Bitcoin ends 2024 as the seventh largest global asset

According to new data released by Binance, bitcoin experienced a rally surpassing 120 per cent last year, positioning it in seventh place among the world’s largest assets by market capitalisation.

The cryptocurrency market capitalisation peaked at a record US$3.91 trillion on 17 December, with bitcoin alone reaching a market capitalisation of over US$2 trillion.

“This is a remarkable milestone that is even more impressive considering bitcoin’s relative youth – just over a decade old – compared to other more established asset classes,” said James Quinn-Kumar, director of community engagement for Binance Australia.

“Moreover, adoption remains relatively nascent, with bitcoin still in the process of being integrated into traditional investment portfolios.”

Bitcoin’s surge in 2024 was fuelled by several key developments, including the approval of spot bitcoin ETFs in the US, favourable monetary policy shifts and expectations of a more supportive regulatory environment in the US following the election of Donald Trump as president.

The price of bitcoin slumped on Monday to just under US$90,800 amid inflation concerns, before bouncing back to above US$94,000 on Tuesday.

According to analysts, the January slump is not a surprise and is a common occurrence in post-halving years.

Looking ahead, bitcoin is expected to extend its bullish trend and reach a price range of between US$200,000 and US$250,000 this year.

Speaking to ifa sister brand InvestorDaily late last year, Magnet Capital co-founder Egor Sidelska highlighted that businesses are increasingly recognising bitcoin as a safeguard against inflation, counterparty risk and liquidity constraints.

Sidelska’s remarks came after data from financial services firm River revealed smaller companies are increasingly making bitcoin a key component of their corporate balance sheets.

Namely, the data showed businesses held 3.3 per cent of the total supply of bitcoin as of 18 August, up 587 per cent since June 2020.

“The value proposition is starting to become very real, and it’s now becoming a lot easier for not only publicly listed companies but even small businesses to hold bitcoin positions on their balance sheet,” Sidelska said.

“You’ll start to see these businesses in the US that basically do that,” he added. “Because you can either pick a choice of, this year, earn 5 per cent in treasuries, or earn 30 per cent holding it in bitcoin, and because it’s liquid, you can sell whenever you want.”

Also late last year, as the price of bitcoin surged to US$105,000, AMP confirmed a modest allocation to the digital currency acknowledging that the digital coin is “too big to ignore”.

In December, Stuart Eliot, AMP’s head of portfolio management, clarified that after “testing and careful consideration by our investment team and committee”, the company decided to include “a small and risk-controlled position” in digital assets within its Dynamic Asset Allocation program in early 2024.

The bitcoin exposure, which represents around 0.05 per cent of its total superannuation assets under management, recognises the structural changes in the industry, including the launch of exchange-traded funds by leading international investment managers, Eliot noted.

Leading superannuation experts have previously dismissed cryptocurrency as a viable investment for retirement portfolios, citing its speculative nature and extreme volatility.