Gemini's 2024 Crypto Trends Report: Spot ETFs, Halving Cycles, AI Meets Crypto...

Source: Gemini

Compiler: BitpushNews Mary Liu

2024 will be a watershed year for cryptocurrency.

I. BTC ETFs

BTC spot ETF will rise by 123% in BTC price within a year of approval. Based on the historical relationship between gold holdings and returns, an increase in BTC holdings after approval is likely to drive price activity.

The approval of a spot-BTC ETF will mark an important milestone in the process of legalizing BTC as an institutional-grade investment. This proves that BTC is real, resilient, and will persist.

The approval of a spot BTC ETF could give U.S. investment funds a BTC, propelling the crypto asset class into the $36.7 trillion pension fund market.

What do you think is the most impactful outcome of an ETF being approved?

James Seyffart, ETF Research Analyst at Bloomberg:

The biggest impact will be to open up spot BTC exposure in an efficient manner on the traditional financial track. I think it’s the easiest way for advisors and some institutions to get exposure to spot BTC. It may also be the preferred vehicle for individuals seeking BTC investments in a tax-advantaged account such as an IRA. Don’t underestimate the impact of the convenience and efficiency that ETF products can provide.

The biggest potential hurdle (which we think is unlikely) is that the SEC can still technically deny and procrastinate if they really want to. Beyond that, we can’t be sure what issues or themes are being discussed by the SEC and potential issuers, but it’s likely to focus on the back-end processing of spot BTC ETFs. That is, who will handle the actual BTC when money or BTC flows in or out of the ETF. There are currently 12 spot BTC ETF filings, and there are many differences in how each fund will handle the step.

VanEck CEO Jan van Eck：

ETF approval has become an important symbolic step for BTC to be accepted by mainstream audiences. It’s not normal for U.S. regulators to approve an investment to drive up asset prices, but it will be an important and insurmountable political obstacle – a dilemma that BTC has always faced.

Amanda Cassatt, CEO of Serotonin and Web3 Marketing Writer:

I foresee a surge in institutional adoption, driven by the growth of ETFs and financial institutions launching stablecoins. Familiar, trusted wealth managers engage with existing clients privately to promote the benefits of investing in cryptocurrency.

Peter McCormack, What Bitcoin Did Blog Host and Chairman of Real Bedford Football Club:

ETF speculation has been prevalent this year, and there are growing signs that the SEC will eventually approve not one, but multiple ETFs, including ETFs from some of the world’s largest financial institutions. If approved, we may see a significant increase in BTC prices as institutional funds will seek investment BTC. ETFs will also cause some divergent opinions, with some arguing that a significant increase in the awareness of these institutions and the number of validators is necessary for BTC growth. In contrast, others are concerned that these institutions may exert pressure on the future direction of BTC, while BTC capital is highly centralized. The most important thing BTC enthusiasts can do is to ensure that the basic principles of the BTC are upheld.

II. AI and Cryptocurrency

The price of artificial intelligence (AI)-related tokens has risen significantly, indicating growing market interest and confidence.

The intersection of AI and cryptocurrency ushers in a new era of possibilities that promises to redefine the entire crypto ecosystem.

Both AI and cryptocurrencies represent extremely powerful models of technological capabilities, but they also have unresolved drawbacks. The deliberate integration of these two revolutionary technologies can create a pathway for them to complement each other’s strengths.

AI innovation has revolutionized smart contracts, enabling secure data solutions, enabling transparent large language models, and combating disinformation.

Which advancements in artificial intelligence and cryptocurrency do you think are the most interesting?

Amanda Cassatt, CEO of Serotonin and Web3 Marketing Writer:

We have observed an increase in projects that combine web3-style monetization, source tracking, and digital content attributes or proxies with payment capabilities, merging AI and web3 technologies into usable forms. The ability of AI to create content is beyond the processing power of humans, and soon we will assume that the content is fake, relying on on-chain proofs for verification. In the near future, most payments will be made on-chain by AI agents on people’s behalf. These proxies will interact with the user experience of the blockchain, bundling their transactions and presenting them to humans in an easy-to-understand manner. We also foresee that code audit firms will develop copilot versions for smart contract writers, so AI can assist in verifying the quality of smart contract code during creation (not just post-creation). (AI code auditing after creation is also useful.) The argument that DeFi protocols are more prone to bugs, hacks, and mistakes, one of the last arguments in favor of CeFi over DeFi, will quickly become obsolete, thanks to the help of artificial intelligence!

Bankless Analyst Jack Inabinet:

Crypto + AI can be an explosive combination. While the early campaigns were mostly about using the hype to spread worthless projects, the prospects are still huge. There’s a lot to get excited about, from AI proxies that leverage cryptocurrency markets to access financial networks, to decentralized computing protocols that open up GPU access to everyone, to projects that reimagine blockchain as an AI output market. It remains to be seen which use case will spark the initial adoption spark, but the limitless freedom of cryptocurrencies combined with the unknown capabilities of AI presents us with a formidable opportunity in 2024.

Three: BTC halved

The price of BTC has seen a parabolic rise in each period after the previous three halving events. The fourth halving of BTC is expected to occur in April 2024. The upcoming halving will reduce the BTC’s mining rewards from 6.25 BTC to 3.125 BTC, reducing the supply of new BTC entering the market.

The halving reaffirms one of BTC’s fundamental facts and one of its biggest value propositions: BTC are predictable, reliable, and trustworthy.

In April 2024, we will witness another great milestone in the BTC life cycle.

How will technological advancements and changes in the global economy affect the market reaction to the BTC halving in 2024? Do you expect it to be different from past cycles, with indirect implications for the crypto industry and the broader global economy?

Investor & Bitcoin: Hard Money You Can’t F*ck With by Jason Williams:

The potential BTC spot ETF fits well with the halving event. Typically, 180 days after the halving, there is a significant fluctuation in the price of BTC. This will be very much in line with the possible approval of the cash BTC ETF on 6 January 2024 and the historical price action of the gold spot ETF. It took about two years from the time it was approved for gold to make a parabolic move. I think the event created real potential for a big lift. When BlackRock’s BTC ETF is approved, they will need to acquire hundreds of thousands of BTC to meet the needs of their end customers. It is impossible for them to hoard so much BTC without large price fluctuations. This is the core question that they are now actively working on, and it is part of my paper on why the price of BTC is rising. A 20.76x BTC is worth $789,000.

Peter McCormack, What Bitcoin Did Blog Host and Chairman of Real Bedford Football Club:

As we approached BTC fourth halving event, all eyes were on mining as the hash rate increased significantly this year. The upcoming halving will bring the block subsidy down to 3.125 BTC per block, which could put pressure on the financial sustainability of mining companies. However, the rising price of BTC, driven by ETF speculation and other macroeconomic factors, coupled with the growing demand for block space, has led to a growing mining revenue. If this growth is sustained, miners can successfully weather the halving while maintaining strong margins.

Fourth, supervision

While many regulators around the world have made great strides in regulating cryptocurrencies over the past year, the EU stands out for its influence in traditional global markets and the quality and thoughtfulness of its approach.

In April 2023, the European Union passed MiCA, which was hailed as the most important crypto regulation to date.

A regulatory regime hostile to cryptocurrencies would not only force good players offshore, but could also pose an existential threat to the economy with the advent of the AI revolution and the next wave of value creation in Web3 innovation.

The U.S. is at a crossroads when it comes to cryptocurrency regulation. Enforcement regulations fail to provide the required clarity or consumer protection while inhibiting innovation.

How do you expect the regulatory environment for cryptocurrencies to evolve in 2024?

Ji Kim, General Counsel and Head of Global Policy, Digital Asset Cryptocurrency Innovation Council (CCI):

One of the bigger stories in 2024 will be that jurisdictions will continue to compete for top status, competing to become key hubs for digital assets and the future financial system. We’ve seen this in countries like the UK, EU, UAE, Japan, Hong Kong, Singapore – there is ongoing competition between leading countries to have the most credible regulatory framework to attract business growth and innovation. Governments around the world are clearly recognizing that cryptocurrencies and their associated infrastructure are here to stay. The question now is which countries can consolidate their position as key hubs.

These international developments will naturally begin to influence cryptocurrency policy in the United States in a positive way. Over the past year, we’ve seen growing bipartisan support in Congress for a regulatory framework to promote responsible crypto innovation. Overall, while the U.S. may be a few steps behind, progress is being made globally, and it’s likely that whether the U.S. will move forward with aggressive cryptocurrency policy development is more a matter of time than if. This necessity will become more evident over time, given the SEC’s ongoing judicial losses, highlighting the limitations of enforcement regulation.

Gillian Lynch, Head of EU at Gemini:

The industry has been battle-tested over the past year, but cryptocurrencies haven’t gone away. In fact, as history shows, the industry is most likely to emerge stronger if there are some much-needed guardrails to protect all players. While opinions on cryptocurrencies and blockchain technology may still be divided, I’m sure most would agree that the crypto industry needs a regulatory framework with customer protection at its core, while striking a balance between creating a clear and consistent rulebook that ultimately helps foster innovation.

Fifth, safety

Hackers and scammers will target anywhere they can find money. Crypto and web3 are no exception.

Attackers will find new, escalating ways to gain access to wallets and accounts. Unphishable multi-factor authentication (MFA), such as keys and Yubikey, will become indispensable for Web3 companies and customers to keep their assets safe.

The security industry will turn more attention to Web3 security tools and protection. Some of these will become tools for security professionals, such as SOAR (Security Orchestration Automation and Response) and instrumentation platforms focused on Web3. Consumers will also see new tools and technologies to protect their Web3 accounts and assets, bringing decades of Web2 security advancements to Web3.

More resilient security measures, such as advancements in phishing detection, represent some of the industry’s biggest opportunities. Careers in crypto security will be one of the fastest-growing fields in the coming years.

The Web3 industry is working hard to evolve security frameworks, guidelines, and best practices. Last year, Gemini partnered with other industry leaders to create the REKT test, a tool that blockchain companies can use to assess whether their projects include basic safeguards and comply with best practices for access control, key management, and security against other hacking vectors.

What are the most prevalent threats?What is your outlook for 2024?**

Khaja Ahmed, Chief Security Officer, Gemini:

In recent years, most consumers’ important personal information has been stolen in numerous hacks by large organizations. Criminals are trading social security numbers, email addresses, physical addresses, credit card numbers, credit files, medical history, and more. This allows scammers and crooks to launch more targeted and sophisticated attacks, and increases the challenge of protecting consumers from financial losses. Consumers must be more aware of the types of scams that are about to occur, and service providers must be more vigilant to detect if their customers’ accounts have been taken over by attackers.

Shaun Blackburn, Director of Cloud Security, Gemini:

We’re starting to see classic impersonation attacks escalate as generative AI like ChatGPT makes it easier than ever to write phishing emails and even generate real-life video impersonation of anyone, and new scams will happen where attackers use the tools available to them to do simple things to trick users into giving up access. Even so, I’m very excited about the progress the industry is making with keys because it provides a simple, accessible security solution for all. This simple protection can greatly improve security.

Sixth, new trends

Which trends do you expect to be in the spotlight in 2024?**

Angel Investor & Author Balaji of The Network State:

The sovereign debt crisis is happening, but it is not yet widely recognized. Without the 2008 repeat of the parachute measures, a parallel global financial system would have become even more important.

Will Clemente, Co-Founder of Reflexivity Research:

BTC will be consolidated as an institutional-grade global macroeconomic asset.

Pudgy Penguins CEO Luca Netz：

I believe that 2024 and beyond will be the year for crypto brands to be consumer-oriented, as I believe this is the next necessary step towards mass adoption of cryptocurrency. The industry needs to move away from a narrative of economic gain and one that revolves around digital ownership and accessibility. I believe that consumers facing the cryptocurrency revolution will be key to reshaping this narrative.

Crypto Investment KOL Lady of Crypto:

The last 15 years have been a warm-up game, and now it’s time for the main event. Mass adoption has arrived, and with it, we’re going to see a large number of Web 2 giants venturing into the crypto space. I think gaming will be the first breakthrough area to decouple from BTC. Before the advent of cryptocurrencies, games already had basic digital currencies and collectibles, and the combination of blockchain and gaming was inevitable.

Azuki Researcher Wale Swoosh:

I think gaming is going to be one of the megatrends that will define 2024. When it comes to cryptocurrency adaptation, gaming has always been and always will be a great Trojan horse. Gaming is an area where the advantages of cryptocurrencies are easy to understand and clear. I strongly believe that the Web3 gaming trend we saw at the end of 2023 will not only continue next year, but will become more pronounced.

1% Better Founder Alex Finn:

I think the cryptocurrency that really unlocks the experience in 2024 will generate value. People will be less willing to spend their money on purely speculative assets. The first thing they will ask is “what does this token unlock for me? will it give me an edge in online gaming?will it give me access to an elite community?and how will this token improve my life?” We’ve been developing cryptocurrencies for 10 years now, and the actual products behind these tokens will eventually emerge.

O Show Host Wendy O:

I’m very excited about crypto in 2024. I really think the emerging trends that we’re going to see will be BTC, BTC ordinals, BRC 20 tokens, and GameFi (being able to actually own the assets that you buy in the game) and of course, RWA. I think it’s very important to be able to own IRL assets and NFTs, and ordinal solves that. NFTs are an ordinal number that allows people to own their own assets – just like BTC allows people to take control of their own money.