Special Issue: My Top 10 Crypto Predictions For 2024

2023 was another crazy year for the crypto ecosystem, with several developments that look poised to shape some of the trends we need to watch in 2024.?

As per our tradition since 2015, here are my top 10 crypto predictions for the year ahead!

1. Bitcoin And Crypto Are The Cool Kids Once More

Bitcoin was up over 150% in 2023, and 2024 is shaping up to be another bull market for the industry.

Expect the physical Bitcoin ETF approval (likely in Q1 2024) and the Bitcoin halving (definitely in Q2 2024!) to act as catalysts powered by the overall macro environment of an end of interest rate hikes and investors looking again for risk-on assets.

We should expect crypto to be part of the usual conversation at cocktail parties again. And that is positive not only for new capital coming into the space but also for the development of the overall ecosystem.

2. Institutional Allocators Get FOMO Again

Whilst we may believe that smart capital would have entered the crypto ecosystem at the bottom, the reality is that most of the institutional allocators stayed on the sidelines waiting for a number of catalysts, including for the dust of the FTX collapse to settle and to see how the Binance domino would fall.

There is finally clarity with the FTX saga behind (with SBF heading to jail for some time) and a record settlement between US authorities and Binance.

In addition, counterparty risk mitigation solutions now abound, allowing a significant reduction of exposure to exchanges, who have, to their credit, really improved in the level of transparency they provide to the market.?

We should expect many large institutional investors to follow the usual playbook in 2024. Start by allocating to VC funds (longer horizon, assets not marked to market, less career risk, etc), followed by allocations to crypto funds of funds or fund managers.

3. The Non-Sexy Infrastructure Players Get Some Well-Deserved Attention

The 2023 bankruptcies brought much-needed attention to counterparty risk. For example, the diversity of custody offerings is now quite impressive, and there are probably more institutional-grade custodians than institutional-grade clients.

However, there are still gaps in the industry, especially in the boring verticals, from crypto fund administrators and compliance providers to crypto insurance and fiat on/off ramps.?

Whilst these non-sexy areas do not get any media attention or do not put you on panels at conferences, they are essential for the growth of the ecosystem, and we should expect smart capital to allocate to such verticals and some of the prominent players in the traditional finance space to enter the web3 by acquiring some of these "boring" players in this space.?

4. Stablecoins To The Rescue

As I predicted last year, 2023 was a fantastic year for stablecoins, with total supply rising to over $130 billion.

This is remarkable when you think there was less than $5 billion in stablecoins only 48 months ago.

In addition to being used for crypto trading (the vast majority of trading pairs are still in stablecoins, with USDT representing over 70%), stablecoins are now being used as “money” in many parts of the world, from Turkey to Argentina, where citizens cannot rely on their central bank.

In addition, stablecoins are being used increasingly in international trade, say between Latin American exporters and international buyers, where using traditional banking lines is expensive and, in many cases, impossible.?

In 2024, we should expect stablecoins to become increasingly more mainstream in regions like Africa or Latin America and cross-border payments more generally.

5. Privacy In Payments

Despite what mass media will make you believe, crypto transactions are surprisingly traceable and transparent, as any traceability firm would be happy to demonstrate.

There is, somewhat ironically, probably more privacy now in payments using the traditional finance inter-bank SWIFT network compared to making Bitcoin transfers.?

We should expect, rightly so, privacy in payments to become a topic du jour.

As privacy coins like Monero are not an option and are banned by most jurisdictions, we should expect privacy solutions like zero-knowledge proofs to be part of the solution.

There have been some very interesting developments in this space, from privacy pools to the future vision of Ethereum, and we should expect forward-thinking VCs and entrepreneurs to look at this space in 2024.

6. The United States Continues To Lose, And Others, Like The UAE, Win

Despite all the lobbying efforts of the crypto community in the United States to try to provide regulatory and policy clarity, the country has arguably lost the race when it comes to becoming the first choice for any new crypto entrepreneur.

The (sometimes laughable) inconsistencies and lack of clarity from the SEC to the infighting between regulatory bodies have made the US a not very friendly jurisdiction.

There is optimism that this can change, especially if Republicans return to the White House in 2024, but the damage is already done.

Who are the winners??

Players like Hong Kong have been trying to return, especially in niche areas like tokenization. There is also some optimism with Europe with MiCA. However, the one player that has stolen the spotlight has been the United Arab Emirates, which has become the global crypto hub of the moment.

Dubai’s Virtual Assets Regulatory Authority (VARA), the world’s first crypto-specialized regulator, has allegedly received hundreds of applications, and Abu Dhabi’s ADGM continues to attract leading players not only by deploying strategic capital but also by creating specific regulatory regimes, including a regulatory regime tailored for DLT foundations.

The above, coupled with a very strategic central bank and a visionary government, are likely to continue making the UAE the global crypto hub to watch in 2024.

7. CBDCs Continue To Move Forward

With over 90% of central banks experimenting with CBDCs, we should expect wholesale and retail CBDCs to continue developing in 2024.

Perhaps due to China being years ahead of the rest of the world in this area, we should expect geopolitics to play a more significant role, especially regarding the choice of fellow countries each central bank decides to partner with for its tests.?

For example, one country to watch is India, which has accomplished tremendous inroads in the CBDC space in recent months and has partnered not with the EU but rather the central bank of the UAE for some recent tests.

On the other extreme, we should continue to see US politicians pass legislation to ban a CBDC in the United States like it was the case in 2023, further deepening the divide in the global CBDC landscape.

One player to watch has been the Bank for International Settlements (BIS) innovation hubs that have been doing really pioneering work not only with cutting edge projects like mBdrige but who have been experimenting with self-custody CBDC options.

For example, Project Sela, a collaboration between the BIS Innovation Hub, the Hong Kong Monetary Authority and Israel's central bank, is an excellent example of a pioneering project that could eventually allow any tech firm or business to offer retail CBDC wallets to clients.

This project does not get the media attention it deserves. However, it can enable a new competitive field in banking, something open banking has tried (arguably not been successful so far).?Definitely an area to watch in 2024.

8. Assets From Bankrupt Crypto Entities Are (Partially) Recovered And Reinvested in Crypto!

Crypto aficionados became bankruptcy experts in the past 24 months with the collapse of not only crypto firms like 3AC, Celsius, or FTX but also those of crypto-friendly banks like Silicon Valley Bank or Signature.?

The recovery outlook for many of the crypto insolvencies is looking positive.

FTX claims are trading at over 60 cents on the dollar, and many believe that the actual recovery will be higher than 90 cents if not par.?

This recovered capital is likely, perhaps ironically, to be redeployed back into the crypto ecosystem, especially if a bull market is all the rage, and players focused on counterparty risk mitigation and institutionalization will likely benefit from these inflows.

9. Tokenization Of Real-World Assets Re-Becomes A Thing

There was much hype around tokenization around 2019-2020, but that star faded due to a lack of traction from issuers and investors.

Now, things seem to be heating up again in the global tokenization landscape with a focus on real-world assets (RWA).?

Not only are some jurisdictions like Hong Kong positioning themselves as hubs for such activities, but the last months have shown interest in such products, from tokenized U.S. treasuries to real estate.

The game changer here could be some of the large traditional financial institutions that decide to enter this space.?Players like Goldman Sachs and J.P. Morgan have already entered the space and we should expect others to follow in 2024.

10. Gaming

There are over 3 billion gamers globally, many of whom are comfortable with digital assets, not only cryptocurrencies but also NFTs.

The gaming community somewhat stepped back from digital assets last year due to the negative reputation of the industry post-FTX. As things recover, we should start seeing more collaboration not only in web3 gaming but probably in web2 gaming.

The next billion users in crypto will likely come from the gaming world, so expect to continue seeing investments and interest at this crossover for the year ahead.

So there you have it, my top crypto predictions for 2024!

Do you agree or disagree with the above predictions? Feel free to share in the comments section below!

(You can also check out my 2023 predictions here to see how they turned out!)

Henri Arslanian

*Please note that this newsletter reflects Henri’s personal views and not those of any organisation he is involved with. This newsletter is for educational purposes only, and none of its content should be construed as investment or financial advice of any kind.

Who is Henri?

Henri Arslanian is the co-founder and managing partner of Nine Blocks Capital Management, an institutional-grade hedge fund focused exclusively on digital assets, with a market-neutral crypto fund focused on generating alpha from inefficiencies in crypto markets using relative value, arbitrage, and quantitative strategies.

Henri was previously a partner and global crypto leader at PwC. In that role, he advised many of the world’s leading crypto exchanges, investors, financial institutions, and tech firms on their crypto initiatives and numerous governments, regulators, and central banks on crypto regulatory and policy matters.

With over 500,000 LinkedIn followers, Henri is a TEDx and global keynote speaker, a best-selling published author, and is regularly featured in global media, including Bloomberg, CNBC, CNN, BBC, The Wall Street Journal, The Economist, and the Financial Times.

Henri was named by LinkedIn as one of the 2022 global Top Voices in Finance and is the host of the CryptoCapsules? social media video series as well as The Future of Money podcast and newsletter.