Bitcoin Dominates Crypto Market in 2024

Bitcoin (BTC) has taken center stage in the crypto market in 2024. However, changes initiated by the Trump administration could lead to a rotation into other assets, as highlighted by crypto data firm Kaiko Research.

According to analysts Adam McCarthy and Dessislava Aubert, the decentralized finance (DeFi) sector is showing promise. Kaiko’s DeFi index (KSDEFI) has outperformed ether (ETH) since its launch in October 2023, yielding approximately 75% returns. This is notable as most tokens in the index are based on Ethereum.

(Credit: Kaiko Research)

The report anticipates that this outperformance may continue into the latter half of 2025, driven by strong tailwinds for several assets within the index. Furthermore, the correlation between the DeFi index and ETH is decreasing as the DeFi sector expands beyond Ethereum.

The index comprises 11 DeFi tokens, with UNI, AAVE, and ONDO being the most weighted. The report cites that at least four of these tokens will likely benefit from upcoming developments.

For instance, recent regulatory changes in the U.S. may allow decentralized exchange Uniswap and decentralized lender Aave to implement fee switches, which could result in fee distributions to UNI and AAVE holders. Moreover, the tokenization protocol Ondo Finance is expected to thrive as Wall Street increasingly engages with crypto.

“Regulatory constraints in key markets have posed challenges since 2020, but these are merely part of the obstacles faced. DeFi has additionally struggled with high user friction and security issues. With regulatory scrutiny easing, the sector now has abundant opportunities for growth,” the report concluded.