The crypto industry is constantly evolving and innovating, with new developments and trends emerging every day. As we entered a new year, what are the key narratives and metrics that will shape the crypto landscape in 2024? Binance Research, the leading provider of crypto insights and analysis, has compiled a comprehensive report on the top crypto trends to follow in the coming months. Here are some of the highlights.
Bitcoin: The King of Crypto
Bitcoin, the first and most dominant cryptocurrency, has had an eventful year in 2023, with major developments across the entire spectrum of the investment landscape. On the crypto-native side, we saw the emergence of the Ordinals protocol, which enabled new innovations such as inscriptions – often called “Bitcoin NFTs” – to gain prominence. On the traditional finance side, the optimism surrounding seemingly imminent spot bitcoin ETF approvals in the U.S. has led to more traditional institutional investors setting their sights on the cryptocurrency ecosystem.
As of December 5, 2023, the market capitalization of BTC had risen 162% year-to-year, outperforming many other key assets and indices, both traditional and crypto. Some of the most significant BTC developments to follow in 2024 include the following.
- U.S. spot BTC ETF approvals: The U.S. Securities and Exchange Commission (SEC) is currently reviewing 13 applications for spot bitcoin exchange-traded funds (ETFs), which would track the price of the underlying asset directly, unlike the existing futures-based ETFs. A spot bitcoin ETF would make it easier and cheaper for investors to gain exposure to bitcoin, without having to deal with the complexities and risks of buying and storing the cryptocurrency themselves. It would also attract more institutional and retail investors, as well as increase the liquidity and legitimacy of the crypto market. The earliest final deadline for the SEC to rule on a spot BTC ETF is set for January 2024, while the latest comes in August.
- Bitcoin halving: Bitcoin miners are incentivized to validate transactions and secure the blockchain through two mechanisms: block rewards and transaction fees, with the former traditionally accounting for the majority of miners’ income. The bitcoin halving is a process that reduces the amount of new bitcoins created and distributed to miners every 10 minutes. The halving occurs every four years, or every 210,000 blocks, and is designed to limit the supply of bitcoin and increase its scarcity. The bitcoin halving has historically been a bullish event for the cryptocurrency, as it reduces the inflation rate and increases the demand for the limited supply of bitcoins. The previous two halvings, in 2016 and 2020, were followed by massive price increases in the subsequent years. The 2023 halving has been no exception, as bitcoin has reached new heights in 2024.
- Ordinals and inscriptions: Ordinals is a protocol that enables the creation of unique identifiers for any bitcoin transaction output, which can then be used to attach metadata and proofs of ownership. These identifiers are called ordinals, and the metadata and proofs are called inscriptions. Ordinals and inscriptions can be used to create various types of digital assets on top of Bitcoin, such as non-fungible tokens (NFTs), domain names, identity systems, and more. Ordinals and inscriptions are also compatible with the Lightning Network, a layer-2 solution that enables fast and cheap bitcoin transactions. Ordinals and inscriptions have opened up new possibilities for innovation and experimentation on the Bitcoin network, and have attracted the attention of many developers, artists, and collectors.
DeFi: The Future of Finance
Decentralized finance (DeFi) is a term that encompasses various applications and protocols that aim to provide financial services without intermediaries, using blockchain technology and smart contracts. DeFi has been one of the most explosive and transformative trends in the crypto industry, offering users more control, transparency, efficiency, and access to financial products and markets.
The DeFi market has continued to grow and mature in 2023, with a 10% increase in total value locked (TVL) over the month of November. TVL is a metric that measures the amount of crypto assets that are locked in DeFi protocols as collateral, liquidity, or staking. As of December 5, 2023, the TVL of DeFi was $1.2 trillion, accounting for 14.5% of the total crypto market capitalization.
Some of the most notable DeFi developments to follow in 2024 include the following.
- Ethereum 2.0: Ethereum is the leading platform for DeFi, hosting the majority of DeFi applications and protocols. Ethereum is currently undergoing a major upgrade, called Ethereum 2.0, which aims to improve the scalability, security, and sustainability of the network. Ethereum 2.0 will transition the network from a proof-of-work (PoW) consensus mechanism, which relies on miners to validate transactions and produce new blocks, to a proof-of-stake (PoS) consensus mechanism, which relies on validators to stake their ether (ETH) tokens and participate in the network. Ethereum 2.0 will also introduce sharding, a technique that splits the network into multiple parallel chains, called shards, that can process transactions simultaneously. Ethereum 2.0 is expected to significantly increase the throughput, speed, and efficiency of the network, as well as reduce the energy consumption and environmental impact. Ethereum 2.0 is being rolled out in phases, with the first phase, called the Beacon Chain, launched in December 2020. The second phase, called the Merge, which will merge the current Ethereum mainnet with the Beacon Chain, is expected to happen in early 2024. The third phase, called Shard Chains, which will implement sharding, is expected to follow later in 2024.
- Layer-2 solutions: Layer-2 solutions are protocols that operate on top of a base layer blockchain, such as Ethereum, and aim to provide faster, cheaper, and more scalable transactions, without compromising security or decentralization. Layer-2 solutions use various techniques, such as sidechains, state channels, plasma, rollups, and more, to offload some of the computation and storage from the base layer to the second layer, and only periodically settle the final state on the base layer. Layer-2 solutions have become increasingly popular and necessary in the DeFi space, as the demand for DeFi applications and protocols has outstripped the capacity of the base layer, leading to high fees and congestion. Many DeFi projects have already integrated or are planning to integrate layer-2 solutions, such as Arbitrum, Optimism, Polygon, zkSync, and more, to offer their users a better experience and performance.
- Cross-chain interoperability: Cross-chain interoperability is the ability of different blockchains to communicate and exchange data and value with each other, without intermediaries or centralized bridges. Cross-chain interoperability is essential for the DeFi space, as it enables users to access a wider range of financial products and services across different platforms and ecosystems, and to leverage the unique features and advantages of each blockchain. Cross-chain interoperability also fosters innovation and collaboration among DeFi projects and communities, creating a more diverse and robust DeFi landscape. Some of the leading projects and protocols that enable cross-chain interoperability in the DeFi space include Cosmos, Polkadot, Avalanche, Binance Smart Chain, and more.
NFTs: The New Frontier of Digital Art and Culture
Non-fungible tokens (NFTs) are unique and indivisible digital tokens that represent ownership and provenance of digital or physical assets, such as art, music, games, collectibles, and more. NFTs have been one of the most exciting and disruptive trends in the crypto industry, creating new forms of digital art and culture, and empowering creators and collectors to monetize and showcase their work.
The NFT market has exploded in 2023, with a 15% increase in total sales volume over the month of November. As of December 5, 2023, the total sales volume of NFTs was $8.7 billion, representing a staggering 2,700% increase year-to-year. The NFT market has also seen a surge in diversity and innovation, with new categories, platforms, and communities emerging every day.
Some of the most fascinating NFT developments to follow in 2024 include the following.
- Metaverse: The metaverse is a term that describes a collective virtual shared space, where users can interact with each other and with digital content, using avatars, virtual reality, augmented reality, and more. The metaverse is seen as the next evolution of the internet, and the ultimate destination of the NFT space, as it offers a rich and immersive environment for NFT creation, consumption, and exchange. The metaverse is also a fertile ground for social and economic activity, as users can form communities, express themselves, play games, create value, and more. Some of the leading projects and platforms that are building and exploring the metaverse include Decentraland, Sandbox, CryptoVoxels, Axie Infinity, and more.
- DAOs: Decentralized autonomous organizations (DAOs) are entities that are governed by a set of rules encoded in smart contracts, and operated by a community of stakeholders, without the need for a central authority or intermediary. DAOs are a powerful and innovative way to organize and coordinate collective action, resources, and decision-making in a transparent, democratic, and efficient manner. DAOs are also becoming increasingly relevant and influential in the NFT space, as they enable NFT creators and collectors to form communities, pool funds, curate collections, support causes, and more. Some of the prominent DAOs in the NFT space include Flamingo DAO, PleasrDAO, FWB, and more.
- Music NFTs: Music NFTs are NFTs that represent ownership and rights to music and audio content, such as songs, albums, podcasts, sound effects, and more. Music NFTs have the potential to revolutionize the music industry, by giving artists more control, creativity, and revenue over their work, and by giving fans more access, engagement, and participation in the music they love. Music NFTs can also incorporate various features and benefits, such as royalties, streaming, remixing, gamification, and more. Music NFTs have been gaining popularity and momentum in 2023, with many artists, labels, and platforms embracing and experimenting with them. Some of the notable examples of music NFTs include Kings of Leon’s NFT album, Audius’s NFT integration, and Illenium’s NFT drop.
These are some of the top crypto trends to follow in 2024, according to Binance Research. You can read the full report here for more details and insights. The crypto industry is always evolving and innovating, so stay tuned for more updates and developments from Binance and the crypto community.
