After a prolonged winter, the crypto industry shows signs of recovery and resilience in 2024. Increasing institutional interest and the widening popularity of Bitcoin are key factors contributing to this positive outlook. In this article, we delve into the trends and developments that are expected to shape the crypto landscape in the coming year.
Scalability solutions in high-demand
Transaction speeds and costs have been persistent challenges for Ethereum and Bitcoin networks. Rollup projects are expected to gain significant traction in 2024 to address these issues. Sergey Gorbunov, CEO of Axelar, highlights the importance of rollup development kits as a key focus area for the year.
These kits offer tools for developers working on blockchain scaling solutions, making improving scalability and enhancing user experience easier.
Rollups, a type of layer-2 blockchain, aim to enhance scalability by consolidating multiple transactions into a single batch off the main blockchain. This off-chain approach reduces the data load on the main chain, leading to faster and more cost-effective transactions.
Prominent projects making strides in this space include DeFi innovators like Frax and Lido and leading decentralized exchanges (DEXs) like dYdX, PancakeSwap, and Uniswap.
Decentralized infrastructure on the rise
Another noteworthy trend in the crypto industry is the growth of decentralized infrastructure. Frank Hu, Chief Operating Officer of ByteTrade Lab, emphasizes the importance of decentralizing both frontends and backends.
This decentralization extends to decentralized web-hosting and cloud-storage systems, underlining the industry’s commitment to fostering a more distributed and resilient ecosystem.
The increasing participation of institutional investors and traditional corporations in crypto drives these positive trends. According to a November survey by Coinbase, 64% of current institutional crypto investors have plans to increase their allocations in the next three years. Additionally, 45% of investors without crypto holdings intend to start investing within the same period, signaling a growing appetite for digital assets among traditional financial institutions.
Interoperability as a growth catalyst
Projects that facilitate interoperability between Web2 and Web3 are poised for growth. Chief Operating Officer of Unstoppable Domains, Sandra Carter, highlights the potential of bridging the gap between these two worlds.
Many individuals, brands, and organizations in Web2 have yet to transition to Web3 or are unaware of its potential. Crypto businesses are expected to play a pivotal role in simplifying this transition and unlocking the untapped value in Web2 through Web3 integration.
The approval of spot Bitcoin exchange-traded funds (ETFs) is anticipated to be a significant driver of business activity in 2024. Mauricio di Bartolomeo from lending protocol Ledn predicts a flood of Bitcoin ETF variations entering the market, including leveraged and short ETFs. The hype surrounding Bitcoin is expected to further boost its utilization as collateral for crypto loans, expanding the range of financial products and services within the industry.
The traditional foundations of the crypto industry are undergoing disruption, particularly in the realm of social media platforms. Juan Bruce, co-founder of DSCVR, observes that crypto has always been closely tied to social media, and he predicts the eventual emergence of decentralized social media platforms that will replace traditional ones.
These platforms will be built on the blockchain and facilitate crypto transactions within a social context for users and projects.
Regulatory challenges persist
While the crypto industry is on an upward trajectory, regulatory hurdles remain a significant risk in 2024. Sandra Carter emphasizes the complex and evolving regulatory landscape with various variables.
Despite some victories and positive signs in legal battles, there are individuals who remain determined to hinder crypto’s mainstream adoption. In the United States, regulators seek to balance competitiveness in blockchain technology with the need for control, creating an ongoing source of uncertainty for crypto businesses.