As 2024 draws to a close, the global economy and financial markets have painted a complex picture of recovery, growth, and uncertainty. This year has been defined by dramatic shifts in inflation, the resurgence of Bitcoin Inc., and Wall Street’s relentless rally, alongside pivotal events such as the U.S. presidential election and mounting global conflicts.
In 2024, Bitcoin hit a milestone, breaking past $100,000. It has soared 123% YTD, surpassing the 31% returns of the Nasdaq Composite Index. Gold also enjoyed a remarkable 2024, up more than 27% so far this year.
Bitcoin experienced a dramatic revival, surpassing $100,000 for the first time in early December. This resurgence coincided with Trump’s election victory and his pro-crypto policies. Despite its meteoric rise, Bitcoin’s volatility persisted, with prices dipping below $100,000 by year-end.
The US stock market continued to dominate the world in terms of performance in 2024. The S&P 500 had a record-breaking year in 2024, closing at all-time highs 57 times. This remarkable performance was driven by the continued dominance of the “Magnificent Seven” tech stocks: Alphabet Inc., Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla. The index’s upward trajectory began in January, reaching new peaks, and maintained momentum throughout the year, fueled by strong earnings reports and investor optimism.
Gold saw incredible price gains in 2024, rising from US$2,000 per ounce to close to US$2,627. Various factors have lent support, including 75 basis points worth of interest rate cuts from the US Federal Reserve, geopolitical instability in Eastern Europe and the Middle East, and uncertainty in global financial markets.
Looking Ahead
What To Expect From Bitcoin Markets in 2025
The cryptocurrency market has had an extraordinary year, and market participants are optimistic about the prospects for 2025 as a new administration takes over in Washington D.C., though plenty of uncertainty remains.
One of the crypto market’s biggest concerns in recent years has been the lack of clarity around regulations and the U.S. Securities and Exchange Commission’s (SEC) enforcement approach.
On the campaign trail, Trump made a number of promises to the bitcoin and crypto industries, including that he would fire SEC Chair Gary Gensler on day one of his administration and establish a ‘Strategic National Bitcoin Stockpile.’ Gensler decided to step down and Trump has proposed crypto advocate Paul Atkins to head the agency.
Market participants need to await regulatory clarity.
Analysts at Bitwise expect Bitcoin to reach $200,000 by the end of 2025, while those at VanEck peg it at $180,000.
Such predictions for bitcoin prices have been made many times in the past but seemed too ambitious. With Bitcoin surging above $100,000, they may not seem so far-fetched now.
What’s Ahead for US Markets in 2025?
There’s also growing concern that US equities are highly valued, and so, expected returns are significantly lower relative to the elevated returns that investors have come to expect in recent years. Optimists cite strong earnings and the potential for productivity-enhancing gains from technology, including artificial intelligence. Nonetheless, the market appears priced for perfection, based on the Cyclically Adjusted Price-to-Earnings (CAPE) Ratio, which is at 38 for the December estimate - close to the highest level in decades, according to Professor Robert Shiller’s database. The implication: expected returns for the medium to long term are significantly lower compared with recent history.
“This last year was interesting because we saw modest earnings growth, in the U.S. in particular, relative to stocks’ performance. The gains were mostly from expansion of the price-to-earnings multiple, and that's probably not going to repeat in the year to come. The challenge is that growth continues to be below trend in many parts of the world, and high-quality assets are expensive everywhere — it's not just the U.S. So, you get what you pay for. The S&P is extremely expensive, but that's because the return on equity is higher, and growth is higher.” Morgan Stanley CIO and Chief U.S. Equity Strategist Mike Wilson said.
“Risks stemming from the disproportionate influence of the ‘Magnificent 7’ stocks on major U.S. equity indices was a critical, but often overlooked, issue in 2024. These richly valued mega-cap names made indices historically top heavy, and we felt it was vital to alert clients about the implications if one or more experienced a big drawdown. While some of the market’s concentration around the Mag 7 eased toward the end of 2024, it remains a risk that investors should watch heading into 2025, particularly as these stocks may see earnings growth decelerate.” Lisa Shalett, Chief Investment Officer, Morgan Stanley Wealth Management, said.