What do the leading institutions think of the bull market outlook for 2024?

Written by: Huo Huo

2024 is a promising year for the encryption market. All eyes are focused on new tracks worthy of attention in the encryption field, including leading institutions.Various institutions have published their own research reports at the beginning of the year, looking forward to 2024 from a professional and detailed perspective, which is of great reference value.

vernacularBlockchainI reviewed the research reports of 23 leading institutions (including Messari, a16z, Coinbase, MT Capital, etc.) and tried to summarize and find "institutional consensus" to increase certainty. It is summarized as follows:

The top ten tracks that are generally optimistic

1) Bitcoin ecological renaissance

After the launch of Ordinals (a digital content encoding method based on Bitcoin) in December 2022, it triggered an ecological craze for inscriptions and Bitcoin. In 2023, the Bitcoin ecosystem will develop strongly, and Bitcoin’s dominant position will becryptocurrencymarket capitalization) rose from 38% in January to around 50% in December, making it one of the most noteworthy ecosystems in 2024.

Institutional forecasts are also generally optimistic about the development of the Bitcoin ecosystem this year:

Major U.S. crypto index fund management companies Bitwise It is predicted that the Bitcoin trading price will exceed $80,000 in 2024;

CoinbaseIt is believed that, at least in the first half of 2024, the main focus of institutional investment will continue to be on Bitcoin, because the passage of ETFs will give traditional investors a strong demand to enter this market.

The forecasts of other institutions are also optimistic. The main reasons are:

The U.S. Securities and Exchange Commission (SEC) has approved a spot Bitcoin ETF, and the next big event, the Bitcoin halving event in April, is coming, and supply and demand are expected to change significantly;

The Bitcoin ecosystem will see infrastructure upgrades, the addition of programmable features, including the development of basic protocols (such as Ordinals), as well as layer 2 and other extensible layers (such as Stacks and Rootstock).

2) Ethereum L2 development of

In addition to the Bitcoin ecosystem, Ethereum serves as an intelligentcontractThe founder of Ethereum Layer 2, the development of Ethereum Layer 2 is also the highlight of the predictions of various institutions in 2024, especially with Vitalik releasing the Ethereum 2024 roadmap and the Cancun upgrade approaching, Ethereum Layer 2 projects such as ARB and OPTokenThere has been a surge recently.

Competition in the public chain ecosystem has always been fierce. In 2023, public chain ecosystems such as Solana and Avalanche have developed rapidly, and their momentum has even surpassed Ethereum. But Ethereum, as the leader, has also begun to exert its strength.Most of the predictions of various institutions are based on the completion of the Cancun upgrade, gas costs will further drop significantly, which can drive the explosion of the Ethereum Layer 2 ecosystem in 2024. Like Bitwise thinks EthereumBlockchainA major upgrade will bring average transaction costs below $0.01, laying the foundation for more mainstream uses.

If the upgrade is successfully implemented, some leading projects of Ethereum Layer 2 (such as Optimism, Arbitrum, Base, etc.) can completely compete with other Layer 1 public chains in terms of performance.

Furthermore, according to Vitalik's vision, in the long run,Zero knowledge proofThe direction is the future of Ethereum Layer 2, and the two Layer 2 projects zkSync and StarkWare are also favored by everyone.

3) Development of Solana Ecosystem

In the past 2023, the Solana public chain ecosystem has performed well, both in terms of technology accumulation andCommunityetc., have laid a solid foundation for the long-term development of the Solana ecosystem, and the explosion of the Solana ecosystem has also attracted a large number of users and funds.

Various institutions predict that in 2024, more projects will choose or migrate to the Solana public chain, and the Solana ecosystem will continue to explode. Because, whether it is TPS, gas fees, orCommunityUsers, etc., Solana is more resistant to attacks.

The expectations of various market institutions for Solana in 2024 focus on the following aspects:

Solana’s technical upgrades, such as the development of light clients through Tinydancer, allow validators to complete verification work at a lower cost and achieve a higher degree of decentralization;

Solana's performance improvements, including improving throughput and performance, improving user experience, deploying new Token standards, etc., have enhanced its robustness;

The release of new products, the increase in on-chain liquidity, and the expansion of developer tools have promoted the prosperity of the Solana DePIN ecosystem.

4. DePIN (Decentralized Public Internet Network)

DePIN, or decentralized physical infrastructure network, is a new method of building and maintaining infrastructure in the real world. Its goal is to build decentralized networks in industries such as telecommunications, energy, mobile communications, and storage.In 2023, there are more than 650 DePINs with a market capitalization of over $20 billion and annual revenue of over $150 million.

An overview of DePin development in 2023

2024,cryptocurrencyData platform CoinMarketCap DePIN has been listed as an independent category, reflecting the encryption market’s high focus on this area.

DePIN covers a wide range of fields, including server networks, wireless networks, sensor networks and energy networks. Currently, various companies predict that the DePin track has huge growth potential. For example, according to predictions by encryption research institution Messari, the overall DePIN industry size is currently approximately US$2.2 trillion and is expected to grow to US$3.5 trillion by 2028.Messari also pays special attention to the following subdivided DePIN sub-tracks: cloud storage market, decentralized database, decentralized wireless network and related AI combination of.

However, while making predictions, various institutions also believe that the maturity of DePIN will require long-term investment and operational development by the market, institutions and developers before it can gradually penetrate into people's lives and applications and complement the existing infrastructure. Parallel, to substitution.

5)AI andBlockchaincombination of

The rapid development of artificial intelligence (AI) in 2023 also promotes AI+ web3 Development of services. In early January 2024, the market value of AI-related Tokens reached US$7.04 billion. In view of the increasing popularity of artificial intelligence, most forecasts are optimistic about using AI as a core function to enhance theBlockchainThe appeal of crypto platforms.

At present, the tracks that various institutions are more optimistic about are:

• Direct applications of AI in the field of encryption:Trading bots, automated payments and arbitrage bots combined with blockchain. Combined scenarios include AI Agent using encryption infrastructure for payment, smartcontractSafetyScheduling AI models, Token rewards individuals for fine-tuning models and collecting valuable data.Messari believes that advances in AI will increase the need forcryptocurrencySolution needs.

• Innovative applications of AI and cryptography:Here AI is used to improve the user experience and efficiency of Web3, and more blockchain technologies are used as guardrails and transparent layers for AI. For example, we have seen research and new use cases on zero-knowledge and machine learning (ZKML), games that allow users to train AI agents using ERC 6551, etc.

• Bankless analyst Jack Inabinet believes, crypto + artificial intelligence could be an explosive combination. While early activity was largely about promoting worthless projects to capitalize on the hype, the promise is still huge.

• Crypto Company DWF It is believed that by guiding social cognition and its limitations in centralized AI, decentralized AI has great development potential in 2024 and can lead the future of AI through Web3.

6) The outbreak of GameFi and the development of chain games

The blockchain games in 2021 and 2022 are in full bloom, developing from "Play to Earn" to "X to Earn", with smash hit projects such as Axie and Stepn emerging. In comparison, the blockchain games in 2023 are relatively bleak.However, with the improvement of infrastructure, various institutions are still optimistic about the future development of chain games.

After all, from the perspective of the traditional Web2 market, games are a very potential market and have almost become a part of many people's lives. Moreover, most traditional game users do not have much knowledge about the GameFi (Gaming) field. From a TVL perspective, as of the time of writing this article (2024.2.1), the TVL of the GameFi sector in the figure below is only US$19.6 billion.

Overview of TVL for each track, source: coingecko.com

From the perspective of GameFi's development space, what is mentioned more often is that GameFi is expected to have a larger narrative in 2024-2025 and will receive more attention.

for example Azuki Researcher Wale SwooshThink gaming will be one of the big trends that define 2024. Gaming has been and will always be a great Trojan horse when it comes to cryptocurrency applications, and there is no doubt that the Web3 gaming trend seen at the end of 2023 will not only continue next year, but become even more pronounced.

Kelvin Koh, co-founder and chief information officer of Spartan CapitalIt is believed that a number of AAA Web3 games will be launched in 2024, and it is believed that these games will bring millions of new Web3 users.

In general, various institutions are currently optimistic about GameFi mainly because of two points:

First, in 2024, blockchains focusing on games will continue to increase. In addition to some traditional and well-established public chains, new public chains such as Oasys and Sui have also joined them;

Second, the participation of large traditional game companies. For example, Oasys has attracted many well-known publishers to join its ecosystem, such as the well-known Ubisoft Entertainment (Ubisoft game software), Square Enix (a Japanese game software production, development company and publisher), Activision Blizzard (Activision Blizzard) , Epic Games and more.

7) Modularity andZero knowledge proofDevelopment of (Snark) technology

In 2023, modular blockchain andZero knowledge proof(ZKP) have been quite fully developed, such as Celestia, zkEVM, etc. And an obvious phenomenon is that these two narratives have begun to show a trend of integrated development. Projects in the ZK field have begun to carry out "modular" development in conjunction with specific vertical fields (such as co-processors, privacy layers, proof markets, and zkDevOps).

Spartan Managing Director Leeor Groen Think privacy and security in Web3Safetywill be a key driver as the technology evolves and will see users begin to realize the value of zero-knowledge proofs and modular blockchains that users don’t even know they rely on on the backend for applications ranging from digital identities to games. For these zero-knowledge proofs and modular blockchains.

A16z believes that the rise of modular technology stacks has brought about the greatest advantages of open source, modular technology stacks, as tools inspired by formal methods are adopted by developers andSafetyWidely adopted by experts, the next wave of intelligencecontractThe protocol is expected to be more robust and less susceptible to expensive hacks. The mainstreaming of SNARKs technology will become a trend.

Regarding the outlook for 2024, various institutions and researchers also expect this trend to continue.Zero-knowledge proofs will become the interface between different components of the modular blockchain stack. This provides greater flexibility for developers to build dapps while lowering the barrier to entry for blockchain stacks; for consumers, ZKP may be seen as a way to protect identity and privacy, such as with ZK-based decentralization form of identity.

Another important point to mention is that SNARKs can provide corresponding proofs for calculations that generate specific outputs, making the speed of verifying proofs much faster than the speed of performing corresponding calculations. It will become a key project in 2024.

8) Mobile terminal and decentralization trends may become mainstream channels, improving user experience.

Regardless of the type of crypto ecosystem, if it wants to develop in the long term, its ultimate goal is to attract new users and encourage existing users to become more active participants. With the recovery of the market, the improvement of infrastructure and the layout of various institutions, various institutions generally believe that there will be a large influx of encryption users in 2024.

Like a16z Chief Technology Officer Eddy Lazzarin Although user experience in the crypto space has been criticized, developers are actively testing and deploying new tools to reset the crypto front-end user experience, such as multi-party computation, simplified passing passwords for logging into applications and websites, embeddedwalletwait. These innovations will give users a better and more secure experience when using encrypted applications.Safetyenvironment of.

But overallXiaobai Navigation, the reasons why various institutions are optimistic mainly lie in the following two points:

On the one hand, a big theme that has emerged during the recent bear market cycle has been a focus on making crypto more user-friendly and easier to use. Manage cryptocurrencies and all related content (wallet, private keys, gas fees, etc.) are not for everyone, making it difficult for the industry to mature unless it can overcome some key challenges related to user experience. For example, around the development of account abstraction, etc., to promote the development of wallet recovery mechanisms and better create failsafes against simple human errors (such as losing private keys).

On the other hand, the Ethereum Cancun upgrade may reduce rollup transaction fees by 2-10 times, and it is believed that more Dapps may pursue the "Gas-free transaction" path, effectively allowing users to focus only on advanced interactions.

9) Regulatory policies

Over the past year, the entire crypto industry has faced increased regulation. As the development of the crypto industry expands, regulatory compliance is an inevitable issue..

Many institutions predict that in the new year, with the election of leaders in various countries, other regulatory policies will continue to be introduced.

digital assetsJi Kim, General Counsel and Global Policy Director, Council for Crypto Innovation (CCI) One of the bigger stories of 2024 will be that jurisdictions continue to compete for top status, competing to become a key hub for digital assets and the future financial system.

Gillian Lynch, Head of EU, Gemini Though opinions on cryptocurrencies and blockchain technology remain divided, the vast majority would agree that the crypto industry needs a regulatory framework that puts customer protection at its core while striking a balance between creating a clear and consistent rulebook that ultimately has Help promote innovation.

Ripple Chief Legal Officer Stuart Alderoty The SEC's lawsuit against Ripple is expected to end in 2024, but its regulatory strategy may continue to target other high-profile individuals. The U.S. Congress will work to reach an overall agreement on cryptocurrency regulation, but still needs to determine the best approach.

Less popular tracks

The more controversial tracks are RWA and NFT. Some predictions are bullish and some are bearish, and there are relatively few mentions.

1) NFT

Compared with the popular inscriptions, NFT has been in a downturn in 2023. With the exception of individual projects, the leading blue-chip projects have all fallen into a rebound rather than a reversal.Taking BAYC as an example, the average price at the beginning of the year reached 71 ETH, but by the end of the year, the floor price dropped to less than 30 ETH.

The pattern of the NFT market has also undergone tremendous changes. Blur competed fiercely with Opensea at the beginning of 2023. By the end of 2023, Blur almost monopolized the market share, while Opensea, which once dominated the market, only accounted for 20% of the market in weekly trading volume in December 2023. . Although Opensea has made products andCommunityFeedback, trying to withstand the onslaught of Blur, but with little effect. With the rise of Blur, the zero-royalty debate has gradually disappeared, and the discussion about "whether creators should receive royalties" has gradually faded away.

NFT trading platform market share comparison in 2023

Some organizations believe that consumer brands will use NFT to promote new models of user participation. NFT can continue to promote the liquidity of the collectibles and art markets. Especially if GameFi develops, NFT, as an important basic accessory, can also follow suit.Like A16z, it means that more and more well-known brands have begun to launch digital assets in the form of NFT to mainstream consumers. Entering 2024, the conditions for NFT to become a ubiquitous digital brand asset are already in place.

Some institutions believe that NFT transaction volume will be difficult to replicate the boom in 2021 because most NFT projects are more hyped and lack real cumulative value. NFT creators need to adjust their strategies to improve competitiveness.

2) RWA

Compared with NFT, there are more institutions that are optimistic about RWA:

The Block ResearcherIt is believed that Bitcoin spot ETFs have triggered a surge in institutional interest, and the bridge between DeFi and TradFi continues to widen. In turn, as more types of traditional financial elements enter the on-chain environment,Tokenized real-world assets are seeing greater adoption, hence the bullish outlook for RWA.

Bitwise Believing that RWA will set off a new trend, at the request of Wall Street, JP Morgan will conduct a review of the fundTokenization and wind it up.

Delphi Digital It is believed that RWA is one of the most successful areas of cryptocurrency in 2023 and will continue to develop in 2024.

In summary, their reasons are as follows:

It is helpful to build a communication bridge between traditional institutions and the crypto world.RWA tokenizes off-chain assets and converts them into blockchain digital assets that are easy to understand. Stablecoins are a common RWA application because of their tokenized expression based on fiat currency.

Many large institutions have increased investment in the field of RWA. At the same time, encryption projects like Chainlink are also cooperating with the world's largest traditional financial institutions to introduce a large number of RWA into the encryption industry and tokenize it.

RWA is building a financial ecosystem,Digital Tokens represent tangible assets that are easier to acquire and scalable to public users, not just privileged or institutional investors. RWA has a wide scope and can be divided into various categories such as private credit, treasury bonds, real estate, commodities, stable coins, insurance, etc., and has great application potential.

But less optimistic institutions believe:

As interest rates peaked, on-chain Treasury yields emerged. Cryptocurrency is pursuing the same or even greater returns that traditional financial investors pursue, but everyone's needs need to be further explored, and this will require a long development process, but it is difficult to have major development in 2024.

3) SocialFi

SocialFi is the fusion of social media and DeFi. From a macro perspective, Web2 has a tendency to shift from social to finance, while Web3 has a tendency to shift from finance to social.

Looking back at social media in Web2, it took Twitter 5 years to attract 100 million users and Facebook 8 years to reach 1 billion. SocialFi is still a relatively new concept in comparison.

The SocialFi track has attracted the attention of investors in the second half of 2021. Many projects such as Whale, Chiliz, Rally, BBS network, Showme, Mirror. However, as the overall market went bearish, SocialFi also died down.

It became popular again because in August 2023, friend.tech created a new form of social experience on Base Layer 2, where users can buy and sell other people's "shares" on X (Twitter). It reached a peak of 30,000 ETH TVL in October and inspired several copycat projects. Friend.tech pioneered a new token economics model for the SocialFi field by financializing Twitter profiles.

However, in these institutional forecasts, SocialFi's development prospects in 2024 are rarely mentioned. The occasional mention is because as the concept of decentralization continues to spread, more decentralized social media networks and tools will be launched. , but we can look forward to whether it can really break out of the circle.

Summarize

Overall, in 2023, the entire crypto industry has gone through the trough and despair of the bear market, and has begun to set off a bull market. The development of the public chain ecosystem led by Bitcoin has entered a new stage, with new narratives and new tracks taking turns to appear on the stage, laying the foundation for the next bull market.

The article comes from the Internet:What do the leading institutions think of the bull market outlook for 2024?

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