2024 Crypto Outlook: ETFs, DeFi 2.0 and iGaming Lead Key Trends
In Brief
Gracy Chen, Managing Director of Bitget shares an overview of emerging crypto market trends and patterns including ETFs, DeFi 2.0 and iGaming.
As Bitcoin slowly returns to its heights, 2024 brings fresh air to the crypto markets. Starting with the long-awaited SEC approval of Bitcoin spot ETFs on January 10th and continuing with a surge in GameFi and Liquid Staking Derivatives’ popularity, this year is bustling with new trends and solidifying the positions of several already existing niches.
Bitcoin, Ethereum and the broader altcoin market have not experienced large price swings since the beginning of 2024. The cumulative effects of the Bitcoin bull run, unfolding for months in anticipation of the favorable SEC decision on spot Bitcoin ETFs, began to gradually unwind after the official announcement, causing the price of leading cryptocurrency to decrease slightly.
On January 31st, however, Fed’s Jerome Powell presented a dovish outlook on the state of the US economy, suggesting that it has finally achieved the so-called “soft-landing” and implying future rate cuts. Crypto prices reacted favorably, recovering from the mid-month decrease. Overall, no explicit one-sided market sentiment suggests that the future trend will likely be horizontal.
Bitcoin Spot ETFs — TradFi’s Dreams Come True
The silent battle for spot crypto ETFs had been waging for years. Yet, it got into the public limelight only when BlackRock filed its application last summer. On January 10th, the SEC approved 11 large spot Bitcoin ETFs that opened the following day.
According to Reuters’ data, over the first three trading days, investors poured a total of $1.9 billion into the new ETFs, making crypto an outlier among similar ETF case studies (for instance, ETFs on gold in 2004 attracted only $1.13 billion), but falling somewhat short of the most optimistic forecasts. Experts will keep monitoring the level of continuous acceptance by institutional investors during the next six months.
Following Bitcoin’s approval, Franklin Templeton, on February 12th, applied for a spot Ethereum ETF, becoming the eighth firm waiting for the SEC’s new decision. Yet, its application was remarkably different: it contained a clause allowing staking to maximize the holders’ yield. S&P Global warned that it might raise the concentration risk in the system, overinflating the role of Coinbase.
While the consensus is that spot Ethereum ETF proposals will eventually be accepted, the estimates range from May 2024 to 1-2 years.
Liquidity Staking Derivatives — DeFi 2.0?
On February 6th, EigenLayer temporarily removed its staking cap of 200,000 ETH. In the following days, the protocol’s TVL (Total Value Locked) skyrocketed to almost $6 billion — a $2 billion increase over just three days. In April 2023, Crypto.com reported that over one-third of all staked Ether was locked in Liquid Staking Derivatives. These protocols allow users to redeem deposited claims through liquidity tokens like stETH.
Liquidity tokens are then tradable on most DeFi platforms — like collateral rehypothecation in traditional finance. Not only does this release extra liquidity for users, but it also allows them to maximize the staking yield. EigenLayer, for instance, accepts restaking — a user can deposit Ether on Lido, redeem liquidity tokens and redeposit them on EigenLayer, earning double the yield.
Less than a year ago, the TVL of all LSD protocols was $14 billion. In early February, according to DefiLlama, this number reached $34.6 billion in the top-5 protocols only. Lido, EigenLayer, Swell, Pendle, and Rocket Pool will remain on the radar for the following months.
GameFi Is Back, This Time Really Back!
On January 16th, Animoca Brands and Chess.com released Anichess — a blockchain NFT chess game in collaboration with Magnus Carlsen. Even such huge names, though, were overshadowed by the success of Heroes of Mavia. Heroes of Mavia is a Clash of Clans resembling the NFT mobile app that hit one million downloads and clutched its position in the App Store’s top charts.
According to data by Bitget Research, almost 30% of new Ethereum users in February were using their accounts primarily for GameFi — a stunning result compared to less than 5% of existing accounts. While the short-term popularity may be caused by the Heroes of Mavia’s token airdrop, if sustainable, Heroes of Mavia might prove that GameFi has finally picked the right approach to Web2 gamers.
Disclaimer
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Gracy Chen is the Managing Director of the top crypto derivatives and copy trading platform Bitget, where she oversees market expansion, business strategy, and corporate development. Under her leadership, Bitget’s user base has quadrupled, propelling the exchange to the top five positions among crypto exchanges in terms of crypto derivatives trading volumes.
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Gracy Chen is the Managing Director of the top crypto derivatives and copy trading platform Bitget, where she oversees market expansion, business strategy, and corporate development. Under her leadership, Bitget’s user base has quadrupled, propelling the exchange to the top five positions among crypto exchanges in terms of crypto derivatives trading volumes.
