The new year has arrived with the usual rush of 2024 predications from major blockchain, crypto and institutional players and leading finance publications. We give an overview of some of their key predications below, so you don't have to read them all.
Considered one of the powerhouse crypto VC firms and thought leaders, A16Z Crypto see 2024 bringing:
a new era of decentralisation, building on new organizational models as a "living laboratory" to usher in better ways to organise communities;
improvements in user experience to finally overcome the challenges of users interacting with blockchain systems (simplified accounts, embedded wallets, and so on);
increasing network effects from modular tech stacks, building on the growing power of open-source blockchain code;
Blockchain helping to secure against AI generated fake content;
NFTs becoming ubiquitous brand assets;
improved verification tools emerge for developers, leveraging the architectural simplicity of smart contracts.
Coinbase Institutional, the institutional arm of one of the leading global digital currency exchanges, has outlined its predications including:
as total crypto market cap doubled in 2023, an end to the crypto winter might be nigh;
a continued anchoring of bitcoin to institutional flows of funds;
the building of infrastructure level tech-stacks (layer-2s, zero-knowledge proofs) will start to enable web3's promise via new Dapps;
crypto remaining a "globally important asset class with widespread commercial and investor appeal";
growing tokenisation of real world assets (particularly bonds) fitting into regulations coming into play around the world;
continued growth in web3 gaming;
decentralisation of real world resources and early stage decentralised identity leveraging zero-knowledge proofs to grow;
improving user experiences for Dapps and crypto tools;
continuing growth of layer-2 rollups for transactions and an Ethereum Cancun upgrade to reduce transaction costs;
a "murky path for US (regulatory) clarity", while the European Markets in Crypto-Assets (MiCA) commences in Europe for stablecoins on 30 June and at the end of the year for other crypto projects.
The research team at Bitcoin Suisse, a leading Swiss crypto service provider, made 13 digital asset predictions for the new year:
Bitcoin spot ETFs, which were approved by the SEC on 11 January;
Bitcoin remains a top performing asset class;
Growth in institutional adoption of digital assets;
Digital assets (particularly BTC and ETH) break into traditional portfolios;
BTC and ETH as reserve assets;
Liquidity spring, with stablecoins on the rise again;
Once the dust of the Bitcoin ETF and halving event settles, mainstream focus will shift to ETH;
Innovation to the Bitcoin network post halving, towards a more sustainable security model;
Institutional staking and restaking to drive up liquid staking;
Rollups will become the primary liquidity hubs;
Mainstream applications (in gaming industry) to attract 50M new on-chain users;
Strong early stage, strong late stage: traditionally, projects that provided outsized returns in late bear market and early bull market stages kept momentum throughout full-fledged bull markets;
Final assembly line: not enough supply compared to high demand
Among the most diversified financial services companies in the world, Fidelity noted the following 5 themes to watch for the new year:
Fed's movements - historical correlations indicate that crypto prices rise during periods of low interest rates;
Impact of Bitcoin halving in April 2024 - the historical impact on price has diminished with each halving cycle;
The spot Bitcoin and Ethereum ETPs impact the market - invite new market entrants;
Layer 2 protocols addressing scalability issues are gaining traction and could potentially encourage widespread crypto adoption by improving transaction speeds and reducing fees;
Demand continues for regulatory clarity, while global regions, such as the EU and the UK are advancing toward regulatory measures, uncertainty remains in the US regulatory landscape.
The research team at Nansen, a blockchain analytics platform, have outlined their high-conviction bets for 2024:
AI agents become primary users on the blockchain, enhancing performance and use cases;
Improved user experience in crypto applications, making it more user-friendly and accessible to all;
Decentralised exchanges take market share from centralised exchanges, boosted by monetary incentives and innovative features;
Expanding use cases of Bitcoin network, layer-2s, Ordinals protocol, modular architecture.
Messari is a leading provider of crypto market intelligence products. In 2024, they have compiled a summary of trends to watch across a range of different categories from top figures, products, trends in DeFI, consumer crypto and more.
Europe leads the way in crypto regulation with MiCA and TFR, but they face their own limitations;
Bull case for Ethereum - well positioned to attract rollup and developers;
The Modular Moment - interoperability solutions will be essential for seamless inter-rollup transactions;
Zero Knowledge coprocessors and Fully Homomorphic Encryption as the most powerful innovation in crypto this decade;
DeFi lending to overtake CeFi lending;
Gaming industry - monetisation enabled by crypto as the next dominant business model in the sector;
Continued innovation in peer-to-peer infrastructure and crypto software improves accessibility and user experience.
Marshall Beard, the Chief Strategy Officer at Gemini, highlighted the following key trends for 2024.
Spot bitcoin ETF approval as a 'significant milestone' in 'legitimizing bitcoin as an institutional-grade investment' - increased inflow of capital anticipated into Bitcoin;
AI-related tokens surge along with public interest in the integration of AI and crypto. AI has potential to revolutionise smart contracts and boost efficiency in current blockchain transactions;
EU leading the way in crypto regulation with MiCA, in stark contrast with the US government's controversial regulation by enforcement approach;
Bitcoin's 4th halving event in April anticipated by the market - historically, price of bitcoin rose post halving.
The research team at Galaxy, a digital assets trading firm, noted the following key takeaways:
The first digital natives, Millennials and Gen Z, have higher adoption rates for crypto;
Millennials are expected to inherit the greatest wealth in history - Millennials are expected to hold up to five times more wealth by 2030 compared to 2020 mostly from inheritances;
Transfer of wealth to these younger generations will have significant impact on crypto assets moving forward;
This significant demographic shift will see greater inflow of capital into cryptocurrency and drive mainstream adoption.
London based Web3 venture capital firm Outlier Ventures identified the following key trends and challenges to look out for in 2024:
Rising interest in tokenisation of real-world assets;
Mainstream brands using blockchain tools to offer innovative and unique consumer experiences;
'Making non-tech literate users comfortable' remains a challenge;
Scalability and security issues with infrastructure may not be ready to accommodate a large influx of new market entrants;
The challenge of regulation continues, with the industry calling for regulatory clarity.
A leading global crypto trading platform Crypto.com highlighted the following key events and potential developments to expect in 2024:
Bitcoin halving;
The Cancun upgrade for Ethereum;
Account abstraction to continue as a new paradigm for Dapps;
Developments around Bitcoin spot ETFs and boosted inflow of capital into crypto products.
Analysts at JP Morgan anticipate Ethereum to outperform Bitcoin and other cryptocurrencies in 2024, through the EIP-4844 upgrade (Proto-danksharding), expected to occur in the first half of the year. In addition, they predict:
Bitcoin halving and spot ETFs have already been priced in, it is likely that ratio of bitcoin's market price to production cost will decrease post halving as was the case in 2020;
DeFi continues to face difficulties in encroaching into the TradFi ecosystem and tokenisation remains at an experimental stage;
VC funding into crypto sector back on the rise, if it sustains into the first quarter of 2024, it may hint the end of crypto winter.
The positive sentiment on Spot bitcoin ETFs and bitcoin halving were echoed in Forbes' outlook for 2024. Additionally they note:
HSBC's partnership with Swiss crypto company Metaco, to offer tokenised securities for institutional investors to launch in 2024;
Increased regulation and policing of the crypto industry to combat financial crimes;
With inflation cooling down and readjusted interest rates, investors are warming up to the crypto market.
PWC released a comprehensive outlook report on the global crypto landscape for 2024. Here is a summary of pending regulatory/legislative movements for some jurisdictions:
UK: Reforms to permit fiat-backed stablecoins expected in 2024;
Australia: The ASIC’s ‘Corporate Plan 2022–26’ highlights crypto-assets as one of its core projects encompassing various consumer protection, enforcement and policy matters;
Canada: Further proposals from the Canadian Securities Administrators on fiat-backed stablecoins and crypto trading platforms;
EU: MiCA provisions on stablecoins scheduled to come into effect from mid 2024. All other provisions will apply from 30 December 2024.
Conclusion
Among this flurry of 2024 predications, there are some identifiable trends including:
the impacts associated with Bitcoin halving and a spot ETF;
a potential end to crypto-winter and increased venture capital activity;
increasing AI integration with crypto technology;
positive effects flowing from the deployment of blockchain scaling solutions;
improved crypto user experience flowing from wallet abstraction and other innovations;
continuing interest and growth in DeFi, tokenisation, web3 gaming and zero-knowledge technology; and
despite some bright spots, continued concerns regarding global crypto regulation.
Written by Michael Bacina, Steven Pettigrove and Kelly Kim