After analyzing the annual reports of dozens of crypto institutions, SoSo Value summarizes the "Eight New Narratives" keywords for the 2024 bull market

2024-01-09 16:35:16

Collection

As a one-stop financial research platform for cryptocurrency investors, SoSo Value is the most efficient free investment tool for cryptocurrencies. We conduct in-depth research on comprehensive reports from crypto institutions, revealing the story of 2024—how will the visions of Bitcoin AI, DePin, RWA, SociaFi, Desci, GameFi, and Regulation unfold?

Introduction

In 2023, the total market capitalization of cryptocurrencies saw a significant rebound, growing from $1 trillion at the beginning of the year to over $1.6 trillion by year-end. This is seen as a clear signal that the crypto market is emerging from the "crypto winter." Besides the overall data, which has significantly improved, various sectors within the crypto industry have also experienced different "highlights."

Looking back at 2023, both the global macro backdrop and the Web3 space were filled with uncertainties. Although the crypto market showed signs of warming up, the global macro economy remained under downward pressure, regional conflicts erupted suddenly, and cultural and consumption aspects were lackluster. Traditional industries faced varying degrees of impact. In the macro-connected Web3 space, major events such as the acceleration of the BTC spot ETF process, CZ's resignation under U.S. regulation, and SBF's conviction marked a new era, while AI technologies represented by ChatGPT began commercial applications.

"Narrative" is a main thread driving the crypto industry, with investment institutions and the market creating new narratives, while investors question and understand these narratives. Looking ahead to 2024, a review of annual reports from dozens of top crypto institutions reveals that most institutions display an optimistic attitude towards the upcoming crypto market in 2024.

SoSo Value interprets these reports, starting from understanding the "narrative" and combining its own insights, summarizing eight key narrative keywords you should know, helping you position for the anticipated "clear bull market" expected by institutions, while hoping readers can avoid investment traps brought by market "uncertainty" and "reflexivity."

This report includes annual reports and articles from institutions such as a16z, Coinbase, Messari, Hashed, Matrixport, Spartan, Binance, Delphi Digital, Pantera, and others…

(Crypto total market capitalization compared to S&P 500 market capitalization | Data source: https://alpha.sosovalue.xyz/)

Narrative Keyword 1: Bitcoin's Return to Dominance and Ecological Wave

Key Institutions: Coinbase, Messari, Gemini, Hashed, Matrixport, Spartan…

Overall Tone: With the support of policies and regulations, Bitcoin is increasingly favored by retail and institutional investors, leading the market recovery and regaining its dominant position. The approval of Bitcoin ETFs and the Bitcoin halving cycle will provide momentum for price increases, while the innovation wave of Ordinals and BRC-20 will reshape the Bitcoin ecosystem.

|------------|------------------------------------------------------------------------------------------------------------------------| | Crypto Institutions | Selected Views: Bitcoin's Return to Dominance and Ecological Wave | | Coinbase | At least in the first half of 2024, institutional traffic will be firmly anchored in Bitcoin. Unless a widely spread risk-averse environment triggers strong demand for liquidity, Bitcoin can perform well even in a more challenging macroeconomic backdrop; | | Gemini | The approval of the spot Bitcoin ETF will allow U.S. investment funds to access Bitcoin, opening up a $36.7 trillion retirement fund market to the crypto asset class. Historically, Bitcoin's price has seen parabolic increases following each of the last three halving events; | | Matrixport | The U.S. Securities and Exchange Commission is expected to approve the Bitcoin ETF in January, with trading anticipated to begin in February or March. This event, along with the Bitcoin halving cycle, is expected to provide healthy momentum for the coming year; | | Messari | Bitcoin tends to lead the recovery. Recently, Bitcoin's dominance has reached a multi-year high. In ETF-driven rallies (leading upward) or severe macro pressure (consolidating downward), Bitcoin's dominance is expected to return to 60%; clearly optimistic about Bitcoin but "pessimistic about Ethereum," with Bitcoin expected to outperform Ethereum; | | Hashed | The innovation wave of Ordinals and BRC-20 helps to re-examine the Bitcoin ecosystem, with related technologies representing a paradigm shift in the Bitcoin ecosystem; | | Binance | The emergence of Ordinals and inscriptions has brought innovation to the Bitcoin ecosystem; | | Spartan | The development of Bitcoin Layer 2 and the "speculative value" of BRC-20 can drive the development of the Bitcoin ecosystem; |

The core narrative for 2024 will undoubtedly revolve around the most core asset in the crypto space—Bitcoin. Most institutions have dedicated significant portions of their reports to predicting Bitcoin's development in the new year. The U.S. compliant crypto exchange Coinbase stated in its year-end report that Bitcoin regained its dominant position in the crypto market in 2023, indicating that retail and institutional investors are increasingly favoring Bitcoin.

1/ Regarding the Bitcoin spot ETF: In 2023, several well-known financial giants applied for a spot Bitcoin ETF in the U.S. Coinbase believes that the participation of financial giants will help validate and enhance the prospects of cryptocurrency as an emerging asset class. At least in the first half of 2024, institutional traffic will be firmly anchored in Bitcoin.

2/ The overall macro environment's impact on Bitcoin: Unless a widely spread risk-averse environment triggers strong demand for liquidity, Bitcoin can perform well even in a more challenging macroeconomic backdrop.

Similar to Coinbase's views, the exchange Gemini also stated in its research report that the approval of the ETF is expected to drive significant capital inflows into crypto, pushing prices upward. Additionally, the approval of the spot Bitcoin ETF will allow U.S. investment funds to access Bitcoin, opening up a $36.7 trillion retirement fund market to the crypto asset class. Regarding the timing of the halving, the halving event in April 2024 is anticipated, and historically, Bitcoin's price has seen "parabolic increases" following each of the last three halving events.

The crypto financial institution Matrixport shares a similar view, mentioning the ETF and Bitcoin halving in its report predicting market trends for the first half of 2024. The institution expects the U.S. Securities and Exchange Commission to approve the Bitcoin ETF in January, with trading expected to begin in February or March. This event, along with the Bitcoin halving cycle, is anticipated to provide healthy momentum for the coming year.

Regarding Bitcoin's price and market capitalization, the crypto investment analysis institution Messari predicts that while it is challenging to forecast Bitcoin's trading position in the short term, its appeal is almost indisputable over a longer time frame. The long-term argument for Bitcoin is straightforward: everything is digital. Bitcoin tends to lead the recovery. Recently, Bitcoin's dominance has reached a multi-year high. The institution bets that in ETF-driven rallies (leading upward) or severe macro pressure (consolidating downward), Bitcoin's dominance will return to 60%.

On the latest BRC-20 ecological wave, the crypto exchange Binance mentioned in its year-end report that "the emergence of Ordinals and inscriptions has brought innovation to the Bitcoin ecosystem." The crypto investment institution Hashed provided a more specific analysis of this field, stating that "the innovation wave of Ordinals and BRC-20 helps to re-examine the Bitcoin ecosystem, with related technologies representing a paradigm shift in the Bitcoin ecosystem, showcasing the long-term sustainable potential of the most dominant, widely accepted, and secure blockchain."

Hashed anticipates that the Bitcoin ecosystem will unfold similarly to Ethereum's decentralized finance in 2020. The ecosystem's infrastructure includes lending markets, decentralized exchanges, bridges, aggregators, portfolio management, development tools, and tracking infrastructure, among others. Startups or protocols that help build tools for secure and flexible Bitcoin programming, develop independent indexing infrastructure or wallets, aggregate systems, or even create native Bitcoin metaverses or NFT markets may have a significant impact in 2024. Addressing the technical doubts regarding BRC-20, the crypto investment institution Spartan stated in its report that the development of Bitcoin Layer 2 and the "speculative value" of BRC-20 can drive the development of the Bitcoin ecosystem.

It is worth mentioning that the crypto investment analysis institution Messari clearly expresses optimism about Bitcoin but is "pessimistic about Ethereum." While it appreciates Ethereum and everything derived from it, the long-term investment case for ETH resembles that of Visa or JPMorgan. Due to institutional allocators' interest in digital gold as a "pure play," Bitcoin is expected to outperform Ethereum in the realm of digital currencies.

(Crypto total market capitalization compared to Bitcoin market capitalization | Data source: https://alpha.sosovalue.xyz/)

Narrative Keyword 2: AI and Web3 Ecosystem Continues to Integrate and Collide

Key Institutions: a16z, Messari, Spartan Group, Gemini

Overall Tone: The AI technology represented by ChatGPT began large-scale commercial use in 2023. What impact or shock does this have on the cryptocurrency field? Most institutions believe that AI will bring a better user experience to Web3 users and change industries such as smart contracts, payments, and code auditing.

|---------|-----------------------------------------------------------------| | Crypto Institutions | Selected Views: AI and Web3 Ecosystem Continues to Integrate and Collide | | a16z | The combination of AI and blockchain will democratize AI innovation through decentralized open-source crypto networks, making users safer. When AI becomes a game maker, cryptocurrency provides assurance; | | Messari | AI is excellent for cryptocurrency. There is no need to overthink it; | | Spartan | We will see more AI used to enhance Web3 user experience and efficiency, and more blockchain technology used as a moat and transparency layer for AI; | | Gemini | AI innovation fundamentally changes smart contracts, supports secure data solutions, enables transparent large language models, and combats misinformation; | | Hashed | The integration of AI and blockchain technology represents a synergy with great potential to reshape various industries; |

The renowned investment institution a16z mentioned in its article "A Few of the Things We're Excited About in Crypto 2024" that the combination of AI and blockchain will democratize AI innovation through decentralized open-source crypto networks, making users safer. At the same time, when AI becomes a game maker, cryptocurrency provides assurance, for example, AI generates legends, terrains, narratives, and logic for games, while crypto provides understanding, diagnosis, and punitive capabilities when AI encounters problems. The crypto investment institution Spartan Group also stated that we will see more AI used to enhance Web3 user experience and efficiency, and more blockchain technology used as a moat and transparency layer for AI.

The crypto investment analysis institution Messari holds an optimistic view on the impact of AI on the cryptocurrency field, stating that there is no need to overthink it, "AI is excellent for cryptocurrency. There is no need to overthink it, but Arthur Hayes (founder of BitMEX) published an article on this topic this summer that is worth noting. For any artificial intelligence, the two most critical elements are data and computing power. Therefore, it seems reasonable that 'artificial intelligence will trade a currency that maintains its purchasing power over time,' which perfectly describes Bitcoin."

Regarding the predicted changes that AI will bring to technology and various industry sectors, the crypto exchange Gemini stated in its report, "AI innovation fundamentally changes smart contracts, supports secure data solutions, enables transparent large language models, and combats misinformation," specifically indicating:

1/ Content Creation: The asymmetrical ability of AI to create content exceeds human processing capabilities, and soon people will default to assuming content is fake, relying on on-chain proof for verification;

2/ Payments: In the near future, most payments will be made on-chain by AI agents on behalf of people;

3/ Code Auditing: Code auditing companies will develop copilot versions for smart contract writers, allowing AI to assist in verifying the quality of smart contract code during creation (not just after creation);

It is noteworthy that the crypto investment institution Hashed believes that "the integration of AI and blockchain technology represents a synergy with great potential to reshape various industries." Regarding the content creation industry, the institution cites examples such as deep learning models like Midjourney and Stable Diffusion, which may become protocols similar to media versions of ChatGPT. Original content and IP holders can stake their assets (NFTs, game items, photos, papers, iconic designs, etc.) to prove ownership and originality, with a portion of the revenue generated by the products distributed as loyalty compensation. This will alleviate the IP ownership issues of content generated by AI engines and open up new markets for content creators.

(AI field token overview | Data source: https://alpha.sosovalue.xyz/)

Narrative Keyword 3: Regional Regulation Becomes Clearer and More Competitive

Key Institutions: Coinbase, Gemini, Spartan

Overall Tone: The foundation for cryptocurrency regulation in 2024 will continue to be established, leading to clearer regulations and greater institutional participation in the crypto space. One of the larger stories in 2024 will be the competition among jurisdictions to secure top positions in the regulatory landscape.

|----------|-----------------------------------------------------| | Crypto Institutions | Selected Views: Regional Regulation Becomes Clearer and More Competitive | | Coinbase | The foundation for cryptocurrency regulation in 2024 will continue to be established, leading to clearer regulations and greater institutional participation in the crypto space; | | Gemini | One of the larger stories in 2024 will be the continued competition among jurisdictions to secure top positions, vying to become key hubs for digital assets and the future financial system; | | Spartan | Some capital will flow to regulated exchanges and local exchanges, leading to more dispersed liquidity; |

The U.S.-based crypto exchange Coinbase has always been at the forefront of U.S. regulation, thus having profound insights into regulation. The institution believes that the foundation for cryptocurrency regulation in 2024 will continue to be established, leading to clearer regulations and greater institutional participation in the crypto space. However, analyzing both the negative and positive aspects of U.S. regulation, the institution notes that "the uncertainty in the U.S. is fostering missed opportunities," while the positive aspect is that the approval of the Bitcoin spot ETF may expand access to cryptocurrencies for new categories of investors and reshape the market in unprecedented ways.

Not only will the foundation of regulation be established, but the global regulatory landscape will also be filled with competition. The crypto exchange Gemini stated in its report, "One of the larger stories in 2024 will be the continued competition among jurisdictions to secure top positions, vying to become key hubs for digital assets and the future financial system." Countries such as the UK, EU, UAE, Japan, Hong Kong, and Singapore have recognized this and will continue to compete, aiming to attract business growth and innovation with the most credible regulatory frameworks.

Will regulation also bring negative impacts? The crypto investment institution Spartan is concerned that regional regulation may affect overall liquidity in the crypto market, stating that "some capital will flow to regulated exchanges and local exchanges, leading to more dispersed liquidity."

Narrative Keyword 4: DePIN Sector Has Huge Development Potential

Key Institutions: Coinbase, Messari, Spartan, Pantera

Overall Tone: DePIN is one of the potential sectors favored by several crypto institutions, as it is believed to have the potential for large-scale adoption; it is also believed that "projects utilizing crypto economics to reduce structural costs will be strong competitors to existing Web2 businesses."

|----------|--------------------------------------------------------------------| | Crypto Institutions | Selected Views: DePIN Sector Has Huge Development Potential | | Coinbase | DePIN has great development potential, and a major theme for 2024 is "the decentralization of real-world resources"; | | Messari | To eliminate risks from large tech platforms, a 1% "insurance fee" could lead to a tenfold increase in DePIN utilization; | | Spartan | Projects utilizing crypto economics to reduce structural costs will be strong competitors to existing Web2 businesses; | | Pantera | DePIN is a consumer-facing application layer, like DeFi, gaming, and social, with potential for large-scale adoption and may drive consumer demand for underlying chains or ecosystems; |

Paul Veradittakit, a partner at the crypto investment institution Pantera, wrote in an article discussing the DePIN sector that the development of DePIN over the past year has had a significant impact and meaning for the entire blockchain ecosystem. One of the most important reasons is that "DePIN is a consumer-facing application layer, like DeFi, gaming, and social, with potential for large-scale adoption and may drive consumer demand for underlying chains or ecosystems."

From a broader industry perspective, Coinbase believes that "DePIN has great development potential, and blockchain technology will play a core role in managing and distributing actual resources in the future." A major theme for 2024 is "the decentralization of real-world resources."

In this context, Coinbase specifically mentioned the concept of DeComp (distributed computing), which is a specific extension of DePIN that relies on a distributed computer network to perform specific tasks. It predicts that this concept will be revitalized due to the large-scale adoption of generative AI, as training AI models can be computationally expensive, and the industry is exploring whether there are opportunities to alleviate this issue through decentralized solutions.

When mentioning DePIN, one cannot overlook the traditional cloud infrastructure sector. Messari states that cloud infrastructure services represent a $5 trillion market in the traditional sector, while DePIN accounts for only 0.1% of that. Even assuming that 0% of online services adopt DePIN as their primary stack, the demand for decentralized redundancy alone could lead to a surge in demand. To eliminate risks from large tech platforms, a 1% "insurance fee" could lead to a tenfold increase in DePIN utilization. It doesn't take much to change the status quo, especially regarding the demand for GPU and computing resources driven by AI.

The institution Spartan shares a similar view, believing that "projects utilizing crypto economics to reduce structural costs will be strong competitors to existing Web2 businesses."

(DePIN field token overview | Data source: https://alpha.sosovalue.xyz/)

Narrative Keyword 5: Tokenization of RWA Will Become an Important Part of the New Market Cycle

Key Institutions: Coinbase, Hashed

Overall Tone: Tokenization is expected to become an important part of the new crypto market cycle, expanding from the currently dominant bond market to other market instruments in 2024, including stocks, private market funds, insurance, and carbon credits, exploring significant opportunities in projects related to derivatives tokenization and securitization.

|----------|------------------------------------------------------------------------------| | Crypto Institutions | Selected Views: Tokenization of RWA Will Become an Important Part of the New Market Cycle | | Hashed | RWA and equity tokens may lay the foundation for the next-generation financial system, with significant opportunities in projects exploring derivatives tokenization and securitization; | | Coinbase | Tokenization is expected to become an important part of the new crypto market cycle, expanding from the currently dominant bond market to other market instruments, including stocks, private market funds, insurance, and carbon credits; |

The crypto investment institution Hashed believes in its report that "RWA and equity tokens may lay the foundation for the next-generation financial system." The institution states that the market is currently focused on products related to U.S. Treasury bonds and the tokenization of underlying assets; however, there are significant opportunities in exploring projects related to derivatives tokenization and securitization.

Regarding investment philosophy in this field, Hashed states that evaluations of related projects will also include regulatory factors such as compliance, risk management, and due diligence, as well as operational factors such as efficient deposit and withdrawal processes, market accessibility, and scalability. The tokenization of RWA is crucial for bridging the gap between decentralized finance and traditional finance, laying the foundation for a more integrated and resilient financial ecosystem.

The crypto exchange Coinbase will explore the significance of tokenization, category expansion, and development in conjunction with regulation in its report:

1/ Tokenization is an important use case for traditional financial institutions, and it is expected to become an important part of the new crypto market cycle;

2/ Category Expansion: In 2024, we may see tokenization expand to other market instruments (currently mainly in the bond market), including stocks, private market funds, insurance, and carbon credits, as customer demand for high-yield products and diversified income sources is increasing;

3/ Regulatory Integration: It is noteworthy the regulatory progress made by jurisdictions like Singapore, the EU, and the UK. The Monetary Authority of Singapore sponsors "Project Guardian," which has generated dozens of proof-of-concept tokenization projects on public and private blockchains of global tier-one financial institutions. The EU's DLT pilot regime has developed a framework to enable multilateral trading facilities to utilize a blockchain for trade execution and settlement instead of through central securities depositories. The UK has also launched a pilot regime seeking to provide a more advanced framework for issuing tokenized assets on public networks;

Narrative Keyword 6: SocialFi and Web3 Social Applications Gain Further Attention

Key Institutions: Binance, Spartan

Overall Tone: The emergence of friend.tech in 2023 has drawn industry attention, and crypto institutions predict that this is just the beginning. The potential of Web3 social applications represented by SocialFi will gain further attention, marking a significant shift in the industry's focus towards consumers and social applications.

|---------|----------------------------------------------------------------------------------| | Crypto Institutions | Selected Views: SocialFi and Web3 Social Applications Gain Further Attention | | Binance | friend.tech demonstrates the potential of Web3 social applications. In 2024, the ability of SocialFi to gain further attention will define the form of social interaction on Web3 in the coming years. | | Spartan | friend.tech is just the beginning; this trend marks a significant shift in the industry's focus towards consumers and social applications; |

The crypto exchange Binance pointed out in its report that the attention generated by friend.tech, especially from influencers outside the cryptocurrency field, indicates the potential of Web3 social applications. In 2024, the ability of SocialFi to gain further attention will define the form of social interaction on Web3 in the coming years. The crypto institution Spartan also discussed the explosion of friend.tech, along with potential airdrops that may occur in the coming year, which has already triggered a surge of imitation projects, stating, "This is just the beginning; this trend marks a significant shift in the industry's focus towards consumers and social applications."

(SocialFi field token overview | Data source: https://alpha.sosovalue.xyz/)

Narrative Keyword 7: Decentralized Science (Desci) Becomes a Strong Use Case

Key Institutions: Spartan, Messari

Overall Tone: Decentralized Science (Desci) will gain more attention as a strong use case for blockchain in 2024, where the incentive mechanisms of cryptocurrencies are meaningful.

|---------|-------------------------------------------| | Crypto Institutions | Selected Views: Decentralized Science (Desci) Becomes a Strong Use Case | | Messari | In the decentralized science (Desci) market, the incentive mechanisms of cryptocurrencies are meaningful; | | Spartan | Decentralized science (Desci) as a strong use case for blockchain will gain more attention in 2024; |

The crypto institution Messari mentioned decentralized science (Desci) in the last paragraph of its year-end report, stating that the projects covered by this concept are still in their early stages, with 50% of the DeSci projects it tracks established in the past year. In this market, the incentive mechanisms of cryptocurrencies are meaningful. To scale, token sales and DAOs aim to fundamentally change the way research is conducted, and the interest in longevity, rare disease treatments, and space exploration is significant enough to drive the development of this field. Meanwhile, the crypto institution Spartan predicts that decentralized science (Desci) as a strong use case for blockchain will gain more attention in 2024, emphasizing the use of Web3 technology to establish secure, lasting records of scientific contributions, thereby achieving fair credit allocation, simplifying transactions, allowing global resource sharing, and overcoming economic barriers.

Narrative Keyword 8: GameFi Sector Will Transition to Play-and-Earn, NFTs Become Brand Assets

Key Institutions: a16z

Overall Tone: Regarding the GameFi sector, a16z's narrative predictions are particularly noteworthy. The institution states that in 2024, the GameFi sector is transitioning from Play-and-Earn (P2E) to Play-and-Earn, while NFTs are becoming brand assets, with more well-known brands bringing digital assets into the mainstream consumer market through NFTs.

|------|--------------------------------------------------------------------------------------------------------------------| | Crypto Institutions | Selected Views: GameFi Sector Will Transition to Play-and-Earn, NFTs Become Brand Assets | | a16z | 1/ In 2024, the GameFi sector is transitioning from Play-and-Earn (P2E) to Play-and-Earn; 2/ NFTs are becoming ubiquitous brand assets, with more well-known brands bringing digital assets into the mainstream consumer market through NFTs; |

In its nine predictions for the crypto market in 2024, a16z mentioned the prediction for the GameFi sector, where the once-popular concept of "Play to earn" has transformed into "Play and earn." a16z believes that what the gaming industry truly needs are games that can attract players while providing them with more value. The transition from Play-and-Earn (P2E) to Play-and-Earn establishes a significant distinction between gaming and "working (grinding)." Additionally, Messari also stated in its report that the current market size of the gaming industry is approximately $250 billion, with expectations for substantial growth. For the gaming industry, the added value of utilizing Web3 architecture lies in its "potential to improve user acquisition and retention," but so far, this remains an unproven argument.

a16z also mentioned predictions regarding the NFT sector, stating that "NFTs are becoming ubiquitous brand assets, with more well-known brands bringing digital assets into the mainstream consumer market." With custodial wallets and low transaction costs on L2 networks, conditions are being created for the widespread adoption of NFTs as digital brand assets for broader companies and communities.