This report from ARK Investment Management provides a review of Bitcoin's performance and on-chain metrics during December 2024, and an outlook for 2025. While December saw a slight price dip for Bitcoin, ARK maintains an overall bullish view for 2025, citing historical post-halving trends, strong long-term holder behavior, and potential for economic growth driven by productivity gains and shifts in macroeconomic indicators.
Key Themes & Ideas:

Bitcoin Market Overview (December 2024):


Price Dip: Bitcoin's price experienced a 3.2% drop in December, closing at $93,354, marking the first down month in over a quarter.


Positive Indicators: Despite the dip, the price remained above key levels: the 200-day moving average, the short-term-holder (STH) cost basis, and the on-chain mean.


Long-Term Holding Strength: 62% of the Bitcoin supply has not moved in more than a year, signaling strong long-term conviction amongst holders.


Short-Term Overheating: Significant liquidations in the futures market suggested potential short-term market overheating.


Bullish Outlook for 2025:


Post-Halving Trend: Historically, all years following a halving event have resulted in positive returns and bullish momentum for Bitcoin. The last halving occurred in 2024.


Historical Performance: Previous post-halving years (2013, 2017, 2021) saw Bitcoin price increases of 54.1x, 14.3x, and 1.6x respectively.


Long Term Holding Behavior: A high percentage of bitcoin remains dormant across multiple year timeframes demonstrating faith in its long term potential.
Volatility: Bitcoin's recent volatility spike is not considered out of the norm historically, suggesting further market expansion is possible.


On-Chain Metrics:


Network Security: Mining difficulty is up 52.4% year-over-year, indicating a strong and secure network.


Miner Revenue: Remains stable at $44.3 million, but is down 8.2% year over year, a neutral signal.


Network Usage: Both active owners and transaction volume are down on a monthly and yearly basis which is considered bearish.


Holder Behavior: While long-term holder supply is down, the amount of illiquid (locked) supply is up. Also, Time-Weighted Turnover is up by a significant amount which signals overall bullish sentiment.
Cost Bases: Both the market cost basis and short-term holder cost basis are up by a significant amount which are bullish signals for the asset.
Market Sentiment: Both Perpetual and Expirational futures basis are deemed bullish.


Macroeconomic Factors & Economic Growth:


Metals-Gold Ratio: The metals-to-gold ratio has hit a historical low, signaling potential for lower interest rates or higher metals prices.


Small Business Optimism: Small business optimism has increased significantly after the election, a positive sign for the economy.


AI-Driven Productivity: The report suggests AI adoption could boost productivity and lead to significant growth in Real GDP.


Correlation with Real GDP: Historically, productivity has been highly correlated with real GDP growth, particularly in times of new technology adoption.
Discrepancies in Metals Ratio: The metals to gold ratio has become disconnected from the 10-year treasury yield, which could mean a correction is coming, to either the treasury or to the metals ratio, or a combination of both.


News of the Month:


Several significant news items occurred in December 2024, including:
MARA proposes a $700 million convertible note offering to buy more Bitcoin.
Trump selects Paul Atkins as the next SEC chair.
Trump appoints David Sacks as AI and Crypto Czar.
El Salvador to change Bitcoin law as part of a new IMF deal.
Ripple secures NYDFS approval for its RLUSD stablecoin.
Texas House introduces a bill to establish a strategic bitcoin reserve.
MicroStrategy to join the Nasdaq 100 and heavily traded QQQ ETF.

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