Nansen’s research team analyzes the crypto landscape for 2024, highlighting four key trends expected to shape the market. Despite a generally positive outlook, analysts urge caution against overconfidence in market sentiment. The article outlines three macroeconomic scenarios and their potential impacts on crypto prices for the year 2024.
Scenario 1, “Soft Landing,” suggests that if inflation reverts to around 2% without an increase in unemployment rates, Bitcoin (BTC) could reach new all-time highs or appreciate by 20-50%. The current crypto prices already reflect this optimistic scenario. In contrast, Scenario 2, “Inflation and Growth Reacceleration,” seen as less likely by the market, could lead to a revisit of the 2021-2022 lows, with Nansen assigning a 10-20% probability to this outcome. Key indicators include better performance of energy and cyclical stocks and increased volatility in bonds.
Scenario 3, “Recession (Mild/Hard Landing),” although considered low-probability, could cause a significant 60% drop in BTC prices. Indicators to watch include an inverted US bond yield curve and widening credit conditions. Nansen also acknowledges “Known Unknowns” such as China’s economic situation, geopolitical conflicts, and the US Presidential elections as factors that could influence crypto outcomes. Positive price movements may be driven by structural catalysts like the Bitcoin halving event and major traditional players adapting to Blockchain technologies.
The research team at Nansen identifies four high-probability bets for the crypto world in 2024. They foresee a future where AI agents become primary users on the Blockchain, necessitating cryptography-based identification to distinguish between human and AI entities, with token-based incentives for AI agents. A shift towards consumer-centric applications is anticipated, focusing on purpose-driven applications for decentralized finance (DeFi), with Account Abstraction (ERC-4337) and advanced wallet infrastructure highlighted for enhanced user experience.
An increase in dominance of decentralized exchanges (DEXs) is expected as continuous swaps gain strong product-market fit, potentially leading to a loss of market share for top centralized exchanges, while more regulated ones like Coinbase might continue to gain. Nansen recognizes Bitcoin as the undisputed safest asset/network but identifies areas for improvement such as user experience, scaling challenges, high fees, and risk concerns. Market signals indicate the likelihood of Layer-2 solutions and a more modular architecture emerging.
In conclusion, Nansen’s research team provides a comprehensive overview of the macroeconomic scenarios shaping the crypto environment in 2024, potential outcomes, and high-probability bets. They advise investors and enthusiasts to approach the market with a nuanced understanding of various factors and to continue adapting to evolving market dynamics.