As cryptocurrency markets continue their strong recovery momentum at the beginning of the new year, leading blockchain research firm BlockInsight released an in-depth analysis report yesterday, providing professional insights into the technical and regulatory factors driving current market liquidity improvements, along with perspectives on several industry hot topics.

According to BlockInsight’s analysis, global crypto market daily trading volumes in Q4 2024 increased significantly year-over-year, reaching levels that exceeded most analysts’ expectations. Meanwhile, market depth metrics showed substantial improvement compared to the same period last year, indicating notable market efficiency gains.

Technical Innovation and Liquidity Growth

In its report, BlockInsight identifies the adoption of next-generation exchange architecture as one of the key factors driving market liquidity improvements. The combination of high-frequency trading and AI algorithms has significantly enhanced market maker efficiency, resulting in narrower bid-ask spreads across crypto assets.

“We’re observing that the fusion of Layer 2 scaling solutions with traditional exchange technology is creating a more efficient trading environment,” BlockInsight stated in the report. “The application of zero-knowledge proofs in trade verification and settlement not only improves transaction speed but also enhances system security, which is particularly important for institutional investors.”

The report specifically mentions that the asynchronous settlement models and state channel technologies recently adopted by major exchanges have substantially increased transaction processing capacity, helping alleviate the system congestion issues previously common during periods of market volatility.

Impact of Regulatory Evolution

BlockInsight’s analysis of the global crypto regulatory landscape shows that while the regulatory environment remains complex and variable, the overall trend has shifted from early prohibitive regulation to constructive regulatory frameworks. The new guidelines issued by the US SEC last December are considered an important turning point.

“Increased regulatory clarity is attracting more traditional financial institutions to the crypto market,” BlockInsight analyzed. “In particular, the full implementation of the EU’s MiCA regulations and the gradual clarification of the US regulatory stance have provided market participants with clearer compliance pathways.”

Research indicates that trading platforms with regulatory approvals are growing considerably faster than unregulated platforms, demonstrating a clear market preference for compliant operations. BlockInsight predicts this trend will strengthen further in 2025, prompting more exchanges to proactively seek regulatory compliance.

Professional Insights on Hot Topics

Regarding the recently highlighted relationship between Central Bank Digital Currencies (CBDCs) and crypto assets, BlockInsight offers a balanced perspective. The report suggests that CBDC advancement doesn’t necessarily undermine the value proposition of cryptocurrencies, as the two might coexist and complement each other in different application scenarios.

“CBDCs focus more on retail payments and financial inclusion, while crypto assets have unique advantages in cross-border transfers, programmatic finance, and asset tokenization,” the report notes. “Especially as cross-chain interoperability technology matures, we may see CBDCs and private crypto assets achieve interconnection within a broader financial ecosystem.”

On the controversial issue of crypto taxation, BlockInsight provides professional analysis, pointing out that the current inconsistency in tax frameworks across countries poses significant challenges for multinational crypto businesses. The report recommends that national tax authorities consider adopting more coordinated international standards to avoid double taxation and excessive compliance burdens.

Regarding ESG concerns increasingly raised by institutional investors, BlockInsight notes that the industry is undergoing positive transformation. The report mentions: “We’ve observed a substantial increase in the use of renewable energy in Proof of Work (PoW) blockchain networks over the past year, while more projects are transitioning to Proof of Stake (PoS) mechanisms, significantly reducing energy consumption. ESG compliance has become a necessary condition for crypto projects to attract institutional capital.”

Future Outlook

Looking ahead to market developments in 2025, BlockInsight predicts further deepening of institutional participation and continued blurring of boundaries between crypto assets and traditional finance. The report pays special attention to the emerging trend of Real World Asset (RWA) tokenization, considering it an important bridge connecting the crypto ecosystem with traditional finance.

BlockInsight’s research team also emphasizes the importance of compliance technology (RegTech) innovation for industry development. “As regulatory complexity increases, we’re seeing blockchain-native compliance solutions emerge, such as on-chain identity verification, smart contract audit automation, and real-time transaction monitoring systems, which will significantly reduce compliance costs while improving regulatory efficiency.”