I feel like something big is about to happen in the cryptocurrency market, something very bullish. While I'm not sure exactly what will happen, the market is undergoing significant changes.
Interest rates start to fall, Ethereum ETF is approved, Bitcoin ETF inflows increase, Stripe launches stablecoin payments...
Like armies positioning themselves before a decisive battle, major crypto companies and traditional financial institutions are preparing for the coming bull run.
More about this “feeling” can be found below:
Source:X
Meanwhile, the machinery within cryptocurrencies hasn’t stopped churning. Yes, prices are falling…but markets are always changing, with new narratives and trends emerging and impacting markets as their influence grows.
Just like MakerDAO was online before the term “DeFi” was even coined, there are new trends emerging in the market that are not big enough to form a coherent story.
Here are 7 emerging trends that could have a big impact on the market.
1. Repackaging
Old coins are boring and gamblers want something new.
It sounds even more exciting if you could change the brand name, create a new token token, and start over with a new chart!
Fantom → Sonic
That's exactly what Fantom does with the Sonic upgrade.
Sonic is a new Layer1 with native Layer2 cross-chain with Ethereum. It will have a new Sonic Foundation & Labs as well as a new visual identity.
What’s more, the new $S token “ensures compatibility and migration of $FTM to $S at a 1:1 ratio.”
This was a smart move, as the Sonic migration generated more marketing hype than simply calling it "Fantom 2.0." This allows Fantom to put aside its multi-chain cross-chain issues and start fresh.
Connext → Everclear
Similarly, Connext is being rebranded as Everclear.
Rebranding is not new in cryptocurrencies, but the emerging trend here is repackaging major upgrades as new products.
This sends a stronger signal to the market than another v2 or v3 upgrade. People are not interested in just another "v4" upgrade.
Source:X
By switching from Connext to Everclear, the team communicated that this was not just a simple rebrand, but a significant step forward in technological advancement.
Connext moves from simple cross-chain infrastructure to the first clearing layer. It's like a chain built on Arbitrum Orbit Rollup (via Gelato RaaS) and connects to other chains using Hyperlane with Eigenlayer ISM.
Connect any chain, any asset, paving the way for a modular cryptocurrency future.
The NEXT token rose by around 38% following the news (but not sustainably). Fantom’s $FTM is hot again and its awareness on X has increased.
I expect more protocols will be renamed to fit market trends and technological advancements in 2024.
For example, IOTA is being rebranded as Layer2 for real assets.
Additionally, mergers may become more common, such as Fetch ai, Ocean protocol, and SingularityNet merging into a $ASI token to become a new crypto super AI project.
The key is to keep an eye on the price performance of new brand items and new marks (if launched). While it’s too early to tell, initial price performance for $FTM and $NEXT, as well as $FET, $AGIX, and $OCEAN, is positive. If the market starts to rise again…
Are there more repackagings, rebrandings to come?
2. Support encryption supervision
Regulation has been a big issue, especially in the United States, with the SEC targeting major players such as Coinbase, Kraken, and Uniswap. While Ripple and Grayscale have scored some victories and approved Bitcoin ETFs, the regulatory environment remains hostile, focusing more on legitimate projects than outright scams.
But things have changed: Trump’s vocal support of cryptocurrencies has forced Democrats to change their anti-crypto strategy. Biden accepts cryptocurrency donations. Now the SEC has dropped its lawsuit against Consensys, effectively acknowledging that ether is a commodity.
Now, the short-term future of cryptocurrencies will depend on the election. I like Felix’s (Hartmann Capital) perspective in the article below.
If Gensler is removed from office or his powers are limited by the courts and Congress, expect crypto assets to surge by more than 30%, followed by a sustained bull run. If he remains in power, a prolonged downturn is expected, with law firms benefiting and cryptocurrencies and taxpayers hurting, with only Bitcoin and meme coins relatively unaffected.
Regulatory clarity could lead to the largest bull run in history, changing digital asset markets in several ways:
Shift from narrative to product-market fit: Crypto projects will focus on creating valuable products rather than just hype, leading to higher quality development.
Clear success metrics: Valuations will rely more on actual product-market fit and earnings, less on speculation, and highlight fundamentally strong tokens.
Easier financing environment: Stronger fundamentals will make it easier for digital assets to obtain financing, reducing the cyclical rise and fall of altcoins.
Booming M&A market: Well-funded projects may acquire undercapitalized but valuable DeFi protocols, driving innovation and closer adoption, with some Tier 1 blockchains turning acquisitions into public goods to increase network value.
3. Bitcoin arbitrage trading: Bitcoin ETF + Bitcoin short position
Leverage always finds new ways into the system. Whether it’s Grayscale’s “widowmaker trade” or CeFi’s (Celsius, Blockfi, etc.) unsecured loans.
Each cycle mechanism is different. But where is the leverage hidden now?
The obvious target is Ethena's risk-free neutral strategy. As long as the funding rate is positive, everything is fine, but what happens if/when the funding rate becomes negative and the $USDe position needs to be closed?
Another target is the rehypothecation of LRT.
But another target is our beloved Bitcoin ETF buyers.
The spot Bitcoin ETF saw 19 consecutive days of inflows, with 5.2% of Bitcoin in circulation being held by the ETF (although this record is now broken).
So, why isn’t Bitcoin soaring?
It turns out that hedge funds are shorting Bitcoin via CME futures in record numbers.
Source: Ignas
"What if a lot of leverage with low funding rates is the leverage of this cycle and already exists" - Kamizak ETH
A possible explanation is that hedge funds bought spot and shorted Bitcoin, engaging in a 15%-20% neutral strategy.
Source: Ignas
The strategy is the same as for Ethena. "What if a lot of leverage with low funding rates is the leverage of this cycle and already exists" - Kamizak ETH
Source: Ignas
What happens when funding rates go negative (as gamblers stop being bullish and close long positions)?
Will Ethena (led by retail investors) and spot Bitcoin + shorting CME futures (led by institutions) cause a major crash when these positions need to be unwound?
Source: Ignas
worry. But perhaps there’s a simpler answer: Institutions are arbitraging the positive price (currently 2.3%) between different Bitcoin spot and Bitcoin futures.
Source: Ignas
Regardless, these new developments brought about by spot ETFs require close attention, as so-called "risk-free" arbitrage often ends up being "more risky" than initially thought.
4. Gamification of points farm
Our points addiction is getting worse, but we don’t know how to stop.
The protocol requires points to attract an initial user base. They help boost adoption statistics and raise capital at higher valuations.
Source: Ignas
We are tired of points but don't have a better replacement yet.
Instead, I've noticed a trend toward points gamification, adding extra elements to make the boring points farming strategy more interesting.
Sanctum introduces Wonderland, where you collect pets and gain experience points (EXP) to upgrade them. As a community, you need to come together to get things done.
This isn’t too different from other points programs in that your airdrops are heavily dependent on the $SOL deposited, but… the community loves it!
Source: Ignas
Sanctum's month-long first season also boosted sentiment. I'd like to see 0 to 1 innovation in points farming, but even with points fatigue, our addiction to them is too strong.
Instead, I expect there will be more attempts at gamification to bring some fun to the farm.
5. The counter-trend of low-circulation, high-FDV (fully diluted valuation) issuances
Everyone hates low float, high FDV releases. Except for the VC and team, who can sell for a higher price. Oh, and there are airdrop hunters, who get more tokens in airdrops.
But what about retail investors? No. 26 of the 31 coins recently listed on Binance are in the red.
Source: Ignas
Binance used to be the place to buy hot new coins, but not anymore. Centralized exchange listings are sell news and cash out events.
Not surprisingly, Binance recently announced a token listing at a modest valuation, prioritizing community rewards over internal allocations.
Source: Ignas
We have yet to see words translate into action, but this would be a step in the right direction.
VCs are taking their fair share of responsibility. Large VC investments that were once viewed as a positive sign are now viewed by the crypto community as extracting value. The concern is that VCs aim to profit by selling their large allocations, which they obtain at minimal cost.
Source: Ignas
The project team must also take action to avoid a perpetually downward price chart.
There is also more experimentation on the part of the protocol parties. For example, Ekubo on Starknet allocates 1/3 of the tokens to users, 1/3 to the team, and 1/3 to be sold by the DAO within two months. Not everyone likes the two-month sell-off, but it’s kind of like a community token sale, similar to ICOs of the past.
Similarly, Nostra on Starknet launched NSTR at 100% FDV, with 25% allocated via airdrop and 12% sold during the liquidity launch pool event. They called it the fairest launch in DeFi, but it raised concerns leading to low-circulation tokens (teams, VCs cashing out early and exiting). Nostra said team and VC tokens will be tokenized on-chain.
If you see them selling it, it’s best if you sell it too.
We also have 100% airdrop experiments such as Friendtech and Bitcoin Runes are mostly minted by the community for free (although Runes also allow for pre-mining).
what's the result? uncertain. But there is hope for the industry.
Watch for new token issuance models – a new type of successful issuance could become a new meta trend in this bull market. If you find one, please share it in the comments.
6. McKinsey enters DeFi
DeFi allows for self-sovereignty, enabling you to own and use your assets regardless of national borders.
But DeFi has gotten really complicated! There are many strategies available, the complexity of which increases with every % we want to squeeze out.
Additionally, governing these increasingly complex protocols requires specific knowledge.
Therefore, consulting companies similar to traditional finance have emerged to help protocols deal with security, governance and optimization issues. The most famous example is Gauntlet, whose clients pay millions every year.
What’s more, DeFi protocols are adapting to allow the McKinsey of DeFi to manage user assets or/and external risk management.
Morpho Blue permissionless lending allows the McKinsey of DeFi to create markets with any asset and risk parameters without relying on governance.
Source: Ignas
7. Getting started with DeFi similar to Web2
I really like this one.
While friend.tech may have its issues, it has successfully popularized Privy, making it possible to create and manage wallets using Web2 accounts.
Source: Ignas
During the NFT craze, I helped a friend purchase an NFT on OpenSea. Teaching how to use MetaMask is a real pain.
But now, you can use Privy to create a wallet on OpenSea using email and 2FA code. Seriously, go give it a try. It took me a minute.
Fantasy Top is leveraging Privy and other user-facing applications.
This trend extends beyond Privy.
Developed by Synthetix, Infinex allows wallets to be created using keys, so you only need to use a password manager for your wallet.
Coinbase has launched a smart wallet that pays gas fees on behalf of users, supports batch transactions, and allows wallet creation using Web2 tools.
Now, complex user onboarding is no longer an excuse for lack of cryptocurrency adoption. We just need unique consumer applications.
This article is reprinted with permission from: "Foresight News"
Original author: Ignas
Compiled by: Shan Oppa, Golden Finance
