Pantera’s Paul Veradittakit's 6 Crypto Predictions for 2024

• Blockchain's Resilience and Growth in the Past Year
• Notable Events in 2023
• Predictions for the Crypto Industry in 2024
• 1. The Return of Bitcoin and the Second DeFi Summer
• 2. Tokenized Social Experiences for New Consumer Use Cases
• 3. Increase in TradFi-DeFi "Bridges"
• 4. Cross-Pollination of Modular Blockchains and Zero Knowledge Proofs
• 5. More Computationally Intensive Applications Moving On-Chain
• 6. Consolidation of Public Blockchain Ecosystems and a Hub-and-Spoke Model for Appchains
• Conclusion

Blockchain's Resilience and Growth in the Past Year

Blockchain has proven its resilience and capacity for recovery in the face of adverse external conditions over the past year. From the low point of the "crypto winter" at the start of the year, the overall market cap of the cryptocurrency space has seen a 90% growth to $1.69 trillion. Bitcoin$42,260 -0.64%, in particular, more than doubled from its yearly low of $16k in January 2023, reaching over $40k in December of the same year.

Notable Events in 2023

Throughout 2023, the cryptocurrency space experienced both the aftershocks of significant collapses in 2022 and groundbreaking developments. Key incidents included the FTX$3.28 -5.38% trial and verdict, the Binance plea deal in November, and the temporary depegging of the USDC stablecoin in March during a banking crisis. On a positive note, there were a series of breakthroughs, including Ethereum$2,315 -2.42%'s Shapella upgrade to a fully Proof-of-Stake network in March, the ruling in July that XRP$0.620 -1.68% was mainly not a security, the launch of PayPal's PYUSD stablecoin, Grayscale's win over the SEC for the Bitcoin spot ETF in August, and the rise of Friend.tech, which pioneered tokenized social experiences.

Predictions for the Crypto Industry in 2024

1. The Return of Bitcoin and the Second DeFi Summer

In 2023, Bitcoin made a comeback, with its market cap dominance going from 38% in January to around 50% in December. Looking forward to 2024, there are at least three significant catalysts driving its revival: the fourth Bitcoin halving due in April 2024, the anticipated approval of several Bitcoin spot ETFs from institutional investors, and a rise in programmability features on both the base protocol and Layer 2s and other scalability layers like Stacks and Rootstock.

On an infrastructural level, there is the expectation of a proliferation of Bitcoin L2s and other scalability layers to support smart contracts. Additionally, the fundamentals are set for a potential "DeFi summer 2.0" on Bitcoin. Bitcoin NFTs, such as those inscribed on Ordinals, may also gain popularity in 2024.

2. Tokenized Social Experiences for New Consumer Use Cases

There is a shift from social to finance in Web2 while Web3 moves from finance to social. Friend.tech pioneered a new form of tokenized social experiences in August 2023, enabling users to buy and sell fractionalized shares of others' Twitter accounts. In the coming year, we expect more experiments in the social space, with tokens playing a key role in reinventing the social experience.

3. Increase in TradFi-DeFi "Bridges"

2023 has seen an increase in institutional interest and potential ETF approvals for Bitcoin and Ethereum. In 2024, we expect a dramatic increase in institutional adoption and the tokenization of real-world assets and TradFi financial products. This will create TradFi-DeFi "bridges" that bring these worlds closer together for increased liquidity and diversification for investors.

4. Cross-Pollination of Modular Blockchains and Zero Knowledge Proofs

The concepts of modular blockchains and Zero Knowledge Proofs (ZKPs) have matured significantly over the past year. This trend is expected to continue into the next year, with ZKPs serving as an interface between different components of the modular blockchain stack. This will provide developers with a greater flexibility for providers and reduce the barrier to entry for the blockchain stack.

5. More Computationally Intensive Applications Moving On-Chain

As the scalability problem for decentralized applications has largely been addressed, we believe that computationally expensive applications will become more economically feasible on-chain in the near future. This includes vertical applications such as on-chain AI systems, Decentralized Physical Infrastructure Networks (DePIN), on-chain knowledge graphs and fully on-chain games and social networks.

6. Consolidation of Public Blockchain Ecosystems and a Hub-and-Spoke Model for Appchains

There has been a growth in infrastructure projects over the past few years. Liquidity serves as a concentrating force for general-purpose public blockchains, benefiting larger incumbent players. Smaller ecosystems must concentrate their efforts on specific verticals to maintain a competitive edge. Moreover, most leading general-purpose public blockchains have released appchain toolkits to allow appchains to tap into the liquidity on these public networks.

Conclusion

Edited by Jonathan Stoker