Bitcoin
Crypto’s Long-Tail Disruptive Trends
The first half of 2024 began a new cycle of crypto adoption. The long-awaited approval of Bitcoin ETFs was a decisive factor for this new cycle, along with the strong price dynamics that led bitcoin to reach a new all-time high. This not only pushed Bitcoin back to the door of institutional adoption, but also positioned the market for another potential bull market cycle.
These cycles have been marked not only by the introduction of new projects, from Bittensor and ZKSync, to Bonk and Dogwifhat, but also by the strong appreciation in the prices of many digital assets. With a higher beta compared to bitcoin, assets of various sizes and sectors often experience greater volatility, reflecting investor expectations for higher returns.
You are reading Long and short cryptoour weekly newsletter with insights, news and analysis for the professional investor. Sign here to receive it in your inbox every Wednesday.
Several trends are shaping the altcoin market in 2024, which means a focus on innovation, sustainability, and exploring new use cases is driving growth among altcoins.
Re-staking has emerged as a notable vertical for this new cycle, which involves continually staking rewards earned from staking tokens, increasing returns over time. Projects such as EigenLayer (EIGEN), EtherFi (ETHFI) and Renzo (REZ) have implemented mechanisms that incentivize users to resume their staking rewards, thus increasing their participation in the network and contributing to its security and stability.
Altcoins are increasingly adopting Layer2 scaling solutions such as Optimistic Rollups, zkRollups, and side-chains to improve transaction speeds and reduce fees. Projects in this category include Arbitrum (ARB), Optimism (OP), Polygon (MATIC), Starknet (STRK), among many others. This trend aims to improve the user experience and attract more users to these project platforms.
Interoperability between blockchain networks is also a growing trend. Some projects are collaborating and building bridges to enable asset transfers and communication between different blockchains. This trend aims to create a more interconnected and efficient blockchain ecosystem rather than many different isolated blockchains. Examples of such projects include Axelar (AXL), Across (ACX) and Stargate (STG).
With the emergence of Layer 2 solutions and interoperability, modular blockchains represent the next phase in the evolution of digital assets. With their adaptable and customizable design, they offer a flexible framework where developers can connect modules such as consensus mechanisms, token standards, and governance models. Blockchains like Celestia (TIA) and Dymension (DYM) are using this modularity to increase scalability, interoperability, and security.
The story continues
Parallelized Ethereum Virtual Machines (EVMs) divide the execution of smart contracts into parallel tasks, leveraging the power of multiple nodes simultaneously. The most popular parallelized EVMs such as Sei (SEI), Canto (CANTO), Nomad, and NeonEVM (NEON) are trying to do this by processing transactions off-chain and then aggregating them back into the Ethereum mainnet. This approach dramatically improves transaction throughput and reduces latency, addressing Ethereum’s historical limitations.
Current crypto market prices seem to indicate that a bull market is underway, mega caps may still have room to grow before smaller coins outperform the rest of the market. However, this phase may not be far away, and once it begins, being under-positioned may be difficult and potentially costly, especially as institutional adoption grows and the need to generate alpha increases.
Note: The opinions expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.