ARK Invest's Monthly Report Just Dropped

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:

1. 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.

1. 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.

1. 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.

1. 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