2024 Crypto Predictions
Every year, I share my predictions for the upcoming annual period in Crypto and web3. You can see how I did with my 2023 and 2022 predictions (tldr: 2023 was OK, and 2022 was way off). To sum up 2023, Crypto had a huge rebound but still has not regained all time high levels. The regulatory environment in the U.S. is as bad as it has ever been. What comes next? Here’s what I think:
1️⃣Let’s start with the macro environment in 2024. Last year, I was cautiously optimistic and markets soared. Going into the new year, I expect the U.S. will avoid any type of serious recession. Tech and Crypto markets performed great last year, and I believe this will continue. The economy is still growing. Corporations thinned expenses as rates and inflation rose. The markets expect the Federal Reserve to begin cutting rates in 2024, and I am onboard with this thesis. We’ll see volatile markets from recession fears and election uncertainty, but I’m overall constructive.
2️⃣The Crypto community is hoping that the first Bitcoin ETF will be approved in January, and it looks like this is set to happen. We should be seeing several large asset managers pumping Bitcoin through their sales machines and brokerage contacts in a big way. This will open new buyers to the asset class, and I think these will be mostly successful. I expect at least $10Bn in new money coming into the $BTC ETFs in 2024, and I believe these will get to $25–50Bn in the next 2–3 years. All that said, the $BTC price already assumes a ton of new cash pouring in from the ETF launches, and I think the market is overextended at the current levels. “Buy the rumor, sell the fact” seems like the right short-term trade here.
I don’t believe we will see an Ethereum or Solana ETF approved in 2024. The SEC Chair Gensler hates Crypto. He’s created problems for the industry at every opportunity. Gensler has declined numerous times to state that $ETH is not a security, and the SEC has claimed $SOL is a security in its lawsuits against Coinbase and Binance. Some people believe these ETFs are going to happen this year, I disagree.
3️⃣Last year, I thought we had a shot at some regulatory clarity, but this didn’t work out. Unfortunately, I doubt we get Congressional action in 2024 either. It’s an election year, so priorities will be elsewhere. Also the takedown of FTX and Binance makes Crypto a risky play for any legislator. I expect we will have to turn to the court system to get clarity in the U.S. for the Crypto markets. I am betting that Coinbase kicks the crap out of the SEC in their upcoming legal battle. This will hopefully give us some definition on what is and isn’t a security in the United States. Once that case completes, likely by the summer, maybe we can see a better institutional view of web3. I had previously thought we could see rules for stablecoins and Crypto custody, but these seem more likely to be addressed in 2025.
4️⃣Startups continued to build and attract capital for blockchain infrastructure in 2023. This is where most of the $2Bn per quarter in VC investment went in the sector. I believe this will continue to be the focus for the first half of 2024, and there will be a rebound in consumer startups and token economies in the second half of the year. I think we’ll see a modest bounce in VC funding, but certainly nothing like the $8–10MM seen at the peak two years ago.
5️⃣Sadly, I don’t think we’ll see a big breakout Crypto hit in the consumer space in 2024. The biggest winner last year was the flash in the pan social startup called Friend.Tech, but this fizzled out so fast no one outside the sector noticed. Big companies are scared of the regulatory and litigation climate for Crypto, so we’re unlikely to see someone like a sports league or a major music act embrace web3 in 2024. There are supposed to be several strong web3 video games launched in 2024. It’s possible one makes it big, but I’m not sure that Apple and Google App Store rules will allow this to happen. I don’t think a game gets big with a progressive web app or on PC only in the United States.
In summary, I think 2024 will be looked at as a transition year. Markets will continue to consolidate and strengthen with upside from a potential Coinbase legal victory over the SEC. Builders will continue to improve Crypto infrastructure so that the next generation of consumer products will be easier to use and less Crypto-centric.
What do you think happens in 2024? Hit me up with your predicitons or give me your thoughts on mine.
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