The year that went by was remarkable for the crypto market, as Donald Trump's win in the US election and the subsequent appointment of Paul Atkins as the SEC Chair triggered a Bitcoin rally to above $100,000. This resulted in the global crypto market cap crossing that of the inflation-linked bond market in the fourth quarter of 2024.
In Q4 2024, the crypto market cap exceeded the $3 trillion mark from $1 trillion. This was way over the global inflation-linked bond market cap, as per a report from Grayscale Research. The report further underlined how at one point the crypto market cap was twice as big as the US high-yield bond market in the last quarter.
However, this momentum wasn't sustained, and the crypto market cap was still short of toppling the hedge fund industry. It couldn't touch Japan’s equity market cap of $4.5 trillion either, as the crypto market cap was found to be at $3.3 trillion yesterday, December 31.
This unprecedented growth in the crypto market has been attributed to Trump’s victory in the November 5 election, which caused Bitcoin to gain over 35% on that day. Later in December, it went above the $100,000 mark, proving many analysts right. Most experts have predicted that the digital asset will cross $150,000 by 2025 end.
Crypto market cap linked to smart contract platform fees?
The high growth in Q4 2024 was also due to extensive competition in the smart contract platform sector which was mainly dominated by Solana and Ethereum. These high-performance blockchains also exhibited substantial growth in this sector, as they attracted the attention of investors and traders.
The Grayscale Research reports also highlighted how crypto investors were drawn to Layer 1 networks in Q4 2024 as seen in the surge in activity in high-performance blockchains like TON and Sui. “This quarter, the Grayscale Research Top 20 features the following smart contract platforms: ETH, SOL, SUI, and OP,” said the report, further highlighting that it has added six new assets Jito, Ethena, Grass, Hyperliquid, Jupiter and Virtuals Protocol—to its top 20 crypto asset list for Q1 2025 .
However, the report noted that smart contract platforms are still experiencing significant design issues despite the increase in competition. This affects the decentralisation, security, and scalability of networks. The specific design choices in these smart contracts are leading to differences in average transaction fees, transaction throughput, and block times.
The report further underlined how a statistical relationship exists between market cap and fee revenue on these smart contract platforms. The higher the fee revenue generated by a network, the more it can provide value to the network, like staking rewards and token returns.
Grayscale said it is adding new tokens as a reflection of the market valuations. “This quarterly rebalance we added 63 new assets to the index series, which now includes a total of 283 tokens. The Consumer & Culture Crypto Sector added the most new tokens, reflecting continued strong returns for memecoins as well as appreciation in a variety of assets related to gaming and social media. The largest addition to Crypto Sectors by market cap was Mantle, an Ethereum Layer 2 protocol, which now meets our minimum liquidity requirements, said the report.