Current Trends in the Cryptocurrency Market: Analysis and Forecasts

Analysing current trends in the cryptocurrency market

The current year has been associated with the most contradictory predictions. First of all, analysts speculated about how bitcoin would behave. After all, most trends in the digital assets sector depend on the situation with the first cryptocurrency, which makes up more than 50% of the total market capitalization.

And here, BTC has increased in value sharply in 2023, before the next upcoming halving, regardless of all the laws of cyclicality. Therefore, the opinions of crypto specialists in assessing the prospects differed significantly. Is the growth potential exhausted by the results of 2023, or should we still count on a triumphant continuation?

Let’s look at the current trends of cryptocurrencies at the end of the first half of 2024: how events developed and what trends can be expected in the future from the main cryptocurrency and the market as a whole.

General situation of the cryptocurrency market

Preconditions

As the current paradigm for assessing the main trends in the development of the segment of cryptocurrencies and blockchain technologies, the bitcoin cyclicality model is traditionally used.

The last jump in BTC (it was marked by the third cycle of the market) we observed in 2021, when the price of the main coin reached its current maximum of $69,000. Then bitcoin lost about 80% of its value and fell silent in anticipation of a new wave of growth. And the market froze in the phase of cryptozyme and preparation for a new, fourth, bull cycle.

And so BTC opened 2023 with a value of $16,500 and closed at $42,300 (!). The world’s largest cryptocurrency, which is the driving force behind the entire digital asset industry, ended the period as one of the most profitable assets, outperforming gold, NASDAQ stocks and the S&P500. Bitcoin saw growth of 160%. According to financial analysts, cryptocurrency investment volume reached 2021 levels by the end of 2023, and the industry’s market capitalization more than doubled from $829 billion to $1.72 trillion.

This has led some analysts to claim that the next bull cycle has already begun in June 2023. At the same time, most experts were not ready to explore the scope of the bull market, which usually lasts about a year. They expected the launch of bitcoin ETFs and the halving of the main coin in 2024 as additional drivers of increased market capitalization and, consequently, even greater optimism among institutional investors. And they were absolutely right.

What we see now

The first half of this year continued to show positive momentum: the market is not slowing down its growth rate – its capitalization reached $2.27 trillion, which is 37.3% more than a year ago. This data was provided by Binance Research in the next report for the period from January to June 2024 inclusive. It noted the recovery of most sectors of the crypto industry (with few exceptions) on the back of the launch of spot ETFs and the halving of bitcoin, as well as other equally important events. Let’s take a closer look at the information in this report.

Layer 1 Solutions Landscape

L1 solutions (bitcoin, ethereum and other altcoins) continued their strong development:

Bitcoin remains the dominant cryptocurrency, holding more than 53% of the market. The coin’s growth is supported by the fourth halving of the coin, the successful launch of the Runes protocol and spot ETFs. In particular, the approval of spot bitcoin ETFs has raised over $17 billion at the time of writing.

The development of Ethereum was supported by such milestones as the widespread implementation of the restacking mechanism, which gained overwhelming popularity, and the EIP-4844 updаte for the Ethereum network. The restacking mechanism significantly increases the liquidity of the cryptocurrency by maintaining the cybersecurity of the network through an additional layer of protection. It allows investors and traders to reuse tokens that have already been blocked in steaking, or to use their wrapped counterparts on platforms that use the EigenLayer protocol. The EIP-4844 updаte significantly accelerated the operation of Layer 2 networks on Ethereum (such as Arbitrum and Polygon) and reduced transaction fees by several times.

The BNB Chain team continued to optimize the opBNB and Greenfield networks to improve memory and scalability.

Solana achieved significant success in issuing Memcoins and launched its unprecedented Blinks. The Memcoin sub-sector, which was one of the major trends in the first half of the year, recorded a profitability of around 280%. And Solana played a key role here: most traders choose it to trade this type of asset. The ecosystem offers a holistic (rather than fragmented) set of products and low transaction fees. In addition, the new feature of Solana blinks (short for “blockchain links”) has become very popular among users. It allows any action to be transformed into a URL that contains metadata and can be shared.

The state of Layer 2

Layer 2 solutions have shown high activity in airdrops. Token rewards were distributed to participants in the highly anticipated airdrops of ZKSync, LayerZero, Blast, and other L2 protocols.

Such directional stimulation resulted in an increase in the TVL (total blockchain value) of Layer 2 solutions to $43 billion, driving 90%(!) growth in the segment.

Decentralized Finance Sector (DeFi)

Decentralized Finance Sector

The TVL of the DeFi sector also grew significantly by 72.8% in the first 6 months of 2024, jumping from $54.4 billion to $94.1 billion. The Lido platform retained its leading position with a result of around $33 billion, followed by EigenLayer and Aave in the top three by more than half.

Uniswap continues to dominate among cryptocurrency exchanges in terms of trading volume with a 49.9% share of total turnover. The second DEX by trading volume is PancakeSwap (17.1%), with Ramses Exchange breaking into third place with 6.7%.

Stable coins

Here too, experts are optimistic and note a significant recovery of direction after the general decline, complicated by the collapse of TerraUSD (UST). Analysts note that the segment has only 14.5% to gain to reach the 2022 high. Stablecoin market capitalization stood at $161 billion as of June 30, the highest in two years.

In terms of individual stablecoins: USDT continues to dominate confidently, maintaining 70% of the market share, but it shows no evolution in this indicator. At the same time, Circle’s USDC and Ethena’s USDe saw their shares grow (by 1.4% and 2.1%, respectively).

NFT and tokens of gaming projects

The NFT sector did not have the same convincing gains. Analysts from the Binance Research team softly defined the first six months as “turbulent” for the market of non-replaceable tokens. Here, the experts noted a significant drop in coin prices of leading projects (many fell by half) and sales volumes.

Blur managed to maintain its leading position with the successful airdrop of Blast tokens. Another high-profile project was the release of the Pudgy Penguins physical NFT toy, which generated over $500,000 in the first two days of sales on Amazon.

The Web3 gaming sector held a strong position in the first quarter, but in the second quarter gaming tokens fell significantly in market capitalization. Despite this, the number of users grew rapidly. Projects such as Pixels and Hamster Kombat attracted millions of new players worldwide.

What analysts expect in the second half of 2024

Last year and the first half of this year, the market showed impressive results. What trends do experts expect to continue in the near future?

The continued participation of institutional investors. The launch of spot BTC ETFs in the US was one of the defining events of the first half of this year. They created an impressive source of institutional demand for the bitcoin market and increased the diversity and depth of investment interest compared to previous cycles. This trend will continue with the launch of spot ETH ETFs and the potential approval of ETFs on other altcoins. The industry expects to see a broader range of institutional players, both in the US and globally, enter the world of large-scale crypto investing following the TradFi giants (such as BlackRock and Fidelity).

Impact of Macroeconomic Factors. One of the most important events in the second half of the year will be the U.S. presidential election in November. Its outcome will directly affect the situation with cryptocurrency regulation, which is currently very tense. The period around the election is likely to be characterized by increased market volatility. In addition, the global financial systеm has been waiting for almost two years for the Federal Reserve to start lowering record-high interest rates. U.S. traders predict that if all goes according to plan, the first rate cut will occur in September.

Bitcoin and DeFi Scalability. BTC continues to expand aggressively in all directions: its potential is growing both from a TradFi perspective thanks to ETFs and from a DeFi perspective. The rapid development of Ordinals, BRC-20 and the latest Runes tokens raises the issue of bitcoin scalability. Several development teams are working on the solution, developing tools such as Lightning Network, Stacks, RGB, Citrea and Merlin. Following them, the DeFi bitcoin market also develops, with BounceBit and Babylon being some of the early players.

Ownership economy applications are becoming increasingly popular. Users want to manage resources that are traditionally in the hands of large corporations. Blockchain technology gives them that ability. These resources can be personal data, creative content, or computing power. Users don’t want to lose control over them, so development teams are exploring alternative decentralized solutions. Two notable areas in this direction are decentralized physical network infrastructure (DePIN) and decentralized social networks (DeSoc).

Increased adoption of tokenization of real-world assets (RWA). Moving real-world assets onto the blockchain opens up tremendous opportunities for transparency and combinatorial uses. Once Fed rates are lowered, the market will see accelerated institutional adoption of RWA and the rapid development of related infrastructure projects (oracles, decentralized identity and interoperability solutions) that will follow.

In conclusion

So, we can see that according to analysts, crypto market forecasts for this year continue the positive trend that started in 2023. The main destabilizing factor that could lead to increased volatility, reduced investor optimism and even more regulatory uncertainty is the upcoming US presidential election. At first glance, Joe Biden’s withdrawal from the race meant the victory of Donald Trump, from whom the crypto industry expected the most favorable treatment. However, the situation seems to be developing ambiguously and it is still unknown what position the still mysterious Kamala Harris will take. All that is known so far is that, according to the 2023 White House financial disclosure, neither Harris herself nor her spouse have a single satoshi in cryptocurrency.

Thank you for your attention. Invest safely and profitably!

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