Themes to watch in 2024

Will 2024 ultimately prove to be a pivotal year for crypto? (BoliviaInteligente / Unsplash)

There’s never a dull year on the blockchain. So, to kick off 2024, we’re taking a look at some storylines that could make news over the next 12 months.

Spot ETFs could finally arrive. How much impact will Wall Street have on crypto?

BTC’s halving is due in April. Previous halvings preceded bull runs — will history repeat itself in 2024?

SOL’s comeback might not be done. The buzzy protocols that could fuel Solana’s next phase.

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STARING INTO THE CRYPTOBALL

Breaking down 9 predictions that could shape 2024

The last few months of 2023 saw crypto markets finally emerge from a long winter, as Wall Street's “spot” bitcoin exchange-traded fund (ETF) ambitions helped BTC end the year up a very healthy 160%. So, what’s on the agenda for 2024?

For starters, upward momentum is showing few signs of slowing down, with bitcoin beginning the year on the edge of $46,000, its highest point since April 2022. (Though it moved closer to $43,000 later in the week.)

To get a sense of where things might be headed next, we gathered predictions from a wide range of crypto analysts and experts. Here’s what they had to say…

This could be the year spot BTC ETFs arrive

After months of growing excitement, the first spot BTC ETFs could finally begin receiving SEC approval in 2024 — signaling, as one analyst put it, a “tectonic shift in the financial landscape.”

Because ETFs are a popular investment category with everyone from individuals saving for retirement to massive hedge funds, ETF applicant Fidelity predicts that they could make crypto a much more common element of the average investment portfolio.

How much more common? Estimates for the potential impact of BTC ETFs cover a wide range: from $3 billion on the first day of trading to an eventual market that Bloomberg Intelligence pegs at $100 billion. (On the other end of the spectrum, some analysts believe that the ETF effect could be muted because it’s already been “priced in” by savvy investors.)

“As the old hurdles fade into the background, more and more advisors will allocate to crypto in clients’ accounts,” says Bitwise, another ETF hopeful. “We think at least 1 in 4 financial advisors will do so by the end of 2024.”

BTC’s halving might fuel the next bull run

Bitcoin’s halving, which alongside potential ETF approval is perhaps BTC’s most anticipated event this year, is set to occur in April. According to a recent CoinDesk article, BTC could reach as high as $160,000 after the halving.

Bitcoin is designed to be a rare, inflation-resistant asset — and one mechanism it uses to achieve this is the halving, in which the amount of BTC generated by mining is reduced by half every four years until all 21 million BTC have been mined. (This is anticipated to be sometime around 2140.)

Historically, much of bitcoin’s gains have come in the 12 to 18 months after the halving — at times when newly diminishing supply have hit surging demand. At the time of 2020’s halving, for instance, one BTC cost less than $10,000. By the peak in 2022, prices had climbed to more than $67,000. (Remember: Past performance is not indicative of future results.)

But much like the ETF narrative, some investors believe the impact of the halving has already been “priced in.” And as Coinbase Institutional noted in its 2024 outlook, while many consider the halving a direct catalyst for BTC, “we think that causality is less precise than some may believe.” The halving’s greater significance, Coinbase Institutional said, is its ability “to raise media attention around what makes bitcoin unique.”

Solana’s comeback may just be getting started

Last year saw the low-fee Ethereum alternative Solana bounce back in a big way. After crashing in the wake of FTX’s collapse, SOL’s 2023 gains topped 1000%, leading research firm Messari to declare the token “crypto’s comeback player of the year.”

A range of buzzy projects built on the network — including the decentralized broadband protocol Helium, speedy DeFi tools like Jupiter, and an improving payments ecosystem that counts Visa and Shopify among its adopters — could help power SOL into 2024.

Tokenized real-world assets could become a leading crypto use case

Many of the world’s largest financial institutions — including the London Stock Exchange Group, UBS Asset Management, and Citigroup — have placed major bets on the tokenization of real-world assets, where ownership of things like real estate, art, stocks, or many other asset classes can be represented as a token on a blockchain.

A few big advantages of tokenized assets? Near-instantaneous settlement of transactions (even across borders), the ability to automate the functions of assets via smart contracts (as opposed to an army of lawyers), and the privacy and security of blockchains.

According to a recent CoinDesk report, a thesis has emerged that “the tokenization of real world assets will form the backbone of the next bull run and unlock the transfer of trillions of dollars of value into crypto.”

Crypto-powered games will embrace fun

Crypto gaming firms have raised billions of dollars since the last bull cycle and have been hard at work developing a new generation of web3 games. This year, some of those projects are set to finally come to fruition.

While previous blockchain games might have been optimized for “play to earn,” the next crop of games are “embracing the fun aspect,” said Alec Wantoch, head of product at HyperPlay, a web3 game launcher. Wantoch added that Asian markets will likely continue driving adoption – around half of all new blockchain games released last year were based in Asia.

If the gaming sector sees growth, look for gaming-related blockchains to have a big year. Avalanche, Immutable X, and Polygon all have multi-million dollar funds aimed at supporting gaming projects on their respective blockchains.

Bitcoin could gain new smart-contract superpowers

In 2023, the rise of Bitcoin Ordinals — BTC-powered NFTs — proved that Bitcoin is more adaptable and programmable than it seems. In 2024, that trend will likely continue as developers continue to innovate on making “layer 2” scaling solutions like the Lightning Network and Stacks faster and more capable. (In their current form, Bitcoin layer-2s often struggle at times of high usage.)

Meanwhile, projects like BitVM will bring Ethereum-like programmable smart contracts to Bitcoin. “Bitcoin’s ‘industrial age’ as a programmability platform seems to just be getting started,” writes Hashdex, an asset manager.

Major brands will find new uses for NFTs

While many prognosticators were declaring NFTs dead, brands from Starbucks to Nike were making big investments in the technology as a way of turning customers into communities. This year, expect more global brands to innovate in NFTs with a focus on utility.

“Many of the conditions are in place for NFTs to become ubiquitous as digital brand assets,” writes a16z Crypto as part of the firm’s 2024 predictions.

In recent weeks, the electronic music duo Disclosure released 1,000 NFTs that are unique, AI interpretations of one of their songs. And the Mexican airline Viva Aerobus partnered with an NFT ticketing company to create digital tickets that could be sold back to the airline, or swapped to other passengers.

Ethereum fees could fall dramatically

In the coming months, Ethereum is expected to launch its EIP-4844 upgrade, which, according to a prediction from asset manager VanEck, will “reduce transaction fees and improve scalability for layer 2 chains such as Polygon, Arbitrum, Optimism.”

The upgrade, also known as proto-danksharding, is the next evolution of technology that splits the network into many “shards” to allow for ever faster transactions.

Bitwise predicts the upgrade could drive the average fee per transaction down from around $0.14 on “low-cost Layer 2 blockchains” to below $0.01: “A 90%+ reduction in the cost to use Ethereum will radically increase the types of activities individuals can feasibly participate in on the network.”

This potential leap has JPMorgan predicting that ETH could outperform bitcoin and other cryptocurrencies in 2024.

Governments will adopt blockchains

Belgium plans to use its 2024 presidency of the European Union Council to push for building a trans-national blockchain that will be used to store things like driver's licenses and property titles for EU residents.

According to Mathieu Michel, Belgium’s secretary of digitization, public blockchains can offer more security, transparency, and privacy over alternatives, while also offering Europe a chance to take control of its “digital sovereignty.”

Review 2023 in crypto