There are quite a number of expectations from 2024 from crypto market participants, considering the fact that 2023 was more of a sluggish interim year between a crypto winter and a highly-anticipated bull run. The market of digital assets is evolving and, given the fact that it already exists, there is no stopping its progress going forward. However, there are already a number of dominating trends that seem to be poised to take hold in 2024 and will like impact the entire market and the behavior of its participants for at least the period of the coming year, if not longer.

In the given material, we will explore the main trends that should be explored as the most likely directions and influencers of the crypto market for 2024.

Protracted Bear Market

The atmosphere of hostility that reigns throughout the media and international market frontiers is acting as the main trendsetter for the crypto market as well. With the service economy collapsing and many leading economies in themselves experiencing a downward shift into recession, if not depression, investors are not in a hurry to start injecting liquidity into such a volatile and dependent market as that of digital assets. Most investors are already fleeing the crypto market after having experienced losses in 2022 and 2023.

The crypto winter is ongoing and, if any economic historical data is of any indication, the forecast is that each such period lasts for at least 20 months, bringing with it a downfall of rates of up to 70%, if not more. With more 350 days currently in the given bear market cycle, there is still plenty of room for it to grow, given that such a short period witnessed some colossal shudders like the collapse of Terra Luna and FTX, to name a couple.

With the market cap down by 65% from 2021 highs in the same period, things may seem gloomy with 2024 on the horizon. But there are positive trends as well. First off, the price of Bitcoin saw an upsurge of up to 10% in recent weeks, a serious disapproval of the earlier forecasts that the king of cryptocurrencies would like below $15,000 by the end of 2023. This, and the 200-day moving average, indicate that Bitcoin can jump over the $35,000 resistance ceiling next year, dragging the rest of the market up with it.

Another important factor in favor of an impending Bitcoin appreciation is the next halving, which is set to take place in 2024.

NFTs Evolving Beyond Art

The current market of NFTs is stone cold, but that trend is likely to reverse in 2024, seeing as how interest in this type of digital assets is heating up with the promise of expanding use cases. Though the market cap of NFTs sank below 97% since the all-time-highs of 2021 and thousands of investors were left with worthless images of pixelated gorillas that had previously cost millions of dollars, it seems the NFT market is slowly recovering from the smearing reputation of a scam and hype-show.

A study by Verified Market Research states that 2030 will see the market cap of NFTs top the $231 billion mark, all thanks to the growing use of this type of asset in gaming. The real application of NFTs seems to be tied with the proof of ownership of digital in-game content, which was very well received by players of the blockchain gaming market.

Retail is also driving interest, with some global fashion houses still clinging to NFTs as a means of making their exclusive merchandise stand out. Nike and Adidas are pioneers in this regard, however, real estate is also leveraging NFTs as an instrument for granting proof of ownership and tokenization of assets. The trend is on the rise, especially in the US and the UK, delineating NFTs from their seemingly staple application as an art carrier.

Prevailing Uncertainty

There is no debating that the fallout from the collapse of exchanges and ecosystems like FTX and Terra Luna will not affect the crypto market in 2024. The domino effect is still ongoing and many exchanges are either shutting down or being consumed by the dominating players on the market.

The immediate impact was the outcry of millions of investors who demanded justice, but the real consequence was the introduction of Proof-of-Reserve measures and the widespread adoption of non-custodial wallets. Both of these trends are set to continue in 2024

However, the biggest impact is the reduction of workforces on the entire crypto market, with most exchanges laying out thousands of employees. Venture investments are also being cut, limiting available liquidity in the market and slashing hopes of a faster recovery as a result of loss of trust.

Regulatory Challenges

Picking up on the fallout from the collapse of FTX, regulatory pressure on both exchanges and the entire crypto market is sure to continue rising in 2024, becoming more sophisticated and far-reaching. Though the US is the trendsetter in this regard, its own regulatory framework for cryptocurrencies remains fragmented and undefined, while Europe has already implemented its MICA agreement.

The Biden administration is currently bogged down in geopolitical matters and the upcoming election campaign, leaving little time for such secondary tasks as the economy and cryptocurrency regulation. However, other countries are rapidly adopting their own frameworks and making them attractive havens for crypto projects of all types as a result.

The Climate Impact

Though already mentioned many times ever since the outset of the first Bitcoin mining farms on an industrial scale, the impact of cryptocurrencies on the global climate is starting to become a mainstream topic, rather than just a trend. The 120 to 240 billion kW hours of electricity that crypto mining uses up every year outstrips the combined consumption of some countries, making it a topic of debate and scrutiny, especially from environmental groups.

The result is that many projects are starting to make the shift from the power-intensive Proof-of-Work algorithm to the more eco-friendly Proof-of-Stake. China was responsible for more than 79% of all mining up until 2021, until mining was prohibited in the country as an economic activity. This has led to a massive exodus of miners to the US, which now produces as much as 35% of all mining products.

What the market is likely to encounter in 2024 is a general claim by environmental protection groups demanding the reduction of mining activities and their regulation to ensure that greenhouse gas emissions are recorded and electricity consumption is monitored.

Adoption on the Part of Institutionals

Though institutional investors were already a major and driving force in matters related to the development of the cryptocurrency industry, it seems 2024 will continue that trend. The main players in this regard will be banks and asset management companies that are eyeballing crypto as a promising instrument for their clients to diversify investments.

Needless to say, the involvement of such players will add both credibility and a much-needed aura of legitimacy to the market as a whole.

DeFi Redefined

Though having suffered a considerable setback in 2022 with the collapse of a near-infinite number of liquidity pools, the decentralized finance market is recovering and showing signs of growth. Armed with new procedures and an revamped set of services, the DeFi market is redefining itself to cater to a growing audience of new market entrants.

2024 seems to be promising in this regard, as lending and borrowing services are gaining prominence in such emerging markets as Africa and Latin America, where the adoption of crypto is growing at a rapid pace.

The Rise of Altcoins

With Bitcoin hovering in the $30,000 region for years, Ethereum in the $2,000 region, and the global economy deteriorating, slashing people’s incomes and savings, there is growing demand for assets that can content for the title of a more stable and affordable type of cryptocurrency. This case is leading the rise of altcoins as an alternative to market heavyweights like Bitcoin, paving the way for such coins as USDT, TON and others to take the stage.

As 2024 approaches, considerable liquidity exchange is taking place on major trading hubs in such assets that are both affordable and have practical applications as a means of payment in some countries. TON is one such example of an altcoin that is widely accepted in Nigeria.

The CBDC Case

China is at the forefront of cryptocurrency adoption on a state level with its crypto yuan, officially having launched it for extensive testing in several provinces. And while Europe and several other countries like Turkey and Britain are placing the development of CBDCs on hold for economic reasons, others like Russia are preparing to launch their own state cryptocurrencies.

The adoption of CBDC seems to be an inevitable development, since states are unwilling to contend with the competition of independent projects in financial matters and are eager to control the cryptocurrency space through the release of native assets.

Cross-Chain Interoperability

One of the biggest hurdles that the blockchain space is facing is the lack of cohesive interoperability between various networks. 2024 seems to be a breakthrough year in this regard. Blockchains like TON are making headway in making their assets portable across chains, like Layer 2 solutions and their accelerating rate of adoption are making transactions faster and more understandable for a broader range of network systems.

Key Takeaways

There was little room for optimism for 2023, but 2024 seems to be showing signs of becoming a year for crypto revival. Though a bull run is still a foregone conclusion and more like wishful thinking, an increase in the price of Bitcoin and the spread of crypto adoption are both good news for ensuring a more favorable investment environment for cryptocurrencies overall.