Four Major Factors Driving the Market Trend in 2024

Over the past two years has been a challenging period since the end of the major crypto bull market in late 2021. Rising inflation rates prompted central banks to raise interest rates, causing a sharp decline in Web3 funding, NFT prices, and enthusiasm surrounding the metaverse, resulting in the disappearance of billions of dollars from investors' funds. Frauds and network attacks involving platforms like FTX and Luna led to the collapse of the crypto market, custodial bankruptcies, and a series of arrests of criminals. Consequently, self-custody became the only prudent choice for

cryptocurrency

enthusiasts in 2023.

However, despite these setbacks, the crypto industry is gearing up to embrace a potential new bull market in 2024 and 2025, driven by various positive factors and trends. This time around, it might not just be a momentary hype but a pivotal moment capable of transforming the global financial industry leveraging technologies like artificial intelligence.

The Bitcoin Halving (April 2023)

Bitcoin halving, in essence, occurs approximately every four years in the Bitcoin network (about every 210,000 blocks). At this moment, the reward given to Bitcoin (BTC) block producers is halved. This means that the newly created BTC amount is reduced, making Bitcoin scarcer, subsequently boosting its value. Given that BTC is the first widely recognized cryptocurrency with a market share of 50%, this event holds significant importance in the cryptocurrency world.

BlackRock ETF

BlackRock, a colossal asset management firm overseeing a total value of $9 trillion in assets, has submitted an application for a

Bitcoin exchange

-traded fund (ETF), specifically a spot Bitcoin ETF. Considering BlackRock's success rate in the ETF space (576:1), this development stands a strong chance of receiving approval from the United States Securities and Exchange Commission (SEC). If approved, this ETF is poised to significantly enhance Bitcoin's visibility and establish it as a recognized and secure asset class. This would enable it to be securely custodied and traded by regulated entities, similar to conventional stocks, thus promoting its mainstream adoption.

Ethereum ProtoDanksharding Upgrade

Cheaper and faster transactions are crucial factors driving the widespread adoption of decentralized platforms. Recognizing the importance of achieving these goals to support the ever-growing Web3 ecosystem, Ethereum, as a leading force in the industry, aims for faster and more affordable decentralized solutions. While Ethereum's current layer-two Roll-up solutions demonstrate their ability to process data quickly and securely, they often come with high costs, which diminishes some of their advantages.

To address this issue, Ethereum is actively exploring a series of solutions. The initial step is ProtoDanksharding (also known as EIP 4844), which aims to reduce the costs of Roll-ups by introducing “data shards.” These data shards store on-chain data that is only valid for a limited period, typically lasting from one to three months. By avoiding permanently storing these data packets on Ethereum, significant cost savings can be achieved.

A New Narrative Driven by Crypto AI and Inscription

In 2023, the widespread adoption of Artificial Intelligence (AI) led to a significant surge in the prices of blockchain platforms integrating AI technology. Representative projects in the intersection of cryptocurrency and AI include SingularityNET, Phala Network, and Cortex. The integration of AI as a core feature holds the potential to enhance the attractiveness of crypto platforms, triggering increased demand for their digital assets.

As blockchain and AI continue to merge within the Web3 ecosystem and with the emergence of narratives around the new metaverse, there is an anticipation that digital asset technology designed specifically for these use cases will regain focus.

Additionally, this year witnessed controversial new use cases for Bitcoin following its Taproot upgrade. The introduction of the BRC20 token standard and Bitcoin ordinals created new demand for block space on the Bitcoin network, causing transaction fees to rise and propelling Bitcoin's price to over $30,000 in the first quarter. While this development sparked debates and controversies, it also showcased the evolving dynamics and potential of Bitcoin as a multifunctional asset.