Binance Research 2024 Outlook: Bullish on Bitcoin narrative and AI sector, with more traditional institutions entering the crypto industry
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Binance Research 2024 Outlook: Bullish on Bitcoin narrative and AI sector, with more traditional institutions entering the crypto industry
Bitcoin narrative continues to lead, with on-chain liquidity flourishing.
Navigating Web3 tides with focused insightsAuthor: Binance Research
Translated by: TechFlow
As 2024 begins, the cryptocurrency market is entering a new phase of development opportunities.
Binance Research has published a 140-page research report reviewing and summarizing the overall landscape of the crypto sector over the past year, along with their outlook for 2024.
Due to length constraints, we have selected the section on 2024 outlook, focusing on Bitcoin innovation trends, the growth of ownership economy applications, and the deep integration of artificial intelligence and cryptocurrency.
Readers interested in the full report can access it via the link at the end of this article.
TechFlow has translated the above outlook section.
Bitcoin Narrative Remains Dominant
Throughout 2023, Bitcoin remained the center of attention, driven by various narratives such as Ordinals/BRC-20, the approval of spot Bitcoin ETFs, and the upcoming 2024 halving. Ordinals and BRC-20 marked a groundbreaking innovation in Bitcoin’s evolution—the first deployment, minting, and transfer of fungible tokens on the Bitcoin network. These tokens quickly became a favorite speculative instrument. Meanwhile, the recently approved spot ETFs could bring significant liquidity into the crypto market and signify mainstream recognition of Bitcoin as a legitimate asset class.
Entering 2024, these dynamics are likely to persist. Historically, the crypto market performs strongly in the year following a halving event. Thus, the recent approval of spot ETFs combined with optimistic expectations around the April halving could trigger significant market volatility. Moreover, if Bitcoin's price surges due to these catalysts, we may witness even more pronounced price swings in Ordinals and BRC-20 tokens, given their smaller market caps and meme-like characteristics. However, the Ordinals and BRC-20 ecosystems are also expected to mature further. Notably, the introduction of additional Bitcoin scaling solutions—such as Stacks’ sBTC—will be an exciting trend that enhances Bitcoin’s functionality.
Ownership Economy Applications Gain Attention
Blockchain technology empowers users to reclaim sovereignty over resources traditionally dominated by large centralized entities—including personal data, creative content, and computing power. For example, centralized storage services often require users to surrender control of their data, exposing them to privacy breaches and single points of failure. To address these issues, various projects are exploring alternative models that give users greater control over their assets and information. Two notable areas in this space are decentralized physical infrastructure networks (DePin) and decentralized social media (DeSoc).
Although the concepts of DePin and DeSoc have existed for some time, they only began gaining traction in 2023. This shift can be attributed to maturing infrastructure, increased awareness, and the expanding crypto user base. In the case of DeSoc, Friend.tech was the primary driver of growth in 2023, generating revenue comparable to some top-tier protocols. Friend.tech demonstrated the potential of decentralized social platforms, enabling users to monetize their content without being constrained by centralized platforms. In 2024, we may see similar applications emerge across different forms of social media, including music, video, and written content.
Meanwhile, DePin gained popularity toward the end of 2023. These protocols are seen as having high growth potential due to their large total addressable markets and ability to scale rapidly through bottom-up adoption strategies. In 2024, we expect to see accelerated real-world application of both DePin and DeSoc projects.
Increased AI Integration
Since OpenAI's ChatGPT sparked global enthusiasm for AI applications in 2023, the convergence of AI and cryptocurrency has become one of the dominant themes in recent months, with numerous projects emerging. We believe that the integration of AI and crypto represents a promising growth frontier. While still in early stages, incorporating AI into the crypto ecosystem opens up a wide range of potential use cases and offers alternatives to existing solutions.
AI-integrated projects have already begun offering services such as automated trading, predictive analytics, generative art, data analysis, and DAO operations. Looking ahead, many more use cases remain to be discovered. For instance, training AI models requires vast amounts of data and computational resources—activities currently dominated by tech giants. This leads to reduced transparency and fragmented development. However, by leveraging distributed storage for data management, we can achieve higher transparency and security. This democratizes the AI model training process, enabling broader participation and potentially triggering a surge in innovation and technological advancement, thereby accelerating progress in the field.
Growth of Real-World Assets
The tokenization of real-world assets (RWA) presents a powerful use case for blockchain technology. By bringing off-chain assets onto the blockchain, RWA tokenization enables greater transparency, improved efficiency, and unlocks new possibilities in composability and potential applications. As we enter 2024, we expect RWAs to benefit from the current high-interest-rate environment. In particular, tokenized government bonds may continue to stand out, offering crypto investors an alternative and attractive yield-generating opportunity. Additionally, with increasing institutional adoption of RWA, supporting infrastructure—such as decentralized identity, oracles, and interoperability solutions—is also expected to gain momentum. These components are essential for building a comprehensive RWA ecosystem. As more institutions dive into RWA tokenization, the development of these foundational technologies is likely to follow closely.
On-Chain Liquidity Flourishes
Liquidity is critical for on-chain ecosystems, particularly in decentralized finance (DeFi), and has evolved significantly since Uniswap introduced its automated market maker model. This evolution has led to multi-layered liquidity frameworks supporting a variety of on-chain activities, including token swaps, derivatives trading, and yield management. As the market gains momentum, the scale of on-chain liquidity and financial activity is expected to grow. Two key categories to watch are liquidity management and request-for-quote (RFQ) systems. Uniswap V3’s concentrated liquidity market maker (CLMM) model addressed capital inefficiency. However, challenges such as impermanent loss (IL) and just-in-time (JIT) liquidity still pose difficulties for inexperienced participants, requiring active position management to mitigate risks. This has spurred the emergence of various liquidity protocols designed to optimize positions for CLMM liquidity providers. Currently, Uniswap V3 alone holds $2.4 billion in total value locked (TVL), while liquidity management protocols collectively manage only $400 million. This gap highlights substantial growth potential—especially with the upcoming launch of Uniswap V4, which will introduce more advanced liquidity optimization features.
Projects like Uniswap X, CoW Swap, and 1inch Fusion exemplify RFQ systems that facilitate matching between traders and market makers, often using mechanisms like Dutch auctions to ensure competitive pricing. Advantages of the RFQ model include competitive pricing, MEV resistance, zero slippage, and gasless order handling. As on-chain trading infrastructure continues to improve, adoption of this efficient model is likely to increase.
Accelerated Institutional Adoption
In 2023, institutions flocked to the cryptocurrency market, and we expect this trend to continue with more traditional players entering the space. Reputable legacy asset managers like BlackRock and Fidelity entered the crypto arena during last year’s bear market, signaling strong confidence in the industry’s long-term potential. As we approach the Bitcoin halving and the approval of spot Bitcoin ETFs, media coverage of crypto is likely to intensify in 2024. This will encourage more institutions to explore the technology and consider how to participate.
Security Remains Critical
Security plays a vital role in building and maintaining user trust within the crypto industry. Past vulnerability incidents serve as valuable lessons, prompting the industry to refine processes and strengthen defenses. According to DeFiLlama, over $1 billion was lost in the DeFi sector in 2023—an improvement compared to approximately $3.28 billion in losses in 2022—but such significant losses remain unacceptable.
Given the importance of security, we expect continued emphasis on this area in 2024. This focus may manifest in various forms, including product innovation, educational initiatives, and improvements in user experience.
Account Abstraction Gains Importance
To attract the next billion users and accelerate blockchain adoption, accessibility and inclusivity are crucial. Ideally, users should be able to seamlessly interact with decentralized applications and perform any on-chain activity without friction. However, in reality, there remains significant room for improvement. For example, the majority of trading volume still occurs on centralized exchanges (CEX). Even at its peak in May 2023, decentralized exchange volume accounted for only about 20% of total CEX trading volume.
Several innovative technologies offer hope for the future. Account abstraction, for instance, enables the creation of smart contract wallets that enhance usability, support social recovery, and significantly improve the overall user experience. Given the intense competition among wallet providers, rapid advancements in wallet technology should come as no surprise—further reducing the complexity of using Web3 wallets.
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