Crypto investment firm Pantera Capital has recently released a report titled “The Year Ahead”. According to the report, the cryptocurrency market started 2024 with a renewed sense of purpose, having successfully navigated through the challenges of a tumultuous 2023. Bitcoin has managed to regain its dominance, while altcoins, the diverse and dynamic contenders, are expected to experience a potential surge during the later stages of the bull cycle.
Bitcoin has recently become more active after a period of inactivity. Its market share, which had fallen to 38% in January 2023, has gradually increased to 52% by December. This increase in activity can be attributed to several factors, such as the upcoming fourth Bitcoin halving which is scheduled for April 2024. The Bitcoin Halving is expected to reduce the supply of new Bitcoin, possibly driving up its price.
Additionally, potential ETF approvals could make it easier for new investors to enter the market. Also, new programmability features like Ordinals and Bitcoin L2s are making it possible to create advanced smart contracts and DeFi (Decentralized Finance) applications on the Bitcoin network, which could lead to a “DeFi Summer 2.0.”
While Bitcoin basks in the limelight, altcoins are quietly preparing for their moment in the sun. Pantera Capital, a leading crypto investment firm, highlighted a historical trend: altcoins have consistently outperformed Bitcoin in the later stages of bull cycles. This “Phase 2” phenomenon could unfold once again in 2024, with altcoins boasting strong unit economics and genuine product-market fit leading the charge. However, investors are advised to be discerning, as outperformance will likely occur on a case-by-case basis, not across entire sectors.
The story of 2024’s crypto scene goes far beyond the familiar binary of Bitcoin and altcoins. Innovative projects like friend.tech are merging social media and finance through tokenized social experiences, leading to new tokenomics models and revolutionizing online interactions.
Additionally, tradFi-DeFi convergence is on the horizon, with institutional investors knocking on the door, and stablecoins playing a crucial role in bridging the gap between traditional finance and the decentralized world. Tokenized real-world assets are set to become more commonplace, blurring the lines between the physical and digital realms.
Modular blockchains and Zero-Knowledge Proofs advancements aim to revolutionize scalability and smart contract composability, making on-chain applications faster, cheaper, and more efficient. Computationally intensive applications like AI and DePIN could finally become viable on-chain, opening up a world of possibilities as gas fees plummet on various L2s.
In the world of public blockchains, bigger ecosystems such as Arbitrum, Optimism, and Solana are likely to dominate. But smaller L2s can still succeed by focusing on specific areas and becoming “appchains” or “sector-chains.” This can lead to a “hub-and-spoke” model, where established public chains serve as central hubs for a network of specialized appchains.
