Cryptocurrency Trends 2024
Yes, we're talking about the flexibility of the iconic protagonist from The Matrix franchise. If you think of the cryptocurrency industry as the Matrix, a digital arena of finances, then these bullets are misinformation that every FinTech business needs to dodge. Where's Morpheus when you need him?
Well, we're your digital Morpheus! This article about the top 5 Cryptocurrency Trends of the year is your "red pill" to succeed in the dynamic digital landscape of finances. Whether you're a seasoned Wall Street wolf or a budding Gordon Gekko, these trends are your best bet at understanding the pulse of the cryptoverse.
From the cryptic “NFTs” and controversial “CBDCs” to the emerging regulations for the crypto industry, we decode the trends that'll make you feel like the 'Chosen One.'
Buckle up, this list of the top 5 Cryptocurrency Trends of 2024 is more thrilling than any Hollywood blockbuster - read on!
This past year has been a wild ride in the cryptocurrency space, wouldn’t you agree? After all, we have seen new bad actors using cryptocurrencies for fraudulent activities, falling prices across the board and even crashes of major cryptocurrency exchanges. This has led to some analysts questioning crypto’s ability to survive and endure this turbulent phase.
However (you knew there was a twist in the tale, right?), the cryptocurrency market still maintains its valuation of over USD 1 trillion and is used by over 420 million people across the globe daily. Despite its ups and downs, innovation and growth in this arena of FinTech shows positive signs. In fact, last year, we highlighted new trends such as stricter regulations, the need for interoperability, the adoption of De-Fi and environmental impact. So, what does the cryptocurrency industry have in store in 2024?
Let’s find out!
Trend 1: The Crypto Winter Will Continue In 2024
With crypto prices trending downwards in recent times and investors fleeing towards safer assets, the cryptocurrency market was clearly in a “bear market” in 2023. Some even referred to it as a “crypto winter.” The new year won’t bring much joy in crypto circles as the “bear” market will likely continue in 2024.
The cryptocurrency market has faced similar downward price trends three times before, each lasting more than 20 months and resulting in average declines of more than 70%. Even the most recent bear market has been ongoing for more than 350 days, with the overall cryptocurrency market cap down roughly 65% from its all-time high in 2021. Bitcoin, the largest crypto by market cap is down 60% from its ATH of $69,000, despite showing signs of resurgence in late October 2023.
While the crypto winter in 2023 was fueled by the fall of the Terra/LUNA ecosystem and the collapse of crypto exchange FTX, leading to massive withdrawals by users, 2024 will see ongoing effects of these factors. It will create a weak market condition and raise concerns among investors about the future of the crypto market. Despite the challenges and poor outlook, the bear market will present opportunities to invest in undervalued assets and make a profit when the market recovers in mid-2024 (more on that in Trend 2!).
Jimmy Song, a Bitcoin expert and open-source coder who has authored 5 books on Bitcoin, says, “Every “negative” event seems to bring more antifragility into Bitcoin. I love that survival strengthens Bitcoin each time.” We’ll have to wait and see when (not if) the crypto market recovers in the near future!
TechDogs’ Takeaway: With the crypto market still in a volatile state, investors are advised to exercise caution, employ risk management strategies and stay informed about the latest developments to navigate these challenging times effectively. Businesses must approach the crypto market with a long-term perspective to set up a position to succeed with the market’s potential recovery. With most cryptocurrencies trading at relatively low prices, there is a potential for major gains with smart investing in 2024. Moreover, conducting thorough research and investing in undervalued assets based on market cycles can help improve one’s crypto portfolio in 2024. With significant events slated to occur in 2024, approach your cryptocurrency investments with a cautious yet positive outlook!
Trend 2: Resurgence Of Digital Ownership Via NFTs Will Enhance Crypto Adoption
Talking of resurgence, the Bitcoin halving in April 2024, which will reduce the supply of Bitcoin, has historically led to a significant rise in its value. This is expected to spark a crypto bull run in 2024. With this in mind, Web 3.0 crypto projects that are focused on NFTs and tokenization will receive increased attention in 2024.
Currently, the cryptocurrency bear market (Trend 1), combined with high inflation, prevalence of crypto scams and a lack of regulation, has wiped out roughly 97% of the NFT market value. However, most crypto experts agree that the resurgence of non-fungible tokens (NFTs) for tokenization purposes is on the horizon in 2024. “People don't understand NFTs, Metaverse, and crypto today the same way they didn't understand online shopping in 1995,” says Anuj Jasani, CEO of online marketplace JustBrandable.
A report from Verified Market Research predicts that the NFT market will reach $231 billion by 2030, becoming the leading technology for verifying and authorizing digital ownership. For instance, ImmutableX, a popular video game firm, has gone all-in on NFTs and Web3 tokenization to trade digital assets. Moreover, business use cases for digital ownership via NFTs are also emerging in areas such as real estate. Mattereum, a UK-based company, is tokenizing physical assets such as homes, musical instruments, vintage wine, etc. as NFT-like assets, aiming to drive the adoption and usage of NFT marketplaces on a day-to-day basis. We’re all in for asset tokenization using NFTs and Web 3.0, folks!
TechDogs’ Takeaway: We know that NFTs sound like a risky business but with the rising adoption of Web 3.0, concrete use cases are emerging. Businesses should start by exploring and integrating NFTs into their existing infrastructure to authenticate and protect digital assets. This will not only add value through verifiable ownership and provenance but also drive digital transformation strategies. Moreover, businesses can bring about better customer engagement and loyalty by using NFT-based experiences. Think of offering proof-of-ownership for limited edition products and rewards using NFTs. Finally, consumers can leverage NFT-based tokenization to authenticate their physical assets and safeguard digital ownership.
Trend 3: Introduction Of Crypto ETFs Will Lead To Greater Institutional Adoption
If you’ve never heard of ETFs, we bet you will come across the term more often in 2024. ETFs, or simply "exchange-traded funds," are investment funds that track a specific index and can be traded on exchanges – in this case, cryptocurrencies. A cryptocurrency ETF will allow institutions to purchase shares of cryptocurrency without actually owning the digital asset, a major trend for 2024!
Crypto Exchange-Traded Funds (ETFs) will benefit institutional adoption by allowing businesses to invest in a familiar, regulated and secure investment fund. Such ETFs will simplify institutional exposure to cryptocurrencies and bridge the gap between traditional finance and new-age financial assets such as cryptocurrencies.
Currently, there are only eight crypto ETFs traded on the U.S. market but its total AUM (assets under management) are valued at over USD 1 billion. When asked about the likelihood of seeing more crypto ETFs, James Koutoulas, CEO at Typhon Capital Management, says, “If anyone's going to get approved it'll be BlackRock. Such an organization can “stand the test of time and they can work on this for years to come. They might have to tweak and adjust but eventually, with the necessary financial resources, they'll get it done.”
In fact, leading players such as BlackRock have submitted proposals for crypto ETFs and if approved, could lead to increased capital flow for cryptocurrency investment funds. Most of all, it will open the doors for institutional adoption and diverse types of ETF products in the crypto space. Hence, the emergence of crypto ETFs will foster greater institutional participation in 2024, leading to better regulation and consumer engagement with crypto products.
TechDogs’ Takeaway: With more crypto ETFs certainly on the way, businesses should consider adding cryptocurrency ETFs to their investment basket to attract a broader customer base and capitalize on the growing interest in digital assets. Moreover, in 2024, businesses need to collaborate with experienced cryptocurrency experts, not to mention financial regulators, to navigate the complexities of this emerging trend. ETFs that track crypto will remain relatively volatile, given the nature of the asset they’re tracking is also volatile. Finally, businesses that offer crypto ETFs should also develop educational resources to help their clients understand the working, risks and potential rewards of ETFs when compared to investing directly in the crypto space.
Trend 4: Advances In Blockchain Layer-2 Solutions Will Drive Crypto Use Cases
Another critical trend that aims to improve the underlying technology of cryptocurrencies, that is blockchain, is scaling through Layer-2 solutions. If you’re unaware, Layer-2 scaling solutions refer to the technology that runs on top of a blockchain protocol to improve its speed, performance and efficiency. It will allow competing blockchains to improve their cryptocurrency offerings in the long run. So how is this trend influencing crypto projects in 2024?
Well, scalability has always been a crucial challenge for blockchain projects since inception. As more users adopt their token, transaction rates and processing load increase, which increases the demand for scalability. In 2024, the widespread adoption of Layer-2 solutions will significantly improve the scalability of blockchain networks, enabling faster, smarter and cheaper cryptocurrency transactions.
The Layer-2 scaling upgrades such as the Lightning Network for Bitcoin and the Ethereum 2.0 upgrade, called Serenity, are current examples of this trend in action.
“The adoption of layer 2s is validation for Ethereum's roadmap, and will further cement ETH as settlement money,” says Chris Burniske, Partner at Placeholder VC, about Ethereum’s Layer-2 upgrades. In fact, the largest Layer-2 solutions on the Ethereum blockchain network, Arbitrum and Optimism, have a higher-than-average TVL (total value locked), with $5.9 billion and $2.8 billion, respectively. This highlights the fact that users are leaning towards cryptocurrency projects that focus on upgrading and improving their blockchain’s Layer-2 solutions.
TechDogs’ Takeaway: Blockchain leaders are always on the lookout for strategies to enhance the performance of their projects and Layer-2 scalability will play an important role on that front. They must invest resources in researching and testing various Layer-2 solutions to identify the one that best aligns with the project's scalability goals. Moreover, crypto/blockchain projects need to develop a clear adoption strategy that not only leverages the technical benefits of Layer-2 scalability but finally results in an improved user experience. Lastly, collaborate with other blockchain leaders within the crypto space to help develop interoperable Layer-2 standards to ensure a future with seamless integration with diverse blockchain ecosystems.
Trend 5: Increased Regulation In The Crypto Space Will Culminate In CBDCs
Remember the FTX implosion in November 2022? It was a major turning point in the crypto landscape as it highlighted its unregulated nature. Hence, governments and financial regulatory bodies will have a major say in the cryptoverse in the coming years. In 2024, we may finally see CBDCs (central bank digital currency) enter the mainstream and challenge the crypto industry.
In 2024, many countries will likely develop more comprehensive cryptocurrency regulations, trying to strike a balance between consumer protection and FinTech innovation. Not only will clearer regulatory frameworks attract institutional investors (Trend 3) but it will boost investor confidence in digital currencies. A sure way to achieve this will be through the introduction of CBDCs!
CBDCs or central bank digital currencies refer to virtual currency that is centralized and managed by central banks as opposed to private decentralized blockchains used in cryptocurrencies. Governments hope that this unique currency will offer the benefits of crypto without the inherent risks. For instance, China is currently testing its CBDC called digital yuan or e-CNY and so far, it has seen significant adoption, being used in transactions totaling $13.9 billion. Even countries with unregulated crypto spaces, such as India, Canada and Saudi Arabia, have introduced pilot initiatives to see the real-world adoption of CBDCs.
However, cryptocurrency exchanges believe that CBDCs would destroy the decentralized and anonymous nature of cryptocurrencies. According to Marta Belcher from the Filecoin Foundation, “CBDCs are a nightmare for civil liberties. They put governments at the center of every transaction, giving governments visibility into financial transactions and the ability to revoke money. This is the exact opposite of the purpose of cryptocurrency technology.” Hence, 2024 will be a critical test for governments and crypto projects alike, with the concept of CBDCs gaining traction.
TechDogs’ Takeaway: CBDCs will have a major impact on the crypto space – whether it will be a positive change or not remains to be seen in 2024. To stay prepared for the change, financial technology businesses should explore CBDCs as a means to diversify their assets, which can help in reducing volatility since CBDCs are backed by the government. Furthermore, consumers should consider investing in CBDCs as part of their balanced investment strategy. Think of them as the stablecoins of the fiat-crypto ecosystem! Finally, businesses that rely on fiat currency should look to develop innovative financial services tailored specifically for CBDCs, as using CBDCs for digital transactions such as lending, remittances and cross-border transactions will be beneficial compared to traditional fiat money.
There we have it – the top 5 Cryptocurrency Trends of 2024!
Despite its volatile and somewhat unpredictable nature, crypto is quickly becoming a mainstream financial technology. Yet, crypto is far from its final form – that’s to say, innovations and breakthroughs continue to reshape the world of crypto!
From “downs” such as the ongoing crypto winter and potential launch of CBDCs to “ups” such as crypto ETFs, NFTs and Layer-2 scaling solutions, the world of crypto keeps on changing – one step at a time. We hope this article made you ready to stay with the times in the ever-evolving world of crypto!
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