Binance Research: Top Crypto Trends to Follow in 2024
Main Takeaways
In this blog series, we offer concise summaries of the Binance Research team’s findings, inviting you to take a deeper dive into the original reports.
This article previews the recent Binance Research report discussing the top crypto narratives to follow as we move into the new year.
While it is too early to say whether we are in a bull market, recent developments in areas such as Bitcoin, DeFi, stablecoins, and NFTs paint a positive outlook for the ecosystem in 2024.
The year 2023 has seen a resurgence of excitement in the crypto industry. While it is too early to definitively declare the return of a bull market, things are looking more hopeful than they have for a while. Based on the observation of recent events and trends, the Binance Research team compiled a roundup of several key narratives and metrics to follow in the coming months. Below are the top crypto trends to follow as we navigate into the new year.
Bitcoin
2023 has been an eventful year for Bitcoin, with major developments across the entire spectrum of the investment landscape. On the crypto-native side, we saw the emergence of the Ordinals protocol, which enabled new innovations such as inscriptions – often called “Bitcoin NFTs” – to gain prominence. On the traditional finance side, the optimism surrounding seemingly imminent spot bitcoin ETF approvals in the U.S. has led to more traditional institutional investors setting their sights on the cryptocurrency ecosystem.
Bitcoin’s year-to-date (YTD) performance
Source: CoinMarketCap, Yahoo Finance, Binance Research (December 5, 2023)
In light of these developments, BTC has outperformed many other key assets and indices, both traditional and crypto. As of December 5, 2023, the market capitalization of BTC had risen 162% year-to-year. Some of the most significant BTC developments to follow in 2024 include the following.
U.S. spot BTC ETF approvals
Although the potential for regulated spot bitcoin exchange-traded funds (ETFs) in the U.S. has long existed, 2023 saw notable positive developments on this front. In August, U.S. courts ruled in favor of Grayscale regarding its dispute with the U.S. Securities and Exchange Commission (SEC) over the conversion of its Grayscale Bitcoin Trust (GBTC) into a spot BTC ETF.
This favorable ruling prompted numerous other players, including BlackRock, the world’s largest asset manager, as well as Fidelity and Invesco, to file their own spot BTC ETF applications in subsequent months. Currently, there are a total of 13 spot BTC ETF applications under review by the SEC. Of these, the earliest final deadline is set for January 2024, while the latest comes in August.
Final deadlines for SEC rulings on spot BTC ETFs
Source: Bloomberg, Binance Research
Bitcoin halving
Bitcoin miners are incentivized to validate transactions and secure the blockchain through two mechanisms: block rewards and transaction fees, with the former traditionally accounting for the majority of miners’ income. Block rewards are paid out for each newly mined block, which happens every 10 minutes on average, and halved every 210,000 blocks, which happens roughly every four years.
Given BTC’s fixed maximum supply of 21,000,000 units, the halving introduces further scarcity designed to increase its price over time, thereby reinforcing the narrative of BTC as “digital gold” or a safe-haven asset. When the Bitcoin blockchain first launched in 2009, block rewards started at 50 BTC per block. After subsequent halvings in 2012, 2016, and 2020, the current reward is 6.25 BTC per block. The next halving is expected to occur in April 2024, after which the block reward will be 3.125 BTC per block.
Block rewards after each Bitcoin halvin
Source: Binance Research
Ordinals and inscriptions
One of the most significant Bitcoin developments in 2023 has been the advent of ordinals and inscriptions. The Ordinals protocol went live at the start of the year and involves the tracking of individual satoshis (sats) based on what the founder, Casey Rodarmor, calls “Ordinal theory.”
Sats are the smallest unit of bitcoin, and each BTC contains 100,000,000 of them. The Ordinals protocol enabled each sat to be ascribed with a unique identifier. These sats could then be “inscribed” with arbitrary content, such as text, images, videos, etc., creating “inscriptions” that are often referred to as “Bitcoin NFTs.”
Total BTC inscriptions
Source: Dune Analytics (@dgtl_assets), Binance Research (November 30, 2023)
Ordinals and inscriptions also led to the emergence of BRC-20 tokens in March 2023, enabling the deployment, minting, and transferring of fungible tokens on Bitcoin for the first time ever. While inscriptions are the non-fungible application of the Ordinals protocol, BRC-20 tokens are their fungible counterpart.
After the initial frenzies following the launch of ordinals and BRC-20 tokens, the market cooled off somewhat before ramping up again. November saw a significant resurgence in activity, being the highest month ever at over 8,300,000 total inscriptions, up 362% from the lows of October.
The advent of ordinals has introduced new excitement and innovation into the Bitcoin ecosystem. It is yet another development that shows that we are in an important period of Bitcoin’s history as we move into 2024.
