We are currently in a bull market. The retail market is gradually recovering, Bitcoin price is stabilizing near its 2021 all-time high, and the outlook is filled with multiple bullish catalysts. As an observer who has been through the entire year of 2023, it is shocking to see the price of Bitcoin climb all the way above $70,000.
As our industry has matured and the scope of the market has expanded significantly, from modular blockchain infrastructure to Solana’s meme coins to Bitcoin NFTs and more, there are now more things to watch than ever before.
This article aims to provide an overview of the second quarter of 2024, integrating everything I have learned and observed. I hope to use this as a starting point for what might happen over the next 90 days or so. I'm not offering any firm guarantees here. Remember, the market is constantly changing, so it is crucial to keep your knowledge updated with new information.
I have divided this into several sections:
1. Main assets
2. Altcoins
3. NFT
4. Airdrop
5. Narrative
Main assets
Bitcoin:
Looking at the longer time horizon, the major assets show impressive momentum. Bitcoin hit its highest ever monthly close yesterday. Considering the approval of a Bitcoin ETF and the impending halving, optimism for Bitcoin in the second quarter is understandable.
Ethereum:
According to information from the polymarket prediction market, the rejection of most, if not all, Ethereum ETFs has already been reflected in market pricing. The first deadline is May 23, and we will pay close attention to relevant news.
In addition to regular spot ETFs, several leading ETF issuers have filed to include staking as part of the spot ETF itself. I think this is a natural and logical sequence, as traditional finance is used to yield, and staking yield is inherent to the Ethereum protocol itself. Moreover, given the success of the spot Bitcoin ETF, Fink's ETF track record, and Coinbase's professionalism in paving the way for regulation, as well as the close correlation between the spot Ethereum ETF and the Ethereum futures ETF, it is hard for me to imagine that we will not see the emergence of a spot Ethereum ETF sometime this year.
Solana：
I published a bullish article on Solana in August 2023, but to see this actually happening is mind-boggling. At every stage, there are countless criticisms, but this is exactly why I am more optimistic. It's clear that Solana has established itself as a "prime" at this point, and I'm very aware that Solana's trajectory will continue over the next quarter.
Is anyone paying attention to SOL futures ETF?
Overall, my view is very bullish, especially when the monthly chart looks like this and the overall sentiment remains 50/50, it can only mean one thing: the market will continue to move upward.
Whenever the RSI crosses the 70 mark, Bitcoin starts to run wild.
Beyond that, the main catalysts to watch out for are (if I've missed any other important ones, please let me know!):
- Bitcoin Halving around April 20th
- Robinhood earnings for April 24
- Dogecoin futures Coinbase trading on April 29
- Estimated Coinbase earnings on May 2nd
- Spot Ethereum ETF deadline of May 23 (and subsequent ETF decision)
Altcoins
Relative to the crazy rise in Q4 2023, many altcoins experienced significant declines last quarter. This is reasonable considering the following factors:
- Institutional focus on Bitcoin (spot ETF approval and upcoming halving)
- The madness of meme coins
I spoke with numerous builders in the field and they cited concerns that this would change the incentives for legal builders. Why bother working on the infrastructure or protocols that will be the core of the future of finance when you can launch a meme coin? I'm sure that will change at some point.
At the end of the day, the crypto market (and the market in general) is a game of attention. The goal of any project is to stay relevant and attract eyeballs. While existing meme coins have actually suffered, new tokens like ETHFI, DYM, JUP, etc. have performed well since their launch.
That’s right. Again, this goes back to the issue of attention.
So what could cause altcoins to rise again? The two main catalysts in my mind are:
- Active SEC litigation against Coinbase (regarding whether tokens are securities)
- Implementation and launch of Uni V3 governance fee switch
I expect both of these to occur sometime in the second quarter.
During this period, there will be a few altcoins that continue to outperform, just like they have over the past few months. There are too many to list them all.
NFT
In September 2023, many mainstream media announced the death of NFT. Since then, we have seen some signs of recovery, albeit less active than in late 2021 and early 2022. what is the reason?
In my opinion, there are two reasons:
- Meme coins satisfy the desire for gambling/speculation
- Market is fed up with oversupply of NFTs
However, over the past quarter, Bitcoin-related NFTs have shown significant outperformance. I think the market leaders (e.g. puppets, nodemonkes, RSIC) continue to perform well in the second quarter.
To summarize why (not just for NFTs but other areas as well), the reasons I observe are:
The market has introduced several new technologies, clearly identifying market leaders
Technology becomes more accessible, making it easier to buy and mint NFTs
The parody project was created with extremely high expectations (we will be the next cryptopunk/bored ape)
A few of these projects have grown, the vast majority have not
Somewhere between the last two points, supply overwhelms demand and the market starts to fall. To add fuel to the fire, NFTs are less liquid relative to meme coins and governance tokens. Rising liquidity is a powerful factor for the rise, which is why BAYC was able to rise from 5 ETH to 40 ETH. And when participants rush to exit, this lack of liquidity becomes a bug on the decline, i.e., who will be the incremental buyers, that is, the exiting liquidity, during the decline?
So where are we today?
Several communities have persisted through the brutal bear market. The two most prominent are pudgy penguins and mad lads. From experience, you will often see industry leaders and original backers use mad lads and pudgy penguins as their avatars PFP. Judging by their price increases in Q4 2023 and Q1 2024, holding onto these two projects means you are either an early holder (and resilient enough not to sell) or a late buyer with enough wealth.
In either case, builders will want to target these NFT holders in an attempt to bootstrap their own projects and communities. As a result, these communities have been targeted by multiple airdrops.
However, over the past quarter, Bitcoin-related NFTs have shown significant outperformance. I think the market leaders (such as puppets, nodemonkes, RSIC) will continue to perform well in the second quarter.
To summarize why (not just for NFTs but other areas as well), the reasons I observe are:
- The market has introduced some new technologies, clearly identifying the market leader
- Technology becomes more accessible, in which case it becomes easier to buy and mint NFTs
- Parody projects are created with extremely high expectations (we will be the next cryptopunk/bored ape)
- A few of these projects have grown, the vast majority have not
Somewhere between the last two points, supply overwhelms demand and the market starts to fall. For the upside, rising liquidity is a strong factor, which is why BAYC was able to rise from 5 ETH to 40 ETH. And on the way down, who will be the incremental buyers, that is, the exiting liquidity?
Airdrops and new tokens
We will see a lot of airdrops in the second quarter. Many projects that have been under construction for the past period of time will undergo airdrops and token releases.
The most anticipated airdrops in the upcoming quarter seem to be:
Confirmed date:
- Ethena ($ENA), April 2
- Wormhole ($W), April 3rd
- Zeus ($ZEUS), April 4
Solana：
- Parcl（$PRCL）
- Tensor（$TNSR）
- Kamino ($KMNO) possible in April
- Drift Protocol ($DRIFT) maybe sometime in Q2?
Modularity:
- Nim network（$NIM）
- Rivalz Network（$RIZ）
- Avail
- LightLink
Re-pledge:
- Renzo
- Eigenlayer
- Swell
- Kelp
AI:
- GetGrass
- io.net
other:
- ZKSync
- LayerZero
- Hyperliquid
- Blast
I'm sure there's something else I've missed, please let me know if there's anything important.
Narrative
Bitcoin Halving - BTC Beta
I see more Bitcoin-related protocols being built, many of which do not yet have tokens. This is to be expected given the recent performance of Stacks (STX). We saw a mini version of this in December 2023, anticipating the approval of a spot Bitcoin ETF. Coins like MUBI, BSSB, ORDI, and TRAC have seen incredible gains. I think we will see this on a larger scale in the weeks/months leading up to and after the halving.
ETH ETF / Rehypothesis - ETH and Rehypothecation Beta
ETH has been hit hard over the past few months, with many calling for the death of ETH. ETH has performed well in some areas, most recently before the run-up from the mid-2000s to $4,000.
SocialFi
Given the gains in Farcaster and $DEGEN, FriendTech is definitely taking notice of the demand here. Just look back to August/September 2023 to see how fast FriendTech is growing. The release and airdrop of V2 are highly anticipated, considering how high the trading volume for points is. If FT V2 does well, this could be a powerful catalyst with SocialFi projects like Fantasy Top.
Finally, if FriendTech Points are really worth over $10 each, I think it is very likely that Farcaster will issue tokens...
Crypto x AI Tokens
I divide AI tokens into two parts:
Decentralized computing/storage/bandwidth
Machine Learning/AI Intelligence/LLM Packaging
With the launch of getGrass and IONet, this should be the catalyst to reignite projects that fall into the first category. The market leader in this space is Render, which performed very well over the past quarter. A strong continuation of NVIDIA's earnings should also reignite interest in the space.
Modular blockchain
After experiencing a sharp rise in late Q4 2023, Celestia, arguably the market leader in modular blockchain infrastructure, has been in a choppy correction.
Beyond price action, real progress seems to be being made, with applications like Aevo, Lyra, Conduit, Polygon, and RitualAI starting to use Celestia to provide data. A similar situation is happening with Dymension.
As these projects built on this modular blockchain infrastructure continue to succeed and airdrop tokens to stakers, it is inevitable that there will be a shift in focus to the modular blockchain category. As a result, I think we will see another round of upward repricing, especially if we get positive new news in the SEC v. Coinbase case: tokens as securities.
Additionally, as the team unlock approaches in late 2024, I expect there will be some level of coordination between infrastructure projects (e.g. DYM/TIA) and integrated dapps to develop a strategy regarding team and investor token unlocks.
Looking longer term (after Q2), I think this modular meta-message will start to become exhausted as these initial market leaders reprice and become successful. My base case for how the end of this cycle plays out is:
- Infrastructure projects that help dapps/middleware save money → airdrops → repricing higher
- Follow-on/beta project launch → some projects provide value, but nowhere near as much as market leading projects
- More projects are launched without any use value and are just building some "cool" technology with funding from investors who missed out on the first two projects.
- Other narratives that may appear are: RWA, DEX, DePIN, Blast.
