With 2024 well underway, we cast an eye forward to the dominant themes that will shape the next 11 months in the crypto space. In this special edition of ProBit Bits, we provide five major predictions that we believe will play a major part in defining the blockchain landscape. From the acceleration of Layer 2 networks, to bullish sentiment around Bitcoin, several factors point to an upbeat year for continued blockchain adoption. In an industry filled with promise and uncertainty, we round off our prediction with one major narrative that will rise above them all – keep reading to find out what it could be.
Bitcoin Price To Hit New Highs
There are strong indicators that 2024 could be a momentous year for Bitcoin's price trajectory, with some analysts predicting it may surpass $100,000 for the first time. Scheduled to take place in April, the fourth Bitcoin halving will further cement BTC's position as a scarce, deflationary digital asset. By slashing rewards for miners in half, this pivotal event heralds the beginning of a new bull market cycle if history repeats itself.
Halvings have historically ignited meteoric price rises due to their impact on Bitcoin's supply-demand dynamics. With each occurrence, buyers seek to acquire the fixed supply of BTC before inflation slows further. The growing anticipation around this April's event is priming the market.
Additionally, the long-awaited approval of spot Bitcoin ETFs in the US removes major barriers to institutional adoption. Regulated funds will give cautious macro investors their first true means to simply gain exposure through traditional exchanges. Major firms like BlackRock stand ready to onboard their colossal pool of capital.
As US regulators embrace spot Bitcoin products, global institutions will feel increasing confidence to participate. This watershed moment for mainstream acceptance could unlock unprecedented new demand. Some projections estimate ETF inflows totaling $14 billion in the first year alone.
With major 2024 tailwinds of the halving and ETF approvals aligning, all conditions seem ripe for Bitcoin to achieve new highs. If history repeats, breaking six figures would represent typical post-halving bull market behavior and cement BTC as a fixture within mainstream portfolios.
Layer 2 Projects Set To Run
There are several factors indicating that 2024 will be a breakout year for Layer 2 networks. As blockchain technologies continue to evolve and find broader commercial applications, the need for scalable solutions is imperative. Layer 2 protocols provide an efficient and effective path towards solving the blockchain trilemma of security, decentralization, and scalability.
Projections anticipate significantly higher transaction volumes and network activity across decentralized networks like Ethereum in 2024. However, Layer 1 congestion and costs remain prohibitive barriers. Layer 2s address this by conducting operations off-chain, enabling far greater throughput while maintaining security. Solutions like Optimistic and Zero Knowledge Rollups are poised to gain widespread adoption as they seamlessly enhance networks like Ethereum and Bitcoin.
Major Layer 2 networks like Arbitrum, Optimism and Polygon have already established sizable total value locked and strong user bases. But significant platform upgrades, multi-chain compatibility and integration of advanced features are likely to supercharge user growth. Attention and developer activity has also accelerated around networks like ImmutableX optimized for NFTs and games.
Traditional investors have demonstrated growing interest in regulated crypto investment vehicles like ETFs to be approved in 2024. Layer 2 networks will be integral to fostering both institutional and independent use-cases seeking improved efficiency and scalability over Layer 1 limitations. Layer 2 progress is also crucial for Web3 initiatives demanding enterprise-level throughput like metaverses and blockchain games. Their advancement depends on secure, high-performance networks capable of supporting high transaction volumes - an area Layer 2s are uniquely solving through off-chain processing.
Governments To Go All-In On CBDCs
The coming year will see central banks and governments significantly ramp up their efforts to develop and implement central bank digital currencies. After long being viewed more cautiously, digital currencies are now increasingly seen as opportunities rather than threats by public sector officials. As CBDCs and regulated digital assets progress, viable use cases and applications are emerging that major jurisdictions want to capitalize on.
In 2024, central banks will engage heavily in experimenting with different CBDC models and testing functions across both retail and institutional contexts. They will explore solutions for optimizing interoperability between CBDCs and other regulated currencies like tokenized bank deposits and stablecoins. With regulatory frameworks being established for these assets in many regions, the emphasis on integrating compliant models will intensify.
Countries like South Korea plan to pilot programs involving hundreds of thousands of citizens to evaluate the user experience of CBDCs in real transactions. As digital payments rise globally, governments recognize the need to introduce scalable solutions catering to public demand.
With the financial sector modernizing to leverage the digital asset space, central banks will be looking to establish their role in maintaining sovereignty over money issuance. The next year will see coordination between public and private sectors ramp up to develop inclusive, well-regulated CBDCs that complement existing payment rails as society moves increasingly online.
NFT Comeback Looms Large
All the indicators point to NFTs making a strong comeback in 2024. While trading volumes declined for most of 2023, October marked a turning point where monthly volumes finally increased rather than decreased. This uptick gained momentum in November, signaling growing optimism among buyers and sellers.
Perhaps most notably, November saw Bitcoin NFTs achieve the highest trading volumes of any blockchain for the first time. This success of Bitcoin-based collectibles highlights increasing innovation that is expanding the uses of NFTs beyond basic profile pictures and artwork. As new applications continue to emerge, they will bring in more segments of the population as interested consumers and creators.
Major brands and retailers are also playing a bigger role by launching NFT collections and initiatives. These high-profile partnerships increase accessibility and exposure. As mass-market NFTs become more commonplace in 2024, they will normalize the technology for the general public and breed familiarity.
Meanwhile, many long-awaited blockchain-based games are set to fully launch next year. As gamers begin to appreciate the benefits of true digital ownership of in-game items, these titles are poised to be significant drivers of NFT adoption. Successful games could even revive interest in speculative purchasing of virtual assets.
With a more positive market sentiment emerging, ongoing innovation, and greater mainstream infiltration, the outlook for NFT trading volumes and creativity appears bright heading into 2024. The sector seems primed to reclaim momentum and push further into the commercial mainstream.
Among All The Narratives, AI Will Come Out On Top
The convergence of AI and cryptocurrency is gaining significant momentum as a new narrative poised to take center stage in 2024. As evidenced by the recent surge in interest and strength of AI-related token performance, more attention is coalescing around this synergy of technologies.
Several factors indicate that AI will rise as the premier narrative of 2024. The integration of AI stands to revolutionize various industries by leveraging machine learning, predictive analysis and other core technologies. Several innovative projects are already demonstrating promising use cases across healthcare, finance, logistics and other sectors.
Investor appetite for AI projects has also strengthened considerably. The report found funding for AI-related web3 projects surged to $298 million in 2023 alone, double the total funding amount from the previous seven years combined. Meanwhile, top AI coins significantly outperformed flagship cryptocurrencies like Bitcoin and Ethereum over the past year.
Moreover, AI has the potential to democratize access to sophisticated models through decentralized protocols. Simultaneously, the rise of RWA tokenization enhances the appeal of blockchain technology for off-chain assets and enterprises. These trends broaden the scope and utility of the technology. Heightened investor interest in AI tokens through 2023 suggests continued momentum into the new year. Rising funding amounts accelerate the development of impactful applications. This follows the global public's surging interest in AI, highlighted through 2023 Google search trends that outpaced even "crypto."
As AI addresses challenges around scalability, data migration, and seamless usability, it lifts user experience to appeal to a wider audience. Projects delivering these types of solutions appear well-positioned to lead. The synergies between AI and crypto are giving rise to tangible opportunities presenting both returns and disruption.
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