From Two Pizzas to One Million iPhones

On May 22, 2010 — a day now anecdotally known as “Bitcoin Pizza Day” — a man in Florida made history by paying 10,000 Bitcoins for two pizzas. At the time, Bitcoin was a niche digital currency barely known outside of tech circles, and those 10,000 coins were worth just around $25. Fast forward to today, and those same Bitcoins would be worth around $1 billion. The story of the Bitcoin pizza purchase has since become a symbol of just how far this digital asset has come — from a quirky experiment to a global phenomenon.

In our previous article,  “Bitcoin Outlook”,  we discussed key catalysts for Bitcoin’s price surge — the Bitcoin halving cycle and the anticipated approval of Bitcoin ETFs by the U.S. SEC. In November, Donald Trump’s victory in the U.S. presidential election added further stimulus, propelling Bitcoin to a new level. Today, we will take a step back and recap key developments in digital assets and take a glimpse of stocks closely related to Bitcoin that stand to benefit from its rise.

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Key Developments in 2024

The digital asset market underwent a pivotal transformation in 2024, driven by landmark regulatory approvals, intrinsic blockchain events, and significant price recoveries across key assets. As we turn to 2025, understanding the momentum gained in the past year is crucial to navigating the evolving landscape.

1. Approval of Spot Bitcoin ETFs: One of the most significant milestones in 2024 was the U.S. Securities and Exchange Commission (SEC) approving spot Bitcoin and Ethereum ETFs in January and May, respectively. This regulatory breakthrough allowed institutional investors seamless access to these flagship digital assets, bolstering their adoption as legitimate financial instruments. Similarly, Hong Kong approved spot Bitcoin and Ethereum ETFs, further solidifying its position as a leading digital asset hub in Asia. These developments reflect the growing global acceptance of digital assets and their gradual integration into traditional financial systems.

2. Bitcoin Halving: In April, Bitcoin underwent its fourth halving, a pre-programmed event that halved the reward for mining new coins. This reduction in supply, an integral feature of Bitcoin’s deflationary model, historically catalyzes price appreciation and played a critical role in shaping market sentiment.

3. Market-Wide Recovery: The November U.S. presidential election provided a significant boost to the digital assets market. Donald Trump’s victory was perceived as a potential tailwind for the industry, whose pledge to make the U.S. the “crypto capital of the world” and his ambitious proposal for a Strategic Bitcoin Reserve were seen as potential game-changers for Bitcoin’s legitimacy and integration into the financial system. Following the election, Bitcoin surged past $100,000, while the broader market experienced a wave of renewed investor optimism and liquidity.

4. Decentralized Finance (DeFi) Recovery: The decentralized finance sector saw substantial recovery in 2024, with total value locked (TVL) surpassing $100 billion by year-end. This resurgence was fueled by innovations in lending protocols, tokenization solutions, and greater adoption among retail and institutional users. DeFi’s revival underscored its importance as a cornerstone of the broader digital asset ecosystem, offering decentralized alternatives to traditional financial services.

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Recap of Past Failures

While 2024 marked a period of progress, it is important to remember the lessons learned from past failures that continue to shape the landscape of digital assets:

• TerraUSD (UST) Collapse: In 2022, the collapse of UST, an algorithmic stablecoin relying on supply and demand of LUNA coins, sent shockwaves through the digital assets market. The failure of UST, due to its inability to maintain its peg to the U.S. dollar, led to massive liquidations and eroded confidence in algorithmic stablecoins. The incident reinforced the need for more robust mechanisms and regulatory oversight in the stablecoin market.

• FTX Bankruptcy: The FTX exchange's spectacular collapse in late 2022, following allegations of fraud and mismanagement, exposed significant vulnerabilities in centralized digital assets platforms. The event underscored the importance of transparency, regulatory compliance, and proper risk management. It also triggered calls for stronger consumer protection laws within the digital asset space. In March 2024, Sam Bankman-Fried, founder of FTX, was finally sentenced to 25 years in prison.

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Revival of Bitcoin and Market Recovery

The collapse of FTX had left the market reeling, with trust eroded and liquidity drained. By late 2022, Bitcoin had plummeted to lows of $16,000, marking one of the darkest periods in its history. Many questioned whether Bitcoin’s narrative as a revolutionary digital asset had run its course.

Yet, Bitcoin demonstrated a remarkable resurgence in 2023 and 2024. From its trough in late 2022, Bitcoin’s price more than fivefold, surpassing $100,000 by December 2024. Notably, Bitcoin’s dominance in the digital assets market has increased significantly, rising from 37% in the 2022-2023 period to close to 60% recently, underscoring its strengthened position as the leading asset in the digital space. This recovery was driven by a combination of factors, including the approval of spot ETFs, the halving event, and broader macroeconomic conditions favoring digital assets. Bitcoin’s market cap surpassed $2 trillion by the end of the year, reflecting renewed investor confidence and growing institutional participation. This resurgence was also reflected in the broader digital asset market, as other leading digital assets such as Ethereum, Solana, and Binance Coin saw their market caps increase by as much as 60% from the beginning of the year.

Market trading volumes also reflected this revival. In the first quarter of 2024, trading volumes surged significantly, and by the end of the year, volumes returned to pre-2022 levels, signaling renewed liquidity and interest in the space. Notably, Tether (USDT), the leading stablecoin by market capitalization, saw a substantial surge in both market cap and trading volume, underscoring the market’s flight to liquidity amid continued global macroeconomic uncertainties.

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Conclusion: Bitcoin from Asset Allocation Perspective

Originally designed as a decentralized digital currency, Bitcoin offers a hedge opportunity against centralized monetary systems and inflation through its finite supply. In its early years, it was celebrated for its low correlation with traditional asset classes and counter-cyclical behavior, making it an appealing diversification tool during periods of economic uncertainty.

However, as Bitcoin gained widespread adoption and institutional interest, its narrative began to shift. Today, Bitcoin behaves more like a risk-on asset, closely tied to market sentiment and macroeconomic trends (particularly following pattern of NDX – of course BTC with much higher Vol).

Despite the positive developments such as ETF approvals and the Bitcoin halving cycle which accelerated BTC rally, the current landscape still carries significant uncertainty, particularly regarding Trump’s potential stance on Bitcoin and other digital assets. Given the high volatility and speculative atmosphere of digital assets, even for investors who are interested in digital assets, we believe that only a maximum of 1-2% of Bitcoin should be allocated in the portfolio to achieve the utility of portfolio diversification.

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