What is narrative in cryptocurrencies?

In the world of cryptocurrencies, a narrative is a popular story or idea that influences how people view the value of different cryptocurrencies.
These narratives can create major public movements and are usually based on recent developments and hot blockchain activity in a particular niche.

*Here are some examples of motivators:
New technological developments in the world of cryptography, such as the development of layer 2 solutions to speed up transactions.

*Major events in the global economy or society that make cryptocurrencies look more attractive, such as the Bitcoin halving.

*The hopes and goals people have for cryptocurrencies, such as the desire for a more decentralized financial system (Defi).

What is narrative trading?

Narrative trading is a strategy that revolves around identifying and investing in financial assets based on popular stories, trending topics, or prevailing market sentiment, often amplified by social media and news outlets.

Unlike traditional methods such as technical analysis (which focuses on price patterns and market trends) or fundamental analysis (which assesses the intrinsic value of an asset based on financial data), narrative-based trading takes advantage of the collective mindset and emotions of investors.

In this approach, traders pay attention to what people are talking about, what is gaining momentum on platforms like Twitter or financial news, and how these discussions might impact the value of a particular asset. For example, a sudden spike in discussions around a particular cryptocurrency due to a technological development, celebrity endorsement, or viral trend on social media might prompt more investors to buy it, temporarily pushing its price higher.

The key to narrative trading is timing and understanding public perception. Traders aim to capitalize on a trend early before it reaches its peak popularity and sell before the hype dies down and prices may fall.

Narrative trading requires staying informed of current events, monitoring social media trends, and having a good sense of market psychology. It is important to note that narrative trading can be speculative and risky, as it often relies more on public sentiment than the underlying value of the asset.

Five Cryptocurrency Narratives for 2024

Bitcoin recently broke its all-time high during the previous bull run, and continues to set new records at the time of writing. This leads many to believe that the cryptocurrency market’s bull run has begun.

While most experts attribute this rise to the four-year Bitcoin halving cycle, there are several supporting features.

It is only natural that these novels will gain a lot of momentum in the current market. Let’s take a look at some of the leading crypto novels for 2024.

Web 3 Games

The gaming industry is undergoing a seismic shift.
In 2022, global blockchain gaming revenue surpassed $4.6 billion, attracting a wave of projects in the subsequent bull market. Many of these projects, such as Axie Infinity, which secured a $7.5 million funding round, have raised millions of dollars in funding. However, some projects have struggled to deliver on their ambitious promises after launch, leaving retail investors feeling disappointed.

Creating a truly exceptional game takes significant time and resources. Developing a cutting-edge game can take up to five years and requires a significant initial investment. Traditionally, venture capitalists have provided this funding, allowing studios to focus on long-term development.

However, the web3 funding landscape tends to lean toward smaller investments — ranging from a few hundred thousand to a few million dollars — as investors seek a quicker return before the downturn sets in. This short-term focus can be impractical for studios building sustainable, high-quality games.

What's the good news?
* While some projects sought to make a quick profit in the recent bull run, many studios were quietly laying the groundwork for the future.

*Since 2020, many developers have been working hard to build innovative GameFi experiences. In 2023, there was a 19% increase in newly developed games, with more than 550 games produced, indicating a strong interest in developing blockchain-based games.

*In 2025, the sector is expected to shift from hype-driven growth to a more balanced distribution across platforms and genres. The integration of AAA games onto the blockchain will enhance the quality and experience of gaming, with a focus on interoperability driving cross-chain asset and game development.

*Today, we are on the cusp of a new era in play-to-earn. Cutting-edge P2E games, like the long-awaited Shrapnel, are about to launch, providing players with immersive experiences and robust economies.

artificial intelligence

AI tokens are emerging as an important element in trading and investing as we approach 2025. AI tokens are not general-purpose cryptocurrencies. Rather, they are digital assets that power specific projects and platforms built at the intersection of AI and blockchain.
The integration of AI and blockchain is expected to deepen, which could boost demand for AI-based crypto tokens. However, investors should be cautious, given the risks inherent in the crypto market.

The emergence of large language models like GPT 4.0, Gemini, and Claude furthers the AI ​​narrative.

Developing AI was expensive and resource-intensive. AI tokens create a decentralized marketplace where anyone can contribute computing power or data to AI projects, lowering the barrier to entry and fostering collaboration.
Ocean Protocol is a platform for secure data sharing. OCEAN tokens are used to incentivize data providers and consumers within the platform’s data marketplace. AI projects often rely on large datasets for training, making Ocean Protocol a valuable tool.
These cryptocurrencies can be used to pay for access to AI services on the blockchain platform. This allows developers to build and monetize AI applications without relying on centralized cloud providers. For example, SingularityNET is a decentralized marketplace for AI services, where users can use AGIX tokens to buy and sell AI models, data, and other tools needed to develop AI.

Additionally, there is the Oasis Network, a privacy-focused blockchain, and iExec RLC, which enables users to monetize computing power. These platforms demonstrate the diverse applications of AI in improving blockchain functionality, from improving privacy to the efficient use of computing resources.

Real-World Asset Tokenization (RWA)

*Tokenizing real-world assets such as real estate, art, or commodities allows for fractional ownership and easy access to these asset classes. This narrative explores the use of blockchain technology to tokenize real-world assets such as real estate, art, or even commodities.

*Tokenization of digital assets introduces a new approach to dealing with assets, with several banking and financial institutions leading the charge. For example, JPMorgan launched the Tokenized Collateral Network (TCN), a platform that tokenizes traditional assets to facilitate on-chain settlements.

*Integrating digital financial assets with DeFi protocols could open up new possibilities. Imagine borrowing against tokenized real estate or using tokenized goods as collateral for loans. This could expand the scope and utility of DeFi applications. This is one reason why major investment firms like BlackRock are recognizing the potential of tokenized assets to add credibility to the narrative of digital financial assets.

*Projects like Centrifuge aim to connect DeFi to real-world assets, potentially lowering capital costs and providing investors with stable sources of income. Landshare is another interesting platform, offering tokenized real estate investments on the Binance Smart Chain, simplifying the real estate investment process. Polymesh, on the other hand, targets the security sector, addressing many of the issues surrounding security tokens and enabling tokenized security tokens.

DePIN
(Decentralized Physical Infrastructure Networks)

DePin
It is an acronym for Decentralized Physical Infrastructure, referring to blockchain protocols that facilitate the decentralized operation of physical hardware infrastructure.

DePIN tokens fuel a new model for building and maintaining physical infrastructure. Unlike traditional approaches that rely on centralized funding, DePIN projects leverage blockchain technology to create tokenized ecosystems. These tokens incentivize individuals to contribute resources and services to real-world infrastructure projects.

DePin’s potential is enormous, spanning multiple industries including power grids, file sharing, cloud computing, mobility, and wireless. One of DePin’s biggest advantages is its promise to transform how we interact with physical infrastructure, making operations more equitable and efficient than the traditional, capital-intensive methods used by legacy companies.

There is a growing need to invest in infrastructure projects around the world, from renewable energy grids to transportation networks. DePINs offers a new solution to fill this gap.

A prominent early example of DePIN is Helium, which launched in 2019. It uses a network of hotspots created using user-owned devices to create a decentralized wireless network. These hotspots provide Helium’s network coverage, which can be used by a variety of applications such as IoT sensors and smart devices.

Another popular DePin project is IoTeX, which addresses the Internet of Things (IoT) space. It aims to create a secure, privacy-focused network for connected devices by leveraging blockchain technology and hardware modules. Users with compatible devices can contribute to the network and earn rewards, while developers can build secure and scalable IoT applications on IoTeX.

Bitcoin and BRC-20 Token Arrangements

Bitcoin Arrangements takes advantage of the Taproot upgrade (implemented in November 2021) to record data directly on individual satoshis (the smallest unit of Bitcoin). This opens the door to entirely new features for Bitcoin, including:

NFT-like capabilities: The arrangements allow multimedia content such as images, audio, and even video to be embedded on the Bitcoin blockchain, creating the basis for Bitcoin-native NFTs.
Increased on-chain activity: Arrangements require more data storage on the blockchain, which can lead to increased revenue for miners and increased network activity.

BRC-20
It is an experimental token standard built on Ordinals. Inspired by Ethereum's ERC-20 standard, BRC-20 allows the creation of fungible tokens (tokens where each unit is identical) on the Bitcoin blockchain.

Similar to the NFT hype in 2021, investors are expecting increased demand for Bitcoin Ordinals collections like Ordinals Punk Party, Laser Eyes Bitcoin, or BRC-20 tokens like ORDI, which have already seen parabolic gains in Q1 2024.

Reference links:

https://99bitcoins.com/news/the-best-3-crypto-narratives-to-buy-for-2025-heres-why-rwa-desci-and-depin-will-pump

https://www.coingecko.com/learn/crypto-narratives