1. Overall market trend
1. Performance of Bitcoin and Ethereum
In 2024, the price trends of Bitcoin and Ethereum have attracted much attention. After many ups and downs, Bitcoin has shown a strong recovery trend. At the beginning of the year, the price of Bitcoin continued to fluctuate, but as market confidence increased, its price gradually climbed and broke through the key resistance level. Especially under the influence of some major events and policies, such as the advancement of spot Bitcoin ETFs, the price of Bitcoin once soared to a new high, injecting strong momentum into the entire crypto market.
Ethereum is not to be outdone. Despite facing some challenges, it still maintains relatively stable growth. Its price fluctuates within a certain range and strives to break through the previous highs. Ethereum's technological upgrades and application expansion provide strong support for its price, attracting the attention of many investors.
As the two giants in the crypto market, the price trends of Bitcoin and Ethereum have a profound impact on the entire market, not only driving the price fluctuations of other cryptocurrencies, but also affecting the capital flow of the market and the confidence of investors.
2. Market confidence and investor sentiment
The sources of market confidence mainly include the promotion of technological innovation, the improvement of the policy environment and the gradual entry of traditional financial institutions. The continuous development of blockchain technology, such as higher scalability and progress in privacy protection technology, has laid the foundation for the long-term development of the crypto market. In terms of policy, the regulatory attitudes of some countries and regions towards cryptocurrencies have gradually become clear, providing guarantees for legal and compliant transactions and enhancing investor confidence.
Investor sentiment has undergone significant changes in 2024. During the market rally, investor sentiment was high and they flocked to the market, pushing prices further up. However, when prices fell back, panic spread, causing some investors to sell their assets. But overall, as the market matured, the impact of investor sentiment fluctuations on the market gradually decreased, and the market stability improved.
2. Important Market Dynamics
1. Development of the Data Availability Layer
In 2024, there have been significant technological advances in the data availability layer. Taking Celestia as an example, it launched a modular data availability blockchain for the main network, which separated execution, consensus, settlement and data availability through innovative design, greatly improving the overall efficiency and scalability of the network. In addition, NEAR data availability layer, Avail and EigenDA are also constantly optimizing technology, such as adopting more efficient data sampling methods and enhanced fraud proof mechanisms. In terms of market applications, as more specialized rollups emerge, the demand for data availability solutions increases proportionally. Many blockchain projects have chosen to cooperate with the data availability layer to improve the efficiency of storage and verification of their transaction data.
2. The rise of re-mortgage agreements
The re-mortgage protocol has rapidly emerged in 2024, bringing new ways for investors to earn income. Investors can earn additional income by locking liquid mortgage tokens (LST), such as stETH and rETH. This method simplifies the complex financial operation process and enables more investors to participate. From the perspective of market impact, the re-mortgage protocol provides security for Rollup applications and enhances the stability of the entire crypto market. At the same time, it has also attracted a large amount of capital inflows, driving up the prices of related tokens. However, re-mortgage also has certain risks, such as liquidity risks and protocol-specific penalty conditions, which require investors to carefully evaluate.
3. Growth of the DePIN Network
In 2024, the integration of the DePIN network and the artificial intelligence industry continues to deepen, and the market potential is huge. The DePIN network provides the necessary physical infrastructure for artificial intelligence, such as computing resources and data storage. Networks such as Filecoin, Render, Theta Network, and Akash encourage users to provide GPU computing power, providing strong support for the training and application of artificial intelligence. As the artificial intelligence market continues to expand, the demand for the DePIN network is also growing, and it is expected to attract more investors and developers to participate, further promoting its development.
4. Progress in tokenization of real-world assets
In 2024, the scale of tokenization of real-world assets continues to expand, and the application areas continue to expand. More and more traditional financial companies take advantage of tokenization to convert assets such as real estate, art, credit, and precious metals into digital tokens. According to statistics, as of December 2023, the tokenized private credit market has more than $571 million worth of active loans and more than $771 million worth of tokenized U.S. Treasury bonds. In addition, intangible assets such as copyrights, trademarks, and patents are also gradually being tokenized. This trend not only lowers the investment threshold, but also improves the liquidity and transaction efficiency of assets.
3. Market volatility factors
1. Impact of the macroeconomic environment
The global macroeconomic environment has a significant impact on cryptocurrency market volatility. Factors such as the speed of economic growth, the level of inflation, adjustments in interest rates, and changes in the money supply can all make waves in the cryptocurrency market. For example, when economic growth slows, investors tend to seek safer investment avenues, which can lead to outflows from the cryptocurrency market, which in turn triggers price declines. When inflation is high, people's confidence in fiat currencies may decline, prompting some funds to turn to cryptocurrencies to preserve and increase their value, pushing their prices up. Changes in interest rates are also crucial. Interest rate increases usually increase borrowing costs and reduce the liquidity of investment funds, which may make the cryptocurrency market face a tight funding situation, leading to price fluctuations. Additionally, an increase in the money supply could trigger inflation concerns, prompting investors to allocate funds into assets such as cryptocurrencies.
2. The role of institutional investors
Institutional investors play a pivotal role in the cryptocurrency market. With their large capital scale and professional investment strategies, they have a significant impact on market fluctuations. Large-scale buying or selling operations by institutional investors can quickly change the supply and demand balance in the market, leading to large price fluctuations. When institutional investors are optimistic about the cryptocurrency market and buy in large quantities, they will drive market sentiment, attract more investors to follow up, and push prices up. On the contrary, if institutional investors sell in large quantities, it may cause market panic, causing other investors to follow suit and causing prices to plummet. In addition, institutional investors' investment decisions are often based on in-depth research and analysis, and their judgments and views on market trends will also guide investors' expectations, thereby affecting market fluctuations.
3. Internal market manipulation and risks
There are many means of manipulation and potential risks within the cryptocurrency market. Some criminals may create the illusion of market activity through fake transactions and mislead investors. They may also use social media to spread false information to artificially raise or lower prices. In addition, the means of "pump and dump" are also common. Manipulators first buy a large amount of a certain cryptocurrency to raise the price, attract investors to follow suit, and then quickly sell it off to make huge profits and cause investors to suffer losses. Another potential risk is the over-concentration of the market. A small number of large investors or exchanges control a large amount of cryptocurrency, and their behavior may have a decisive impact on market prices. Moreover, due to the relatively weak supervision of the cryptocurrency market, some new crypto projects may be fraudulent, causing huge losses to investors.
4. Bull Market Characteristics and Differences
1. The uniqueness of the 2024 bull market
The 2024 bull market shows significant differences in market structure. Compared with previous bull markets, this year's market is more seller-oriented, and the terms of projects in the pre-sale stage are obviously unfavorable to investors. In the past, investors dominated the market and were able to secure more favorable conditions. But now, project parties have more say, and pre-sale terms are harsh, resulting in a significant slowdown in capital turnover.
In terms of investment opportunities, the bull market in 2024 will no longer be a general rise, but will focus on specific sectors and projects. For example, emerging fields such as AI and DePIN will receive more attention, while traditional hot sectors may perform mediocrely. This is very different from the situation in the past bull market when various projects blossomed across the board.
(II) Pre-sale terms and project quality
The pre-sale terms in 2024 have changed dramatically from the past. The vesting period is often longer than 18 months, even up to 4 years, and the fully diluted value (FDV) is inflated, which increases the risk for investors. At the same time, about one-fifth of the projects may change the terms or refund the funds months after raising funds, and the recourse for investors is almost zero.
However, such stringent pre-sale terms also prompt project parties to pay more attention to project quality. Only with a reliable team, legal operations and a strong foundation can a project stand out in the competitive market and attract investors' funds. Therefore, when choosing a project, investors need to more carefully evaluate the quality and potential of the project and should not be attracted by the high expected returns alone.
V. Future Prospects and Suggestions
1. Long-term development prospects
The crypto market is expected to continue its growth in the future, and its influence may further expand with the continuous advancement of technology and the expansion of application scenarios.
On the one hand, innovations in blockchain technology will continue to drive the development of the crypto market. For example, breakthroughs in technologies such as more efficient consensus mechanisms, more secure encryption algorithms, and smarter contract languages will improve the performance and security of cryptocurrencies and attract more users and funds into the market.
On the other hand, the global acceptance of cryptocurrencies is expected to gradually increase. More and more countries and regions may impose clearer legal regulations and supervision on cryptocurrencies, creating conditions for their legal and compliant development. This will attract more traditional financial institutions and large enterprises to participate, further promoting the maturity and growth of the market.
In addition, with the continuous innovation and development in fields such as decentralized finance (DeFi) and non-fungible tokens (NFT), the crypto market is expected to be deeply integrated with the real economy and provide new solutions to solve the pain points in the traditional financial field.
(II) Investment strategy and risk management
In the midst of market fluctuations, investors should adopt a diversified investment strategy. They can choose different types of cryptocurrencies for investment, such as mainstream currencies such as Bitcoin and Ethereum, as well as emerging currencies with potential. At the same time, they can also consider investing in financial products related to cryptocurrencies, such as futures and options, to hedge risks.
For risk control, investors should first clarify their risk tolerance and not invest all their funds in the crypto market. Set reasonable stop-loss and take-profit points to avoid excessive greed and fear. In addition, they should keep a close eye on market dynamics and keep abreast of changes in policies and regulations, technological innovations, and market sentiment in order to make timely investment adjustments.
At the same time, investors should also pay attention to the safe management of assets, choose safe and reliable trading platforms and wallets, strengthen the protection of account passwords, and prevent asset theft. In addition, they should avoid blindly following trends and believing in market rumors, and maintain independent thinking and rational judgment to reduce investment risks.
