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Thawing from a long, cold bear-winter, we enter 2024 riding the emotional hype of last quarter’s price action.
Let's welcome Crypto Spring with optimism, curiosity, and arms wide open.
Institutions are pilling in.
Regulators are warming up.
Retail remains mostly uninvolved.
Opportunity can be heard in the conversations of crypto-natives discussing the powerful confluence of positive industry tailwinds (“resolving” FTX, clearing out Binance’s Name, etc) and macro events, including the Bitcoin ETF, Bitcoin Halvening, American Presidential Elections, potential Chinese liquidity injections, potential yield rate cuts, just to name a few, looking at us in 2024.
A lot of problems are finally behind us,
and there are many new ones ahead.
Without further ado, let's review some of the exciting expectations in the pipeline for this year:
Disclaimer:
* These are in no specific order.
** Nothing here is investment advice.
*** These are not to be used for making financial decisions.
Market Capitalization is the barometer directly expressing the cryptocurrency industry’s economic value in the world.
After hitting all-time highs of roughly ~3 trillion in November 2021, we went on to see lows of ~800 Billion in December 2022 and closed 2023/started 2024 at ~1.65 Trillion.
Marketcap growth happens in two ways: (vertically) existing assets rally, or (horizontally) new assets enter the ecosphere.
As the eyewatering >500% rallies in Solana, radical influx of alternative digital asset ecosystems such as Celestia, Injective, Mantle, et al. and pipeline of upcoming launches (Manta Pacific, Dymension, etc.) would indicate, the coming cycle will bring an expansion in both directions. Coupled with the asset archetypes that are not included in this measure (such as NFT collections, private on-chain RWA, etc.), there are reflexive economic forces being suppressed, indicating a blossoming for the sector.
As we move throughout the year it is highly possible that marketcap will dip below where the year started, perhaps it might even lay dormant/tread sideways for multiple month; but ultimately we will end the year higher than where we began.
Scaling and Interoperability have been and will continue to be two of the dominant, existentially important themes in the cryptocurrency/digital asset industry for the next decade.
Being an extremely young sector sitting somewhere between the two, with even current leaders, including Arbitrum and Optimism, still in the middle of completing configurations (state validations, data availability, withdrawal windows, node incentivization, sequencer decentralization, etc.), Rollups have attracted so much capital, provided so much operational efficiency, and captured such a massive portion of developer mindshare that they have received an entire market sector of their own.
Previous layer 1’s and exploring the transition to rollup architectures (such as CELO with promises of being the first to instantiate decentralized sequencer sets); the modular thesis emphasizes the glory of flexibility in choosing where data lives and how it propagates only further supercharging the desire of entrepreneurs to launch new networks.
Just like ICOs drove the 2017 rally, NFTs drove the 2021 rally; Rollups will be the technological catalysts that drive the next rally.
Online culture is a fascinating paradigm that is impossible to fully grasp. Landing firmly on the left side of the crypto curve, memes (especially dog-branded memes) are the ephemeral degen plays that turn the average 80 IQ person into a filthy millionaire.
Every cycle has a leading dog meme coin, an expression of the newest generation cultural meta; first, we had DOGE, then we had SHIB, and now we have BONK.
DOGE had its ~75 Billion USD Marketcap, currently at $11.16 B
SHIB saw ~44 Billion USD Marketcap, currently at $5.29 B
BONK has so far seen a ~1.5 Billion Marketcap, currently at $0.65 B
Deployed as an SPL token on Solana, $BONK is rumored to be run by a team of highly qualified operators who know what they are doing. When compared to the other two dog meme behemoths, BONK is the only one actually generating a phat protocol revenue.
Doge likely will not be displaced as the currency king of online dog culture. SHIB on the other hand, has higher fees as an ERC20, a broken initial coming-to-market strategy (with sending Vitalik 50% of the supply…), and a much weaker social presence than some of the newer projects; it is primed to be displaced by a newer better version.
Powerful in attracting attention, prompting involvement, and bootstrapping token distribution, airdrops are the ultimate marketing tool in crypto.
Already playing out in late 2023 with some gigantic drops in the Solana ecosystem with $JITO and the SAGA phone, as well as within Comos IBC ecosystem IBC with Kujira, Injective, Osmosis, and others; Airdrops will continue to be extremely popular throughout 2024.
Celestia staking is considered the holy grail (very interesting to see what comes of this).
Polkadot has been silent during these layer wars; possible that this silence will translate into a surplus of airdrops as the ecosystem tries to catch up.
Regardless of where exactly these Airdrops come from, there are two things we can expect with a high degree of certainty: first, they will likely be tithed to a point system; second, they can be ridiculously lucrative.
Ethereum has been slightly lagging behind the market in terms of price performance. Actually, the lagging has been pretty serious.
While Bitcoin has grown by ~158% over the last 365 days, the MarketCap grew by ~110%, Ethereum has run roughly ~77%.
This underperformance has ignited a lot of negativity against ETH on social media platforms. Bashing and hate are a perfect counter-indicator for putting on a trade.
With an ETH ETF on the horizon, it's not impossible that a hate rally is in store. After the BTC ETF hype is juiced out, people will need somewhere else to look.
Massive. Enormous. Gargantuan market size. Endorsement from tradfi megalodons like BlackRock.
The Real World Asset sector caught some attention during the bear winter, and some of the projects in that space saw face-melting gains, including RIO (>3,650%) and NXRA (>150%).
Due to the unavoidable links to legacy financial infrastructure, RWA’s will have minimal (if any) benefits to the public cryptocurrency sector. Likely to be primarily private market deals that are subject to similar regulatory scrutiny, RWA’s might need to take a backseat and allow more public sectors to gain traction.
Moreover, RWA’s don't possess any new breakthroughs; the sector is literally just legacy finance on blockchain-based rails. As we know already, privacy and compliance with local jurisdictions might render RWA’s still a tad too early.
Being the sector expecting the heaviest regulatory headwinds has likely been a major contributing factor to DEFI’s relative underperformance.
To be fair, Decentralized Finance never really died but, as measured by global TVL, has yet to show serious signs of recovery.
With a multitude of exciting technical breakthroughs happening with leaders like SNX and UNI, coupled with the operational benefits of rollups and proto-dank sharding via the Dancun upgrade coming to Ethereum, it is a matter of time before on-chain yields become too attractive for people to pass on and the reflexive cycle begins to fulfill itself.
It is almost impossible to know for certain how exactly the TVL will shore up (in new projects or old ones) or where it will shore up(EVM, Cosmos, Solana, or all of them at once), but regardless, not having some kind of exposure would likely render a portfolio suboptimal.
The amount of venture capital investment into the crypto space has been on a steady decline since the 2021/2022 hype top. Declining prices, dwindling interest, and increasing regulatory scrutiny have driven capital away.
Sparked by progress in the courtrooms, price appreciation, and the realization of inescapable macro liquidity shifts, VCs have once again begun to show interest in crypto.
In 2021, roughly ~29 Billion USD came in.
In 2022, roughly ~34 Billion USD came in.
In 2023, that number plummeted to ~11 Billion.
With the lowest quarter being marked in Q3 of 2023, Q4 saw a slight uptick, and moving forward, we anticipate seeing a trend reversal. Concrete numbers are undefined, but total sums greater than 2023 are highly likely.
To be clear, large VC investments do not immediately translate to price rallies, but they do serve as a good signal for what can be anticipated in the near future.
El Salvador has set quite the example with its Bitcoin operations. The incredible international attention the country received for its forward-thinking policies has invited new migrants, stimulated tech startups, and even bolstered its balance sheet.
Coming out of multiple decades of debt, El Salvador is positioned to continue strengthening its economy perpetually by earning value through its volcanic mining as well as the appreciation of BTC that it buys on the open markets.
It is very possible that other nations will recognize the powerful promises of sovereignty BTC carries and will declare economic alignment with it.
Which nations this will be is anybody's guess, but South America, Africa, and Asia might have some clues.
America is known for being the king of capital. Consumers spend more money here than nations elsewhere earn. Throughout the earliest years of crypto, it was American Capital that drove the industry into new higher highs; however, the ridiculous regulatory stance in the US has given emerging markets a chance to capture and control the growth of crypto.
The open, inviting atmosphere and some degree of regulatory clarity have positioned Asia (HK and Singapore specifically), the EU, and the UAE to drive the next wave of retail adoption.
Predicting what/how/why something will happen in crypto is a fool’s game; many attempts will be proven wrong, and many others will turn out to be right but poorly timed.
Specifics are nearly impossible to nail down, but being directionally correct is very possible.
That is what these predictions should outline: a possible roadmap/framework for thinking about how the industry will continue to mature this year.
The only thing that is certain,
Is the uncertainty.
Now go forth with unrelenting vigilance, tranquility, and peace;
Take your slice of the kingdom.
Live long & propser 🥂
Andrey Didovskiy
