Key Post Takeaways: In this blog series, we provide concise summaries of the Binance Research team's findings, inviting you to dive deeper into the original reports. This article features Binance Research's recent report that discusses the key cryptocurrency narratives to follow as we head into the new year. While it is too early to tell whether we are in a bull market, recent developments in areas such as Bitcoin, DeFi, Stablecoins and NFTs paint a positive outlook for the ecosystem in 2024. The year 2023 saw a resurgence of enthusiasm in the crypto industry. While it's too early to definitively declare the return of a bull market, things look more hopeful than they have in a while. Based on observation of recent events and trends, the Binance Research team has compiled a summary of several key narratives and metrics to follow in the coming months. Below are the top cryptocurrency trends to follow as we head into the new year.Bitcoin2023 has been a busy year for Bitcoin, with major developments across the entire spectrum of the investment landscape. On the native crypto side, we saw the emergence of the Ordinals protocol, which allowed new innovations such as inscriptions – often called “Bitcoin NFT” – to gain prominence. On the traditional finance side, optimism surrounding the imminent approvals of spot bitcoin ETFs in the US has led more traditional institutional investors to focus on the cryptocurrency ecosystem.Bitcoin YTD performanceSource: CoinMarketCap, Yahoo Finance , Binance Research (December 5, 2023)In light of these developments, BTC has outperformed many other major assets and indices, both traditional and cryptocurrency. As of December 5, 2023, BTC's market cap has increased by 162% year over year. Some of the most significant BTC developments for 2024 include the following.US Spot BTC ETF ApprovalsWhile the potential for US regulation of spot bitcoin exchange-traded funds (ETFs) has long existed, 2023 has brought notable positive developments on that front. In August, US courts ruled in Grayscale's favor regarding its dispute with the US Securities and Exchange Commission (SEC) over the conversion of its Grayscale Bitcoin Trust (GBTC) into a BTC spot ETF. This favorable decision prompted several other players, including BlackRock, the world's largest asset manager, as well as Fidelity and Invesco, to submit their own spot BTC ETF applications in the following months. There are currently a total of 13 spot BTC ETF applications under review by the SEC. Of these, the shortest deadline is set for January 2024, while the longest is set for August.Deadlines for SEC Decisions on Spot BTC ETFsSource: Bloomberg, Binance ResearchBitcoin HalvingBitcoin miners incentivized to validate transactions and secure the blockchain through two mechanisms: block rewards and transaction fees, with the former traditionally accounting for the majority of its income. Block rewards are paid for each newly mined block, which happens on average every 10 minutes, and halved every 210,000 blocks, which happens approximately every four years. Given the fixed maximum supply of 21,000. 000 units of BTC, the halving introduces even more scarcity to increase its price over time, thus reinforcing the narrative of BTC as “digital gold” or a safe-haven asset. When the Bitcoin blockchain was first launched in 2009, block rewards started at 50 BTC per block. After subsequent halvings in 2012, 2016 and 2020, the current reward is 6.25 BTC per block. The next halving is expected to take place in April 2024, at which point the block reward will be 3,125 BTC per block.Block rewards after each Bitcoin halvingSource: Binance ResearchOrdinals and InscriptionsOne of Bitcoin's most significant developments in 2023 was the advent of ordinals and inscriptions. The Ordinals protocol was launched earlier this year and involves tracking individual satoshis (sats) based on what founder Casey Rodarmor calls “Ordinal theory”. Sats are the smallest unit of bitcoin and 1 BTC is equal to 100,000 ,000 sats. The Ordinals protocol allowed each SAT to be assigned a unique identifier. These sats can then be "inscribed" with arbitrary content such as text, images, videos, etc., creating "inscriptions" that are often referred to as "Bitcoin NFT".Total inscriptions in BTCSource: Dune Analytics (@dgtl_assets), Binance Research (November 30, 2023)Ordinals and inscriptions also led to the emergence of BRC-20 tokens in March 2023, enabling the implementation, issuance, and transfer of fungible tokens on Bitcoin for the first time. While inscriptions are the non-fungible application of the Ordinals protocol, BRC-20 tokens are its fungible counterpart. After the initial frenzy with the launch of ordinals and BRC-20 tokens, the market cooled off a bit before rising again. November saw a significant resurgence in activity, being the highest volume month with over 8,300,000 total subscriptions, a 362% increase from the October low. The advent of ordinals introduced new excitement and innovation into the Bitcoin ecosystem . It's yet another development that shows we're at an important period in Bitcoin's history as we move towards 2024.Stablecoin SupplyThe supply of stablecoins is a measure of the amount of capital that is readily available to invest in crypto assets at any given time, indicating thus potential buying pressure. For the first time since Q1 2022, the quarterly net change in supply of the top five stablecoins by market capitalization turned positive in Q4 2023. It's worth keeping an eye on this metric in the coming months to see if this change was temporary or representative of a more sustained uptrend.Quarterly changes in net supply of the top five stablecoinsSource: DeFiLlama, Binance Research (30 November 2023)Volumes of NFT Throughout 2023, non-fungible token (NFT) trading volumes have seen a significant slowdown, declining to new annual lows every month from February to September. However, in October this trend was finally reversed and we saw a considerable increase in trading volumes in November. A key highlight here is the growth of Bitcoin NFTs, which were the most popular type of NFTs in November, with over $375,000,000 in trading volume. Surpassing even Ethereum, this is a notable achievement for Bitcoin as it has long been considered unsuitable for NFTs and uses other than peer-to-peer (P2P) transactions.NFT Trading Volumes in 2023Source: CryptoSlam! Binance Research (November 30, 2023)Note: "Other" refers to the remaining 10 blockchains in the top 15 by all-time NFT volumeAfter months of falling prices and pessimism, increased trading volumes in November could be taken as an indication of positive market sentiment and a revival of the NFT scene. It will be critical to watch these NFT trends in 2024 to see if the market sustains its revitalization.Protocol FeesAs the industry matures and protocols move toward revenue generation, the fees generated by top cryptocurrency projects will be an important metric to watch. followed. Fees have risen steadily throughout 2023. In November, fees for the top 20 cryptocurrency projects across all sectors were more than 88% higher than in January.Fees for the top 20 cryptocurrency projects across all sectorsSource: Token Terminal, Binance Research (November 30, 2023)Note: “DeFi” refers to Lido, Uniswap, Convex, GMX, PancakeSwap, MakerDAO, Aave, dYdX, Venus, and Curve. "NFT" refers to OpenSea, Manifold.xyz and Blur. "Other" refers to Flashbots and friend.tech. Ethereum is by far the biggest fee generator, having accumulated more than double the fees of any other protocol. Decentralized finance (DeFi) protocols are collectively the second largest fee generator after Ethereum, with Lido and Uniswap leading the market. While DeFi projects and Layer-1s (L1s) have been dominant in fee generation this year, NFTs also represent a significant portion of fee revenues. Here, OpenSea is firmly in the lead, with almost double the fees of Manifold and more than double the fees of Blur. Overall, fee generation is an indicator of a sustainable business model, so it was encouraging to see these numbers will grow throughout 2023. As we move into the new year, it will be important to look closely at which protocols and subsectors are able to demonstrate the best rate growth.Layer-1Although Ethereum continues to be the dominant L1 smart contract in most metrics, other alternative L1 solutions have also shown promise throughout 2023, with some even outperforming Ethereum. Watching this trend in 2024 will be crucial to see if Ethereum maintains its dominance in the L1 landscape. Change in market cap for top alternative L1s throughout 2023Source: Coinmarketcap, Binance Research (November 30, 2023)Solana has had the most notable performance in 2023, particularly with the SOL token market capitalization increasing by around 56% in November. Toncoin has also made considerable progress this year, most notably the announcement of The Open Network's partnership with Telegram in September. Numerous other developments have occurred across all major L1s. Following its Shanghai upgrade in April, Ethereum enabled the withdrawal of staked ETH, generating huge DeFi markets in liquidity staking and LSDFi. With the continued growth of the ecosystem, BNB Chain launched opBNB, an L2 optimistic based on the OP Stack, and BNB Greenfield, a next-generation data storage platform.SocialFiThe social potential of blockchain uses has long been anticipated , leading to the emergence of SocialFi – short for “social finance”, denoting the convergence of DeFi and social networks. 2023 has seen a product-driven rise in this subsector, with friend.tech in particular capturing the attention of many.friend.tech Daily Transactions and Protocol FeesSource: Dune Analytics (@cryptokoryo), Binance Research ( November 30, 2023)By the end of November, friend.tech had managed to generate over $25 million in protocol fees since launch. After rising in August and September, its daily activity has slowed down in the last two months. However, the product is still in beta mode and a full launch is expected soon. The attention that friend.tech attracted, particularly from influencers outside of the cryptocurrency space, indicated the potential for Web3's social uses. Other notable projects on this front include Farcaster, Lens Protocol and Binance Square. In 2024, SocialFi's ability to gain more traction will define the shape of social interactions on Web3 for years to come. Final Thoughts The final months of 2023 have brought a refreshing shift in sentiment in and around the cryptocurrency industry. Amidst the growing buzz, arrival of new market players and growing frenzy, it is vital to monitor leading indicators and stay ahead of meaningful narratives, with this article highlighting key talking points and critical metrics to follow as fast forward to 2024.Further ReadingBinance Research: Top Trends in Crypto – December 2023Binance Research: Exploring the Evolution of BitcoinBinance Research: Top Trends in Crypto – November 2023General Disclosure: This material is prepared by Binance Research and should not be considered a prediction or advice investment strategy, and is not a recommendation, offer or solicitation to buy or sell any securities, bonds or cryptocurrencies, or to adopt any investment strategy. The use of terminology and opinions expressed are intended to promote understanding and responsible development of the industry and should not be construed as definitive legal opinions or those of Binance. 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