Bitcoin 2024 Outlook: What Will Make the Next Bull Run Different?
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Bitcoin 2024 Outlook: What Will Make the Next Bull Run Different?
Bitcoin's technological development is entering an accelerated phase.
Navigating Web3 tides with focused insightsBy TechFlow Asher Zhang
Summary
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The surge in Bitcoin inscriptions is primarily driven by the technical capabilities enabled by the Taproot upgrade, while seven additional notable technical upgrades or BIPs are on the horizon for Bitcoin.
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In Bitcoin's ecosystem development, sidechains and Layer 2 solutions are likely to become dominant directions; additionally,借鉴ing mature models from Ethereum, application ecosystems such as DeFi could rapidly emerge on Bitcoin.
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Bitcoin halving, approval of Bitcoin ETFs, and Federal Reserve rate cuts are expected to act as key catalysts for a bull market, while millennials are simultaneously inheriting wealth and embracing the crypto world.
Bitcoin's Technical Development Enters an Acceleration Phase
The recent surge in inscriptions has drawn widespread market attention, prompting major public blockchains to follow suit amid FOMO. The key enabler behind this inscription boom lies in the Taproot upgrade. Beyond Taproot, numerous other aspects within Bitcoin’s BIPs warrant close attention, with many critical technological advancements progressing rapidly. This article argues that these developments could further shape the trajectory of the entire blockchain industry. Below we highlight seven major developments and proposals for Bitcoin in Q4 2023. Note: The Taproot upgrade represents the latest phase of Bitcoin scaling following Segregated Witness (SegWit), primarily incorporating three technical concepts — P2SH, MAST, and Schnorr — enabling complex transactions like multi-signature and time-locked transactions to appear indistinguishable from standard Bitcoin transactions.
1. BitVM enables expressive smart contracts on Bitcoin. Given Bitcoin’s design constraints, executing smart contracts directly on Bitcoin is slow and costly. BitVM operates similarly to Optimism in the Ethereum ecosystem, incorporating fraud proofs and challenge-response protocols.
2. Taproot Assets Mainnet Launch: Taproot Assets officially launched on October 18, 2023. It creates assets by embedding arbitrary data into Taproot scripts (Tapscript). Altcoins on Bitcoin now have the potential to thrive on the Lightning Network. Taproot Assets (formerly known as TARO) allows developers to issue, send, and receive Bitcoin-based assets.
3. OP_CAT Proposal: Bitcoin researcher Ethan Heilman submitted a Bitcoin Improvement Proposal (BIP) to the Bitcoin-Dev mailing list, suggesting adding the OP_CAT opcode to Bitcoin’s scripting language. This opcode would allow developers to construct and evaluate Merkle trees and other hash-based data structures within Tapscript—the native scripting language introduced with the Taproot upgrade. Enabling OP_CAT would remove previous limitations, further enhancing Bitcoin’s programmability and unlocking new use cases.
4. OP_TXHASH Draft Proposal: Bitcoin Core developer Steven Roose proposed a BIP focusing on implementing two new opcodes—OP_TXHASH and OP_CHECKTXHASHVERIFY—in Bitcoin’s scripting language. OP_TXHASH competes directly with two major covenant proposals currently under discussion: BIP-118 and BIP-119. Covenants impose predetermined spending conditions on Bitcoin transactions. For example, users could create a covenant ensuring that BTC sent to an address can only be spent after 200 blocks.
5. Lightning Timeout Trees: The Lightning Network, Bitcoin’s primary Layer 2 solution, faces a key adoption barrier—users must initiate at least one on-chain Bitcoin transaction to move funds off-chain. This limits how many users can migrate assets off-chain, especially when on-chain fees are high. A long-discussed solution is the concept of "channel factories," allowing multiple users to join the Lightning Network through a single Bitcoin transaction. John Law’s “timeout tree” proposal may have found a way using covenants (spending conditions on BTC transaction outputs). The proposal introduces a coordinator (or Lightning Service Provider – LSP) who oversees the opening and closing of user channels. By using covenants, coordinators are restricted from spending users’ BTC without proper authorization. This marks the first channel factory architecture leveraging covenants—a powerful mechanism for imposing spending conditions on BTC.
6. Updated MuSig 2 Proposal: MuSig 2 is an upgraded version of MuSig 1, a multi-signature scheme for Bitcoin that enhances privacy and scalability. MuSig 2 (BIP-327) improves upon MuSig 1 by operating as a two-round multisignature protocol, offering superior security, efficiency, and privacy with only two rounds of communication required among signers—down from three. In October, Bitcoin Core developer Andrew Chow introduced two new BIPs focused on MuSig 2 development: MuSig 2-PSBT and MuSig 2-Descriptor.
7. BIP-324 – V2 Transport: BIP-324 introduces privacy-focused improvements to Bitcoin’s peer-to-peer (P2P) layer, which serves as the data highway between Bitcoin nodes. The latest version of Bitcoin Core (v0.26) added support for version 2 encrypted P2P transport as specified in BIP-324. This feature is disabled by default but can be manually enabled, offering enhanced protection. This marks a significant step forward in privacy at the Bitcoin P2P level.
Bitcoin’s Ecosystem May Be Entering an Explosive Growth Phase
The surge in interest sparked by the Ordinals protocol and the resulting inscription craze provides strong evidence for future growth in Bitcoin’s ecosystem. As Bitcoin’s underlying technology advances, corresponding ecosystem development will naturally follow—with particular promise in sidechains and Layer 2 solutions. Furthermore, projects already mature on Ethereum may quickly migrate to Bitcoin. Below is an overview of potential application sectors and ecosystem projects for reference.
Bitcoin Sidechains or Layer 2 Infrastructure: Stacks, BEVM, Mintlayer, Spiral, Liquid Network, Fedi, Rootstock, Interlay, Babylon, Botanix, Bison Labs, Alpen Labs, Ark, etc. Among them, the most significant include:
Stacks: A Bitcoin Layer 2 protocol that enhances Bitcoin’s functionality through automatic execution of smart contracts, without requiring a Bitcoin fork. Stacks brings DApp and smart contract capabilities to Bitcoin without altering any of Bitcoin’s core functions.
BEVM: A decentralized BTC Layer 2 compatible with the EVM, where BTC serves as gas. Its core goal is to expand Bitcoin’s smart contract use cases, enabling decentralized applications with BTC as the native gas within the EVM ecosystem.
RGB: An off-chain protocol and smart contract layer built atop the Bitcoin blockchain, enabling the minting and issuance of Bitcoin-based digital assets. With RGB, users can issue stablecoins, tokens, non-fungible tokens (NFTs), and build client-validated confidential smart contracts on Bitcoin.
Taproot Assets: Taproot Assets (formerly Taro) is a new Taproot-supported protocol for issuing assets on the Bitcoin blockchain, enabling instant, high-volume, low-cost transactions via the Lightning Network. At its core, Taproot Assets leverages Bitcoin’s security and stability along with the Lightning Network’s speed, scalability, and low fees.
DeFi on Bitcoin: Notable examples include Unisats (a BRC-20 swap platform providing liquidity and trading), Bisq Network, and Atomic Finance.
Cross-chain Bitcoin Assets: Bringing Bitcoin securely onto other chains (primarily Ethereum) has long been a focus for DeFi projects. Key cross-chain Bitcoin assets include: WBTC (centrally custodied by BitGo), tBTC (issued by Threshold), renBTC (issued by Ren Protocol), and sBTC (from Synthetix).
Bitcoin Enters Macro Finance: A New Era Begins
Bitcoin halving, approval of Bitcoin ETFs, and Federal Reserve rate cuts are increasingly seen as the engines driving the next crypto bull market. Undoubtedly, Bitcoin is entering the realm of macro finance, as traditional financial doors swing open—welcomed by millennials inheriting generational wealth.
From the perspective of the Bitcoin halving cycle, we are indeed entering a new phase. According to PlanB’s Stock-to-Flow (S2F) model, Bitcoin is now in the “six months pre-halving to 18 months post-halving” window—a period historically associated with strong buy-and-hold returns. In addition to the approaching halving, regulatory compliance for crypto assets has reached a turning point, with the launch of Bitcoin ETFs appearing imminent. According to TechFlow, court documents in August 2023 revealed that a three-judge appellate panel in Washington overturned the SEC’s decision to block Grayscale’s ETF. In the Ripple case, on October 3, Judge Torres rejected the SEC’s appeal; on October 19, Grayscale announced on X that it had filed an S-3 form as part of its efforts to convert GBTC into an ETF. Recent statements from the Fed also strongly indicate upcoming rate cuts. As reported by TechFlow, Fed Chair Powell recently stated clearly during a press conference: “Rate cuts are now within the scope of policy discussions. Policymakers are actively thinking about and discussing when it would be appropriate to cut rates.”
Corresponding to these massive positive expectations, millennials are both inheriting wealth and embracing the crypto world. According to Galaxy Research, millennials are on the verge of experiencing the largest wealth transfer in history. Although baby boomers and older generations make up less than one-third of the U.S. adult population, they collectively hold two-thirds of American household wealth ($96 trillion)—more than 11 times the wealth held by millennials and younger generations. Having lived through multiple recessions, facing high housing costs and heavy debt burdens, younger generations are more open to alternative financial systems and investments—including cryptocurrencies. Numerous surveys show that this generation’s adoption or acceptance rate of crypto is at least three times higher than their parents’. Estimates suggest that the impact of this wealth transfer could add $20–28 million in daily purchasing power to the crypto market over the next two decades. The demographic shift of wealth and power toward younger generations is inevitable—and bodes well for cryptocurrency.
Conclusion
Bitcoin’s technological progress was relatively slow for a long time, but since the Taproot upgrade, its pace has clearly accelerated. Following Taproot, the rapid rise of Bitcoin inscriptions has revealed immense potential for ecosystem applications, further attracting developers to build on Bitcoin and fueling broader ecosystem growth. On the macro front, Bitcoin halving, ETF approvals, and Fed rate cuts are highly likely to catalyze a crypto bull market, integrating Bitcoin deeper into global financial markets. Meanwhile, millennials are simultaneously inheriting wealth and embracing cryptocurrencies—a new and unprecedented bull market is quietly unfolding.
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