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In 2023, despite ongoing global economic downturn and tightening cryptocurrency regulations, the crypto industry has demonstrated remarkable resilience. Key developments such as the Ethereum Shanghai upgrade, new cryptocurrency regulations in Hong Kong, lawsuits against major exchanges Binance and Coinbase, the NFT craze, and the anticipation of a Bitcoin spot ETF have contributed to the overall recovery and stabilization of the global cryptocurrency market, which has firmly surpassed a market cap of $1.6 trillion amid fluctuations and volatility.
With a strong performance in the closing stages of 2023, and the blessing of multiple positive news such as ETFs, halving, and interest rate cuts, the much-anticipated bull market of 2024 seems no longer distant. In this stage filled with opportunities and risks, hope and challenges, PANews interviewed 20 well-known crypto institutions such as Animoca Brands, HashKey Capital, Binance Labs, NGC, C Squared Ventures, Cobo, Generative Ventures, Newman Group, etc., to discuss topics such as the future market trend, narrative themes, and potential race tracks.
Looking back at 2023
The frequent occurrence of black swan events in 2022 plunged the industry into a trough, making “cleaning up” and “repairing” the two key words for 2023. YatSiu, co-founder and CEO of Animoca Brands, believes that “2023 is a year of industry rectification. During the market rebound, we have seen bad actors being removed. For many, this is a challenging market environment, but as an industry, we have become stronger and more robust. Despite the challenges, the entire industry has shown amazing adaptability and growth, truly demonstrating the resilience of this industry.”
“From the secondary market perspective, 2023 was a year of starting low and ending high.” Binance Labs stated that although the primary market was much quieter compared to the previous year, there were still many gratifying advancements. During the long bear market waiting period, we saw the cream rise to the top, with truly outstanding entrepreneurial teams solidifying their positions. At the same time, the reasonable return of valuations has provided long-term oriented investors with more opportunities.
In 2023, Hong Kong was almost a buzzword throughout the year. Adrian Lai, founder of Newman Group, pointed out that with the full support of the Investment Promotion Bureau, Cyberport, and Hong Kong Fintech Week, Hong Kong has become the next center of Web3. He also expressed his greatest surprise at the development of Ordinals, NFTFi, and Web3 social networks.
Eric Yang, managing partner of Fundamental Labs, stated that in 2023, despite the continued macro and geopolitical challenges facing the global economy, the industry has shown great resilience. Technology and applications have further evolved and become more widespread, and new ecosystems continue to emerge. The integration of DePIN, AI, and Web3, as well as the Bitcoin Layer 2 network, is particularly impressive.
According to Benson, an investor at OKX Ventures, the most surprising track in 2023 was the Bitcoin ecosystem. “Combining OKX’s focus in the wallet field, we have laid out many related projects. This year, the BTC ecosystem will definitely integrate with the Turing-complete smart contract ecosystem in different forms, possibly in the form of restaking/L2 or cross-chain bridge communication protocols, which will give rise to a new round of asset issuance channels and onboard new user groups.”
Bitcoin Ordinals: How much potential is left in the new hot trend?
The revival of the Bitcoin ecosystem has sparked a craze for inscriptions, not only driving innovative development in Bitcoin but also spreading inscription narratives to other public chains, triggering a nationwide frenzy of inscriptions. Will Wang, a partner at Generative Ventures, said, “No matter the industry, the core assets worth holding onto are always few, and the inscription track is no exception. Ultimately, value will concentrate on meaningful consensus. As early investors, we will actively focus on teams in the BTC ecosystem that address the main contradictions, just like ETH, focusing on scalability, security, and practicality.”
Ciara Sun, founder and managing partner of C Squared Ventures, expressed her views on the positive role of the Bitcoin ecosystem, stating that the BTC ecosystem had been developing slowly, especially in terms of BTC expansion concepts. Many BTC developers had seen BTC as a super ledger unsuitable for deploying Dapps for Defi interaction. However, after the promotion of Ordinals, users familiarized themselves with how the BTC ecosystem operates by learning to use BTC wallets, indirectly participating in the BTC ecosystem through inscriptions. This not only brought significant income to miners but also promoted the development of expansion projects such as RGB, Lightning Network, Tap Assets, Bitvm, and others. In addition to asset issuance, the future BTC ecosystem will need to be compatible with more complex application scenarios and usage environments. Less on-chain computation and more on-chain verification will continue to drive the continuous iteration of the entire ecosystem.
Adrian Lai, founder of Newman Group, believes that Ordinal is the fastest-growing track in the recent Bitcoin ecosystem. With the increase in Bitcoin market value, the potential of BTC native DeFi and related markets has rapidly increased, attracting a new group of users and other developers’ attention. Therefore, in the first half of 2023, there was a sharp increase in demand for infrastructure construction in this ecosystem. However, Adrian stated that the Ordinal ecosystem is still in a very early stage, with many technical aspects needing improvement. In this situation, it will take some time for it to usher in a new wave of growth. “If this ecosystem can explode before the next bull market arrives, the prospects for Ordinal are undoubtedly limitless, surpassing the growth rate of Bitcoin.”
Binance Labs stated that the explosion of the Bitcoin ecosystem and inscriptions has injected great enthusiasm into the market with new ecosystems and a new BRC20 asset issuance method. Currently, it is still mainly in the speculative stage, and its actual utility remains to be observed.
The inscription is currently in a chaotic, disordered, and highly fragmented stage with obvious head effects. Formless Capital founder Cecilia also pointed out that the inscription track is still in its early stages, and she also looks forward to seeing more related and improved infrastructure emerging in the future to help users and traders better verify, explore, and participate in the inscription project.
Prasad Mahadik, a senior investment analyst at MH Ventures, said that by using the inscription technology to compare data layers of Bitcoin, new uses or applications are being created, which could expand its role as a decentralized application layer (DA). The development of the BRC-20 standard now includes functionality beyond its initial scope, and the functionality developed by indexers will not be limited to indexing BRC-20 tokens. The Bitcoin ecosystem is receiving renewed attention, especially in the infrastructure and decentralized finance (DeFi) fields. “We also see the emergence of various asset issuance standards, such as Runes, TAP, SRC20, and stablecoins supported by BTC. In addition, the development of extended solutions such as the RGB protocol is enhancing privacy and enabling smart contract functionality.”
As a novel asset issuance method, as long as there is hot money flowing, the inscription sector will definitely continue to exist. From the perspective of fair launch, it is also a more user-friendly alternative meme coin. In terms of the potential of the inscription, Benson, a investor at OKX Ventures, said that in the short term, its potential downside will also be a marketing tool for project parties to do cold starts or release new products; in the long term, there are many excellent developers optimizing the protocol layer, launching different asset standard protocols, and based on these standards, empowering assets or re-running ETH’s DeFi practices, which will definitely bring strong market growth.
The Battle of Ecosystems: Ethereum or Solana?
The recent discourse and price performance of Solana and Ethereum have sparked widespread market discussions and a “battle” between supporters of the two ecosystems, which professional institutional investors see as a positive phenomenon.
YatSiu, co-founder and executive chairman of Animoca Brands, does not see any controversy between Ethereum and Solana. Instead, he sees it as a sign of intense competition and a healthy ecosystem. He believes that when various chains offer competitive alternatives, it drives the market forward. The free market is the cornerstone of innovation and growth, and the competition between Ethereum and Solana is the best proof of that.
Ciara Sun, founder and managing partner of C Squared Ventures, provided a detailed analysis of the two different ecosystems. She pointed out that Solana’s relative strength over Ethereum is mainly due to: (1) Solana’s low price, with the SOL token at historically low levels after the FTX scandal, leading to a significant number of users buying in, making it more cost-effective compared to ETH; (2) active developers, including the ongoing efforts of projects such as LSD with SOL assets at its core, steady growth in TVL, driving participation in DeFi through underlying assets such as mSOL, rapid deployment of inscriptions like SOLs, LAMP, and FREE, and the wealth effect driving a large influx of funds. The active developers on Solana quickly attract market funds and attention; (3) a large amount of VC and FTX exchange holdings of massive token chips, driving up interest in line with everyone’s interests.
Reasons for the stagnation of the ETH ecosystem include: (1) large market value and plate size, relatively low cost-effectiveness compared to other L1s. During a bull market, everyone pursues higher increases, requiring a large number of chips to drive up ETH and easily leading to dumping, causing the ETH-to-BTC exchange rate to continuously decline; (2) lack of new narratives: After the successive hype of LSD and Layer2, there is a lack of core narratives, the Cancun upgrade has been continuously delayed, making it difficult to attract market funds; (3) NFTs in the ETH ecosystem are similar to BRC20 in BTC, with the stagnant NFT prices leading to a decrease in real users of ETH, with many users moving to niche tracks such as meme and inscriptions; (4) The halving of BTC and whether the spot ETF is approved are the core speculative narratives in the market, with little external stimulus for ETH, and the foundation has been selling coins all along.
The current competitive situation in the crypto market has already been played out in the earlier tech field. Prasad Mahadik, senior investment analyst at MH Ventures, pointed out that such situations have occurred repeatedly in the tech field. “The precedents of Android and iOS, and Mac and Windows, tell us that a single architecture is hard to support everything. Both of these ecosystems have a lot to learn from each other, such as the optimization of ETH and Solana’s fee mechanism and MEV mitigation.”
Jack, a researcher at Web3.com Ventures, believes that the thriving DeFi ecosystem has helped Solana maintain a strong momentum in the early stages of this bull market. Although Ethereum’s current performance is not outstanding, it is believed that with the arrival of the Cancun upgrade and the implementation of EIP-4844, a new wave of growth in the L2 market can be expected, potentially reshaping the current landscape of L2. The Ethereum ecosystem still holds opportunities for participants in the crypto industry.
Ethereum is still the biggest smart contract application platform. Eric Yang, managing partner of Fundamental Labs, believes that competition from other Layer1 platforms is positive for the whole industry. In addition to Ethereum and Solana, Polkadot will also see a 2.0 upgrade with many important features.
Given the positive expectations, how will the market trend in the future?
Under the expectations of ETFs, halving, and interest rate cuts, various institutions generally hold an optimistic attitude towards the market trend in 2024.
Among them, Xiao, a partner at HashKey Capital, is very bullish on the future market. She stated that the expectation of interest rate cuts at the macro level brings more liquidity. “In the world of BTC, halving is a fundamental positive, and ETFs also provide a channel for large funds to enter. At the same time, we see that the BTC ecosystem is beginning to have applications, even layer2, so I am very optimistic about the BTC ecosystem. On the other hand, in the bear market of the past year, the infrastructure of the entire crypto industry has also been improved, with some improvements in scalability and interoperability. Under the premise of liquidity stimulation, it is expected to attract more users into the circle.”
Shen Yu, co-founder and CEO of Cobo, pointed out that in addition to the expectations of ETFs, halving, and interest rate cuts, the revision of the Basel Committee on Banking Supervision (BCBS) standards and the implementation of cryptocurrency accounting rules by the Financial Accounting Standards Board (FASB) in the United States are also positive for the industry. Shen Yu said that once the cryptocurrency accounting rules take effect, it means that cryptocurrency can be treated as a class of assets and valued in real time, which will lead to a phenomenon: more companies will be more willing to hold digital assets, better reflecting their true value. If this trend continues to expand, banks can also hold cryptocurrencies as alternative assets, or support collateral lending, providing better off-exchange leverage, rather than the current large amount of on-exchange leverage. “Do not try to predict the market, as the market is often unpredictable.”
Zihao, a partner at NGC, predicts that the market will experience a brief uptrend after the ETF is finalized, and then enter a halving bear market, only to see the long-awaited bull market in the second half of the year. He added, “From a long-term perspective, the halving bear market will be a better opportunity.”
Nicole, a partner at Lingfeng Capital, believes that ETFs are the biggest positive for Web3, perhaps none other, and sees this as a paradigm shift in ideology, beneficial for Web3 and will have many chain reactions benefiting Web3.
Ken, an investor at Magnus Capital, believes that we have already seen the market’s bottom and are approaching a new cycle, possibly entering the next phase of the bull market. “From a macro perspective, once the Federal Reserve adopts a better quantitative easing policy, we will definitely see a new round of uptrend.”
In addition, Jack, a researcher at Web3.com Ventures, also maintains an optimistic attitude towards the cryptocurrency market in 2024, especially in the second half of the year with the triple support of interest rate cuts, halving, and ETFs, the entire cryptocurrency market may re-peak in the next bull market cycle.
Compared to these short-term positive factors, Will Wang, partner at Generative Ventures, says that as an early-stage investment firm, they are all in on this track (compared to other areas of venture capital) and are more focused on long-term factors. “We are extremely optimistic in the long term, based on a simple assumption that since 2008, the underlying problems of traditional financial institutions, especially central banks and intermediary financial institutions, and the unsolvable future debt issues and currency depreciation due to excessive issuance, will make crypto assets one of the extremely important options for asset holders. In my previous articles, I also likened it to the financial version of the ‘Noah’s Ark’.”
The main narrative of 2024: AI, the Bitcoin ecosystem…
“Compliance is a prerequisite, and cross-domain integration presents new opportunities. The acceptance and participation of institutional investors and mainstream industrial users will lead the development of Web3 into a new stage.” Du Yu, the head of the Wanxiang Blockchain Lab, predicts that in 2024, global regulations on Web3 will become clearer and more mature. Regulatory frameworks in areas such as ETFs, stable coins, and tokenization will provide guarantees for the industry’s health and sustainable development. Du Yu believes that as the industry narrative shifts from simple blockchain technology to a broader Web3 focus, the industry’s attention is gradually moving from technological innovation to application innovation. From an application perspective, pure blockchain technology is no longer sufficient to meet demand. “It is expected that 2024 will witness a deep integration of blockchain with the Internet of Things and artificial intelligence, especially in the Web3+AI and DePIN tracks, which will bring new focal points and hotspots to the industry.”
YatSiu is optimistic about the market trends in 2024 and has high expectations for the development of GameFi. He stated that there are 3.2 billion gamers familiar with the concept of virtual currency and assets, and Web3 games are expected to experience rapid growth, especially in the Asia-Pacific and Middle Eastern regions, with a strong interest also emerging in Europe. Some long-awaited AAA-grade Web3 games are set to be released this year. It is anticipated that these games will enrich the Web3 gaming experience and promote the overall development of the industry.
Binance Labs expects to face challenges in 2024 and predicts that the main narratives will revolve around two areas:
• Mass-market breakout applications: such as socialfi, gamefi, and AI-driven applications. The biggest challenge is that most current applications still primarily focus on finance, with insufficient user usage and consumption scenarios, lacking non-financial business models and sustainable revenue.
• Innovative DeFi projects: such as LSDFi, and new types of derivative exchanges. DeFi, as the most urgently needed application in the industry, is also constantly undergoing iteration and innovation: from spot trading to derivatives, from AMM/order book to various hybrid mechanisms, and from trade mining to real yield supported by actual cash flow.
Additionally, they believe that the biggest challenge this year is that the speed of technological iteration may lag behind the industry’s bullish transformation, and the development of infrastructure may not keep pace with the influx of users and funds into the industry.
In the view of Will Wang, a partner at Generative Ventures, narratives can be categorized as either internal or external. “Internal narratives will continue to change constantly in 2024. At the beginning of the year, it might be all about the BTC ecosystem, but that could shift by mid-year, only to possibly revert back by the year’s end. The frequency of these changes might even occur on a monthly basis, reflecting the unpredictable nature of internal funds. However, when it comes to external perspectives, or how the general public views crypto assets, our stance remains consistent: it’s crucial to focus on rebuilding trust. The key question is whether these assets are reliable and predictable, rather than being associated with scandals and security incidents. Therefore, we believe that the true narrative for the masses revolves around rebuilding trust in these assets, whether it’s through mainstream financial institutions entering via ETFs or the general technological advancements pushing the boundaries of what’s deemed impossible in the industry. These are the true driving forces.
Will Wang further adds, “Additionally, we are more focused on the next ‘Satoshi Nakamoto moment.’ In 2008, Satoshi Nakamoto attempted to address the trust issue brought about by central banks and financial intermediaries. What about 20 years later in 2028? If the breakthrough in AGI happens as anticipated, then the intermediary issue in 2028 will revolve around AI. Balancing and mitigating the intermediary problems brought about by AI will be humanity’s greatest challenge and will mark the next ‘Satoshi Nakamoto moment.’”
HashKey Capital partner Xiao said that this year’s main narrative is about breaking out and integration. “First, it’s the financial integration brought by ETFs, making it easier for more funds to enter the crypto circle. On the other hand, with the improvement of infrastructure, we can support applications with a larger user base, and we will also see the integration of crypto user circles and traditional user circles. In addition, crypto and other technologies such as AI, IOT, are also integrating.”
NGCVentures partner Zihao mentioned that there are many main narrative threads in this market, which can be divided into different levels, corresponding to different asset levels, risk levels, and potential returns. He stated that breaking out is still a common issue faced by all narratives, with Bitcoin, AI, Solana, DEPIN, and Gaming having the best breakout foundations. Eric Yang, managing partner of Fundamental Labs, expressed particular interest in the integration of DePIN, AI, and Web3, as well as the infrastructure of the Bitcoin ecosystem. Ken, an investor at Magnus Capital, also agreed that the industry will focus on the combination of Depin, AI, and Web3 as the main narrative, pointing out that the lack of large-scale and high-security interoperability is still a challenge, and it is expected that zk technology will further mature to improve this demand.
Karen Kao, market media director of Sora Ventures, believes that the main narrative will revolve around the Bitcoin ecosystem, such as inscriptions and BRC 20, as well as other protocols such as atomicals and TAP/PIPE, Casey’s runes, and so on. Currently, the main obstacle is that the market is mainly focused on Bitcoin memes, so as more practicality enters the market, people will gradually gain a better experience in interacting with L1 Bitcoin, which will enhance speculative behavior, thereby driving prices further upwards.
When to enter the market? How can ordinary investors seize the bull market?
For many individual investors who are following the developments in the cryptocurrency industry, the most important and pressing issue is how to seize the right opportunity to enter the market, grasp the buying and selling points, and earn more profits during a bull market. Shen Yu, the co-founder and CEO of Cobo, expressed that everyone’s financial situation and risk tolerance are different. Given the significant fluctuations in the cryptocurrency market, it’s essential to experience and feel the market firsthand. As for when the right time to enter is, it varies from person to person. Furthermore, combining some key year-end routine work that he shared on X recently, he also provided detailed advice for ordinary investors:
First and foremost, it is essential to manage asset security:
- Follow the 3-2-1 data backup principle: Don’t wait until you lose data to regret it. Regular backups ensure safety.
- Security risk modeling: Identify and address potential risks based on the “Blockchain Dark Forest Self-Rescue Manual” to safeguard data and system security.
- Password and system updates: Update strong passwords, back up 2FA, check SIM card PIN codes, reset operating systems, and avoid security vulnerabilities.
- Network security check: Inspect network devices to ensure an impenetrable network environment, protecting online activities.
- Wallet backup check: Verify the correct backup of wallet mnemonic phrases to prevent unnecessary losses.
- Scan old address assets and authorizations: Thoroughly check previously used addresses to ensure asset security, take advantage of low gas fees to clean up authorizations, and update the whitelist address list.
Secondly, it’s important to do financial planning:
- Update the balance sheet: A clear financial situation is the basis of rational decision-making.
- Annual asset management plan: Set clear goals for the 2024 bull market.
Lastly, continuous learning, maintaining curiosity, and observing and thinking more are essential. The crypto industry evolves very quickly, with strong cyclical patterns. Bubbles burst quickly, and there are plenty of innovations and various interesting and fun things. Continuous learning and growth are necessary to capture rapid growth opportunities.
Jack, a researcher at Web3.com Ventures, stated that for non-professional investors, holding mainstream tokens would be a more stable profit strategy for participating in a bull market, avoiding the influence of overheated investment emotions. The noise of market information during a bull market is often greater, requiring higher research capabilities from investors.
Yi Hsin Wei, BD Associate at Ava Labs, mentioned that entering the market now is a bit late. The best entry time was during the low period of 2023 Q1-Q3. However, the best strategy now is dollar-cost averaging (DCA) and investing in altcoins with higher upside potential. Additionally, gradually accumulating tokens with larger market value and finding the best profit avenues, such as staking and LSDs, is recommended.
Eric Yang, Managing Partner at Fundamental Labs, believes that Web3 is still a very new industry, and there are good investment opportunities and targets in both bull and bear markets. Not following the crowd, avoiding blind obedience, and FOMO, continuous learning, sticking to independent judgment, and maintaining rationality will always lead to good entry opportunities.