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| By Jurica Dujmovic |
Today, we're exploring key cryptocurrency trends that are making waves in 2023 and expected to continue into 2024.
These trends highlight both opportunities and challenges for the industry and investors in today's economy. And hopefully, this close examination will give you a clearer picture of the evolving crypto landscape, no matter if you’re a newcomer or seasoned crypto investor.
Crypto Trend No. 1: The Continued Domination of DeFi
The development and growth of the decentralized finance sector was the main narrative of the last bull run. According to Coingecko, DeFi’s market cap was reported to be $52 billion so far in 2023, with expectations of further growth attributed to the adoption of DeFi-based services and trends.
The total value locked — which represents the liquidity and thus use of a platform or sector — in DeFi reached an impressive $83.3 billion in Q1 2023, further indicating the growing demand and trust in DeFi protocols.
To me, this is bullish. DeFi continued developing even during the bearish and neutral long-term cycles. And it’s not done yet.
The coming year is poised to witness groundbreaking innovations and emerging technologies within the DeFi space that are set to revolutionize the financial sector. These include cross-chain integrations, enhanced security, institutional adoption, expansion of use cases across various industries and the evolution of governance models within DeFi projects.
Global DeFi projects are honing in on interoperability — enabling assets to transition seamlessly across different blockchain networks, which, in turn, enhances the overall user experience.
A big development that will likely benefit the sector in the coming year is how much more accessible DeFi has become. Institutional investors, for example, are showing increased interest in DeFi. More institutional adoption is anticipated in 2024, likely leading to heightened liquidity and legitimacy in the DeFi space.
In 2024, I anticipate that we will see DeFi extend its reach beyond finance into realms like real estate, gaming and supply chain management, showcasing its potential to revolutionize traditional industries with blockchain-based solutions.
There is no shortage of DeFi projects to choose from — Uniswap (UNI, “B-”) or Aave (AAVE, “B-”) — if you’re looking to leverage yourself to this trend. And remember, you can always check a project’s Weiss crypto rating right here on our website.
Crypto Trend No. 2: Evolving and Expanding NFT Opportunities
Initially, the NFT space was heavily dominated by digital art, but it has since expanded to encompass a variety of assets like virtual real estate, tokenizing real-world objects, in-game items, personal identity and credentials.
New types of NFTs, known as "utility NFTs," are emerging, representing a wider range of digital assets beyond art and collectibles that facilitate various use cases, such as event ticketing, cause marketing, insurance and reward programs.
In the year of artificial intelligence, we’ve seen AI integration boom over the past few months. I anticipate this development will continue into 2024, potentially leading to the creation of unique, AI-generated art NFTs and collectibles.
I also think AI is just the start. I expect 2024 to bring additional, currently emerging technologies into the NFT industry. These could offer the potential to unlock innovative solutions not only within the NFT space but also across other industries like education, real estate and medicine.
These factors collectively contribute to the ongoing evolution and expansion of NFTs, setting a solid foundation for further growth and diversification in 2024. The blend of technological innovations, diversified use cases and the onset of mainstream adoption are primary drivers propelling the NFT space forward.
Crypto Trend No. 3: The Looming Threat of CBDCs
Central bank digital currencies have been gaining traction around the globe over the past year and are poised to continue this trajectory in 2024.
As a reminder, CBDC are digital assets controlled by central banks. They are not true, decentralized and trustless crypto assets because they are centrally controlled by a single authority and inherently connected to the TradFi system.
But as cryptos gained in popularity enough to enter mainstream conversations, governments around the world looked for ways to get in on the action … without ceding monetary control.
CBDCs were the answer of choice.
As of March 1, 2023, 64 countries have entered the advanced stage of CBDC development, with over 20 central banks — including those of Brazil, China, Japan and Russia — launching pilot projects.
China, in particular, is in the lead in this domain, with its ongoing pilot program for the digital yuan encompassing 26 large cities and 5.6 million merchants, marking a notable milestone in CBDC development.
Moreover, news has emerged regarding Mexico's plan to launch a CBDC by 2024, and the Central Bank of Brazil’s President Roberto Campos Neto has also announced plans for a CBDC launch in 2024, following a closed pilot program conducted earlier in 2023.
Make no mistake, this is not good news.
The ascent of CBDCs is not just a glaring menace to the decentralized essence of cryptocurrencies, but a potential harbinger of an Orwellian financial epoch where basic human rights might be at stake. The allure of CBDCs, veiled as a means to streamline cross-border transactions and enhance financial security, is nothing but a facade for a centralized surveillance monolith.
The cryptocurrency market is built on the bedrock of decentralization, anonymity and financial democracy — all things that stand in direct opposition to a currency controlled by a central government. CBDCs are meticulously crafted to be the eyes and ears of central banks in the digital financial realm, offering a panoramic view of every individual's financial life.
This is a stark divergence from the privacy and freedom championed by cryptocurrencies.
The steps taken by these governments in CBDC development are not strides toward a more modernized financial infrastructure, but a giant leap in Big Brother’s accessibility to your money, where financial transactions are under incessant scrutiny and complete control.
As we tread into 2024, we find ourselves on the precipice of a battle not just for financial privacy, but for a future where financial autonomy isn’t usurped by centralized digital overlords.
Crypto Trend No. 4: Overregulation
The collapse of FTX at the end of 2022 ushered in a wave of confusion over regulation to straight up overregulation in 2023, marked most notably by the Securities and Exchange Commission’s lawsuits against Binance and Coinbase — the two largest centralized exchanges.
Many called out the SEC for this attempt to regulate through litigation rather than legislation. And while the SEC lost its case against Coinbase, I don’t believe this trend will just disappear. That's because the push for a stringent regulatory framework poses significant hurdles for new entrants and small players in the cryptocurrency domain, inadvertently creating a favorable ground for CBDCs and large corporations.
Let me be clear, there is a need for clear, practical regulations. Not only does this create protections for retail investors, it also allows businesses and institutions to interact with and invest in cryptocurrencies more easily.
But overregulation that piles on the red tape and oppressive legal measures not even seen in TradFi threatens to stifle innovation and impose too many barriers to entry for new investors and institutions.
The confluence of Crypto Trends #3 and #4 — the rise of CBDCs and overregulation — is concerning. It reflects a broader agenda to pivot toward a centralized digital financial realm, undermining the core values that cryptocurrencies embody.
This unfolding dynamic necessitates a discerning look at the broader implications for financial autonomy and the spirit of innovation that has driven the crypto sphere thus far.
In these trying times, it's imperative to stay informed, adapt to evolving regulatory frameworks and maintain a balanced and well-researched portfolio to navigate the shifting tides of this promising yet challenging financial frontier.
To that end, I suggest you watch our recent video. In it, we break down the challenges currently facing the crypto space, as well as how my colleague, Juan Villaverde, has managed to navigate them in the past and how he plans on navigating them in the coming months ...
Months, he believes, will be leading up to the next big bull run. He says the time to prepare is now. I have to agree.
And I’d say the first step in your prep should be watching this informative and timely video.
Best,
Jurica
