Bitcoin, Layer 2, RWA: 7 Crypto Trends in 2024

Our article delves into the most promising cryptocurrency trends for 2024, shedding light on the market dynamics that could shape the industry.

As of press time, the cryptocurrency market is overwhelmingly positive. Altcoins are on the rise, a Bitcoin ETF has been successfully launched, and there have been few closures or bankruptcies among crypto projects in the past three months.

The upcoming Bitcoin halving, expected in March-April 2024 (the exact timing fluctuates due to the varying speed of block formation in the Bitcoin network), will see mining rewards drop from 6.25 to 3.125 BTC per block. While halving doesn’t have a direct impact on Bitcoin's price, it does reduce mining profitability, which may lead miners to hold onto their assets rather than sell at a loss, potentially creating a shortage in the market and positively affecting the price. 

From a macroeconomic perspective, if the Federal Reserve opts to lower interest rates in 2024, it could further bolster the cryptocurrency market.

All these factors suggest that the chances of Bitcoin continuing its upward trend in 2024 are quite substantial.

While Bitcoin is the pioneering cryptocurrency, it falls short in some areas compared to altcoins. However, the Bitcoin network is undergoing refinement and its ecosystem is broadening. Key developments in the Bitcoin ecosystem likely to gain traction in 2024 include:

• The Lightning Network (an L2 network for rapid transactions);
• Ordinals;
• Cross-chain protocols;
• Decentralized exchanges, like Thorchain.

Data from DeFiLlama reveals that Bitcoin's Total Value Locked is a mere $307 million, a modest figure against its $800 billion market capitalization. Historical trends suggest that with strategic approaches, even a network as slow and conservative as Bitcoin can adopt new functionalities, potentially impacting its use this year.

Traditional NFTs are losing their appeal, evident from the reduced liquidity, trading volumes, and token prices. Real World Assets (RWAs) could form a crucial link between the physical world and the blockchain domain. RWAs could encompass areas such as:

• Real estate;
• Movable property;
• Stablecoins;
• Corporate stocks, bonds, and securities;
• Collectibles and valuables.

For more details, refer to our dedicated article. Presently, the RWA sector's TVL exceeds $6 billion, a significant rise from $2.5 billion just three months ago. The ecosystem's expansion rate could escalate with the introduction of new projects and favorable market conditions.

As per Ultrasounds Money, Ethereum's yearly deflation is at 0.6%, with more ETH being burned annually than produced. Ethereum continues to lead in the DeFi sector with a total TVL of $30 billion.

Some analysts forecast a surge in Ethereum's growth, potentially overtaking Bitcoin's market cap. This could be possible if Ethereum resolves its key issues of limited throughput and high transaction fees.   

Currently, the average weekday Gwei on the Ethereum network hovers around 60-80. However, the user base and locked funds in various Layer 2 solutions are on the rise. Notable blockchains in this segment include:

• Optimism;
  
• Arbitrum;
• Polygon;
• Metis;
• ImmutableX.

These networks offer an appealing architecture not only for traders but also for developers, who prefer them over Ethereum for launching applications. Additionally, the absence of a native token in many Layer 2 solutions is drawing attention, partly due to the potential of retroactive airdrop.

The year 2023 witnessed a remarkable upsurge in the SocialFi space with the introduction of Friend.tech. This platform empowers users to interact with their favorite celebrities and influencers. As reported by CoinGecko, the SocialFi sector's TVL reached $3.5 billion.

For 2024, a significant development in similar projects is anticipated. For example, Dmail has revealed plans to launch its own token, mirroring the initiative taken by the DeBank app. Such developments serve as powerful growth and liquidity catalysts for the entire ecosystem.

2023 was characterized by the prominence of retroactive airdrops. Projects like Starknet and LayerZero have announced their drops, but many leading projects are yet to introduce their own tokens. These include:

• ZkSync;
• Scroll;
• Arbitrum Nova;
• Linea.

This trend is not limited to standalone cryptocurrency networks; numerous DeFi projects, such as Orbiter, Holograph, Kinza, MarginFi, and Aevo, are gearing up for their own token releases and airdrops. These initiatives are poised to benefit both users and traders alike.

The launch of ChatGPT marked a pivotal moment, sparking the creation of various AI-powered cryptocurrency protocols, including:

• Trading bots;
• Analytical platforms;
• Liquidity aggregators;
• Marketing tools;
• Launchpads.

Despite many projects initially riding the hype wave for quick gains, the potential within the artificial intelligence domain is undeniably significant. A key challenge for crypto startups will be to drive demand for their internal tokens and build enough utility to ensure these assets stay in demand.