As 2023 concludes, the crypto market emerges from failed ventures and outright fraud, embracing real progress toward mainstream adoption. As global tensions rise and regional banks falter, bitcoin reclaims its status as a reliable store of value.

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Meanwhile, TradFi giants filing for Bitcoin spot ETFs and tokenizing real world assets (RWAs) signify the convergence of the two worlds. With crypto now 15 years old, the year 2024 holds the promise of being a defining moment in its evolution.

The recent surge in Bitcoin prices serves as a prelude to an anticipated bull market of 2024. And several other factors align to set the stage for a crypto resurgence.

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Macro Factors: Global liquidity conditions have been on the upswing since October 2023. The Fed’s change in tone during the December FOMC confirmed market expectation of potential rate cuts in early 2024, creating more favorable conditions for risky assets.

Mainstream Adoption: The advent of spot ETFs (expected to be approved as early as January) and tokenization represents a pivotal moment in crypto's integration into the broader financial landscape. Allocating a small percentage of US wealth management assets to Bitcoin ETFs could yield significant ETF sizes. Simultaneously, DeFi protocols are diversifying their yield sources into RWAs like U.S. Treasuries, attracting more crypto-native capital.

Technological Advancements: Major upgrades in blockchain scalability and UI/UX development are breaking barriers in the transition from Web2 to Web3. If Web3-based apps offer the ease of use found in Web2, coupled with the advantages of self-sovereignty, user migration is inevitable.

Is crypto heading towards mass adoption, or experiencing irrational exuberance? Three plausible scenarios for 2024 emerge:

Cambrian Explosion: BTC could surpass its all-time high (above $69,000) in January 2024, with selected sectors witnessing price actions reminiscent of the DeFi summer of 2021.

Steady Growth: BTC might follow similar pattern as 2023, with 20-50% rallies driven by positive news and intermittent sideways movement, culminating a 50-100% return.

Reset and Rebuild: Major market corrections could occur, pushing BTC prices below $30,000.

The first two scenarios appear more likely, supported by macro tailwinds, mainstream adoption and technology advancements. Moreover, long-term BTC holders continue to accumulate, and stablecoin supply has rebounded, indicating potential external capital to flow into crypto.

Looking forward, past cycle winners might not lead the charge this time. Successful projects often boast a robust community of developers and users, such as the exciting themes below:

Solana Renaissance: Solana, riding high behind the FTX shadow, has established a flying wheel effect, attracting developers and users with its high-performance blockchain. A mini-DeFi summer in Solana is evident as its Dex monthly trading volume surges almost 10-fold this year.

DeFi 2.0: Despite being a mature sector in crypto, DeFi remains ripe for innovation. Derivative DEXs, with enhanced settlement times and lower costs, could challenge CEX dominance in that field. Tokenized assets and re-staking could make DeFi yield attractive again compared to US Treasuries.

Web3 Gaming: Past VC investments in Web3 gaming are poised to bear fruit. Platforms like IMX are gaining a network effect, providing the technology and resources for a thriving Web3 gaming community.

2024 is destined to be an exciting time for crypto investors and builders!

Opinion Crypto Long & Short TradFi Spot etf Real World Assets Bitcoin Price Adoption DeFi

Kelly Ye

Kelly Ye is a portfolio manager and head of research at Decentral Park Capital, a liquid venture fund specializing in digital asset investments. She invests in both liquid and early-stage deals across various crypto sectors, employing a thesis-driven approach supported by in-depth fundamental and quantitative analysis. Prior to joining Decentral Park Capital, Kelly served as the Head of Product at Fidelity Digital Asset Management and as the Head of Research at CoinDesk Indices. In these roles, she played a pivotal role in the growth of the digital asset businesses at both companies. Before venturing into the digital asset space, Ms. Ye accumulated 15 years of experience in traditional finance, focusing on research and product development across different asset classes. She led teams at esteemed institutions such as New York Life Investment, Goldman Sachs, GSAM, and BNP Paribas. Ms. Ye has received numerous industry accolades and awards since entering the financial services industry in 2008. Ms. Ye holds a Bachelor of Science in Applied Mathematics from Peking University and a master’s degree in operations research MIT. Kelly is a CFA® and has served on the board of CFA New York and co-chaired the Women in ETF Speakers’ Bureau committee.