. Among them, large Lightning Service Provider (LSP) acts as the custodian of customers, and customers use the Lightning Network to settle the application by paying applications for instant settlement.

At the same time, the inductive characteristics of the lightning network can at least allow anyone to participate in the network, even if some custodians have limited their applications. We believe that this is an important guarantee for preventing bad behaviors in itself. If you cannot completely prevent users from using the payment system, it is meaningless to review from a commercial level.

Finally, we should consider that many Bitcoin owners are unwilling to spend their Bitcoin. Why do you spend your most valuable assets without lack of opportunities and spending legal currencies? There is no shortage of small payment capabilities in the world, but it is scarce to protect savings from inflation and erosion. Perhaps it is not until Bitcoin reaches a certain degree of altitude, and small daily Bitcoin payment will become popular, which means that the Lightning Network may still be advanced in its age.

Why does Bitcoin need a contract (Covenants) to achieve scalable

independent custody and transactions

Author: Matthew Kimmell, CoinShares Digital Asset Analysts

The creation of Bitcoin aims to enable individuals to hold and transfer value independently without relying on third parties. Unlike previous digital cash projects, Bitcoin successfully solved the problem of dual payment, and no concentrated coordination was required. However, with the increase of Bitcoin's adoption, it has become more difficult to maintain these core principles, especially in terms of cost benefits, user friendship, and system expansion.

We believe that the next step is to introduce "Covenants" -the modification of Bitcoin script language, specifying the rules of use of Bitcoin. Specifically, the contract allows Bitcoin to restrict the receiver that the receiver can only spend bitcoin to some specific destinations.

Although this seems to be a small change, the enabled contract may have a reform effect on Bitcoin, especially when it is combined with the existing Bitcoin script function. The contract can enable new incentive mechanisms, enhance high -level technology, and expand the possibility of Bitcoin management.

In our opinion, the contract is a step to achieve scalable point -to -point electronic cash, and by reducing the cost of independent custody and transaction. If this change fails, Bitcoin may deviate from its original intention.

- Lightning network solves some problems, but the contract further

promotes the scalability of Bitcoin

The scalability of Bitcoin has many literature records. With the increase of the number of users, trading in a limited block space will lead to a longer waiting time, and make daily use becomes unrealistic and costly.

Lightning Network (LN) can alleviate this problem by allowing users to open a payment channel under the chain to provide fast, low -cost transfer services. Only when the user is turned on and closed when the channel is turned on and closed. However, the Lightning Network also has its limitations. Some chains are still necessary, and these operations may bring higher costs, especially when transaction costs rise.

Lightning networks have improved transaction speed, but have not fully achieved the goal of decentralized transfer value of Bitcoin -that is, it does not rely on third parties. Due to cost and inconvenience, holding and transferring Bitcoin still involves third parties, such as exchanges, wallet providers and financial products.

"Covenants" may change the status quo. The contract can allow multiple users to share the same non -cost transaction output (UTXO) without losing unilateral control over the funds, thereby achieving new hosting forms and cost allocation, and reducing problems that occur in high -cost environments.

From a wider perspective, the contract is a step towards Bitcoin more suitable for daily use, while maintaining personal freedom.

—The contract unlocks new possibilities for Bitcoin 2nd layer network.

Many of the advantages of the contract can be achieved through higher -level technologies like Lightning Network. Although the lightning network increases the speed of transfer and reduces costs, it still needs to conduct chain transactions, which are mainly used for channel opening/shutdown and liquidity management.

The contract can further expand the advantages of the Lightning Network by sharing the costs of these chains and benefit more users. For example, Channel Factory allows multiple users to turn on the Lightning Channel from a single unknown transaction output (UTXO), thereby reducing the transaction burden and cost of each user.

In addition to channel factories, the virtual UTXO (V-UTXO) solution in proposals such as ARK can also benefit from the contract. Although theoretically these protocols can be run without contracts, the interaction of these protocols is greatly enhanced through the introduction of certain contracts, and the contract is critical to the actual operation of these systems.

- Contract is the key to realizing the self -sovereignty of Bitcoin

"It's not your key, not your currency (not your coys (not your coins)" is a common slogan of Bitcoin, which conveys the importance of self -custody, which means that users control their funds without an intermediary. However, complexity and increasing costs have prompted users to turn to custody solutions.

In order to allow Bitcoin to be adopted globally, and maintaining self -sovereignty as an option, change is necessary. The Lightning Network is helpful, but in terms of existing form, it is almost not enough to solve the problem. If it is not changed, Bitcoin will eventually become too expensive to ordinary users.

The contract solves scalability through the introduction of more advanced transaction functions, making fund management more fine. It is important to choose which contract and how to activate it, but we believe that the demand is quite clear. Each contract proposal is relatively simple and backward, but has strong potential in the practical application of Bitcoin transactions. Some contracts are re -activated by Bitcoin that have existed but have been disabled, and others introduce new operating codes or more flexible transaction construction methods.

This is an appropriate continuation with the large -scale Taproot and SEGWIT upgrade in 2021 and 2017, and the research behind it has been deeply cultivated for many years.

Accepting the concept of the contract can help individuals hold and trade Bitcoin in a safe and safe way, and conduct in accordance with their own conditions. Without the support of the contract, the admission of Bitcoin will continue to develop along the hosting path. We expect that by 2025, the contract's discussion will increase and may be activated in 2026.

The use of Ethereum (LAYER 2) will continue to grow and show an upward

trend.

Author: Luke Nolan, CoinShares Ethereum Research Assistant

In March of this year, Ethereum implemented the DENCUN upgrade, which significantly reduced the trading cost of Layer 2, and increased the number of trading (TPS) to the first layer (Layer 1). These details are more complicated. This article does not discuss in detail, but you can find a detailed overview here.

The upgrade has a significant impact on the use of the second floor. On the one hand, we can call it a huge success, as shown in the brief analysis of this article; on the other hand, with our observation of the Ethereum ecosystem, some indirect impacts have also appeared. The value of Eto (ETH) tokens. So, what is the prospect of the second floor in the Ethereum ecosystem in the next year?

The daily transaction volume on the second floor of Ethereum (excluding Ethereum). Source: Growthepie, CoinShares, Data Available as of Close 17 September 2024

Overall, Layer 2 has changed significantly in the past year, especially after the Dencun upgrade, as shown on I2Beat:

The horizontal coordinates are: tokens, one year ago, now, and percentage change changes

Even if far beyond the current trend of Layer 2 adopting growth, the development of large institutions on the new second floor is constantly promoting. Earlier this year, Sony announced their second -level network "Soneium". Recently, Kraken also launched their "INK" blockchain. The second -level institutionalization will be further promoted, and in the next year, users who have attracted these corporate customers will join.

- Blob market dynamics

Even with the significant increase in usage, the BLOB market -the second floor is used to publish transactions to the independent expense market of Ethereum -still maintain "free" to a large extent. The actual cost of the release of BLOB is separated from the transaction data itself, which is affected by the mechanism similar to the EIP-1559. Simply put, each Ethereum block can release up to 6 BLOB; when the number of BLOB published more than 3, the cost of these BLOB will increase, and when the number of BLOB released is less than 3, the cost will be reduced , Until the minimum possible cost.

Recently, at the end of October, we saw that for a period of time, the number of BLOB's release continued for more than 3 consecutive times. Although the duration was short, this made the BLOB market enter the price discovery stage.

The average number of BLOB per block (over the past 10 days). Source: Dune Analysis, Data as of 25th November 2024

This change originated from the increase in transaction demand caused by users to receive Scroll airdrops. In our opinion, the competitive BLOB market brings value accumulation to ETH token by increasing ETH destruction. The greater competition between the second floor in the BLOB market will be the basis for our 2025 outlook: in the next year, the use of the second floor will continue to grow, and the event will be more active. We will start seeing the duration of the BLOB price discovery. This will be that many people think that the current two-layer relationship with the first layer (L2-L1) has the beginning of the healthy coexistence of parasitic properties (at least from a comparison perspective, which is healthier).

- Layer 2 will continue to grow in the next year

In addition to the aforementioned large institutions