2024 Crypto Market Outlook: 20 Predictions

As a participant and observer of the crypto market, the author presents the following 20 predictions for market development in 2024. These predictions are purely personal conjectures and are for reference only, and should not be considered as investment advice.

1. Layer 2 networks (L2) will continue to be one of the most important narratives in 2024. With the implementation of the Ethereum Dencun upgrade, the significant decrease in L2 fees will drive explosive growth in its ecosystem. In addition to gaming, perpetual contracts, DeFi, and NFTs, fields such as social media and DePIN will also witness rapid development on L2.

2. Multiple L2 projects will engage in comprehensive competition with other public chains. With the implementation of EIP-4844 and the evolution of data availability layers, L2 will be on par with high-performance public chains in terms of costs and speed. The competition between a certain L2 and the Solana ecosystem will become a major focus in 2024.

3. A well-known L2 project is expected to launch its economic mechanism in 2024, becoming an important force driving the explosion of L2.

4. If a certain full-chain game L2 project makes a breakthrough, it will open up a new narrative for games.

5. In 2024, it is possible that the fully diluted market cap of an L2 project will exceed $100 billion; in an optimistic scenario, during the peak of a bull market, the fully diluted market cap of an L2 project may surpass $300 billion. The final landscape of the L2 market cannot be determined yet in 2024, but it may be fundamentally shaped after this cycle.

6. The Bitcoin ecosystem has opened the door to innovation after experiencing a surge in inscriptions. Many teams are exploring breakthroughs in scalability, including decentralized indexing, the evolution of the inscription system, decentralized cross-chain solutions, zero-knowledge proofs, and L2, among other directions. Once progress is made, it will not only promote the development of the Bitcoin ecosystem itself but also accelerate the integration with the Ethereum ecosystem. The exploration of the Bitcoin ecosystem will become one of the most striking evolutions of this cycle.

7. The Ethereum mainnet will gradually evolve into an enterprise-level blockchain, with most interactions of ordinary users occurring on L2/L3 and a few high-performance L1s. Ethereum will gradually become the foundational asset in the crypto market. With the development of modular blockchains, Ethereum will become the most important settlement layer, while most execution layers and some data availability layers will be outsourced. However, due to the demand for underlying security, ETH will still capture the value of overall ecosystem growth.

8. Modular blockchain will still be an important narrative in 2024, especially with fierce competition in terms of data availability. The Ethereum re-staking sector will also venture into the data availability layer. In the modular space, the Cosmos ecosystem and Ethereum ecosystem have both competition and融合. There will be competition between third-party data availability and native data availability, and before the implementation of Danksharding, the urgent market demand for L2 will create a certain scale of demand for third-party data availability.

9. In addition to the Ethereum and Bitcoin ecosystems, the Cosmos and Solana ecosystems will also continue to develop. Cosmos will make progress through modularity; Solana, on the other hand, will achieve breakthroughs through certain applications. Furthermore, as modular blockchains mature, one evolutionary direction for Solana may be to participate in a broader crypto ecosystem like other L2s, increasing its integration with Ethereum and thereby capturing greater value.

10. Web3 games are expected to make breakthroughs on L2/L3 (such as a certain well-known L2 network), and it is possible that a game could have over a million users. Games based on a certain L2 gaming chain may become the forefront of breakthroughs in Web3 games. The introduction of interoperability between gaming chains and more games will provide important insights into the evolution of Web3 games.

11. A well-known NFT trading platform, in addition to integrating NFT DEX and NFT lending, is expected to enter the NFT perpetual contract market this year, and even the NFT markets of L2, Bitcoin, and Solana ecosystems, and is likely to continue playing a significant disruptive role in the industry.

12. In addition to the explosion of L2 projects, the Ethereum ecosystem is expected to generate a significant scale of deflation to achieve value capture. Unlike other L1 chains that increase issuance and use fees as security costs, all new issuance and fees in Ethereum are returned to stakers and holders, which will incentivize more users to stake/re-stake, further locking up the circulating ETH.

13. Perpetual contract trading in DeFi is expected to see massive growth in 2024, with trading volumes on several major platforms likely to reach at least 5 times that of 2023. While perpetual contracts may not be the most important narrative in a bull market, they are likely one of the strongest fundamental tracks.

14. The advancement of modular blockchain and cross-chain technology will promote the integration of the Ethereum ecosystem with the Bitcoin ecosystem and the Solana ecosystem. During this period, many currently lesser-known projects may emerge. Following the current evolutionary trend of the Bitcoin ecosystem, one possible path is for Ethereum to support a second-layer network for Bitcoin. If this idea comes to fruition, the degree of integration between Bitcoin and Ethereum will gradually increase. In any case, Bitcoin's expansion needs to follow its own native path, similar to some emerging protocols. If a corresponding virtual machine can be successfully developed, it will have a significant impact on the development of the Bitcoin ecosystem.

15. Decentralized Physical Infrastructure Networks (DePIN) may achieve breakthroughs on Solana and a certain L2, but this track is still in the early stages of development, and more exploratory projects will emerge.

16. Although artificial intelligence is still some distance from practical application, it does not affect its status as one of the important narratives of 2024. AI protocols based on L2 and high-performance public chains will also gradually emerge.

17. The Ethereum restaking track may become one of the important narratives at some point this year.

18. NFTs, meme coins, and inscriptions may experience a revival at some point, driving an increase in trading volume on decentralized exchanges for NFTs, and providing a market foundation for the launch of NFT perpetual contracts.

19. Some well-known individuals may enter the NFT, meme coin, and inscription fields.

20. With the development of L2 and the exploration of high-frequency applications, smart contract wallets are expected to begin to emerge in 2024.

It is important to emphasize that all the above analyses are merely a one-sided observation of technology and the market, and may not be accurate. Investors must maintain independent judgment and implement effective risk control.