Q2 outlook for the crypto market: bullish on Bitcoin, with re-staking, AI, and modular narratives requiring close attention
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Q2 outlook for the crypto market: bullish on Bitcoin, with re-staking, AI, and modular narratives requiring close attention
When overall sentiment is still 50/50, it only means one thing: the market will go higher.
Navigating Web3 tides with focused insightsAuthor: JAY
Translation: TechFlow
We are in a bull market. The retail market is gradually warming up, Bitcoin is holding steady near its all-time highs from 2021, and there are many bullish catalysts ahead. As someone who lived through all of 2023, seeing a 7 in front of the Bitcoin price feels surreal.
As our industry matures, the scope of the market has expanded dramatically—from modular blockchain infrastructure to Solana meme coins to Bitcoin NFTs (and more). There's more to keep track of now than ever before.
The goal of this piece is to provide an overview of Q2 2024, consolidating everything I've learned and observed. I want to use this as a starting point for my thoughts on what might happen over the next ~90 days. Nothing here is guaranteed to be correct. Remember, markets constantly evolve, so updating your priors with new information is crucial in this space.
I’ve broken this down into several sections:
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Major Assets
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Altcoins
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NFTs
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Airdrops
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Narratives
Major Assets
Bitcoin
From a higher time frame, major assets look impressive. Bitcoin closed yesterday at its highest monthly close price ever. With the approval of Bitcoin ETFs and the halving just weeks away, I don’t understand why anyone wouldn’t be optimistic about Bitcoin in Q2.
Ethereum
According to Polymarket prediction markets, the rejection of most (if not all) Ethereum ETFs has already been priced in. The first decision deadline is May 23rd, so we’ll hear something by then.
Beyond standard spot ETFs, several leading ETF issuers have also applied to include staking yields as part of the spot ETF itself. I believe this is a natural, logical progression—traditional finance likes yield, and staking yield is inherent to the Ethereum protocol. Additionally, given:
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The success of spot Bitcoin ETFs
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Fink’s ETF track record
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Coinbase paving a respectful, professional path for regulators
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The tight correlation between Ethereum futures ETFs and spot Ethereum,
I find it hard to imagine we won’t get a spot ETH ETF at some point this year.
Solana
I published a bullish post on Solana back in August 2023, but watching this unfold in real time is unreal. At every stage, there were countless critics (which only made me more bullish). Clearly, Solana has established itself as a “major” player, and I’m very confident that its trajectory will continue throughout the next quarter.
From becoming the most accessible chain for online casinos to hosting the most innovative RWA and DePIN protocols, I believe they’ve found product-market fit. The pace of innovation from Solana’s core team and ecosystem builders is remarkable.
In Q2, a wave of protocols will launch tokens (more on that later). “Come for the memes, stay for the dapps” seems to be Solana’s motto, and clearly, every other L1/L2/L3 ecosystem is trying to replicate Solana’s playbook. After consolidating through much of January and February, I believe Q2 will see Solana return to strong upward momentum.
Finally, if/when we see a spot Ethereum ETF approved, I expect this will spark traditional finance interest in Solana’s progress. Institutional demand for Solana is evident (just look at historical digital asset flows and the Grayscale SOL trust). Once a spot ETH ETF is approved, the market will turn its attention to Sol.
Is anyone watching SOL futures ETF?
Overall, I'm highly optimistic. When the monthly chart looks like this and overall sentiment remains around 50/50, it can only mean one thing: the market will go higher.
Whenever the RSI crosses above 70, Bitcoin goes on a wild run
Other key catalysts to watch out for (let me know if I missed anything important!):
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Bitcoin halving around April 20
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Robinhood earnings on April 24
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Dogecoin futures trading on Coinbase on April 29
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Expected Coinbase earnings on May 2
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Spot Ethereum ETF deadline on May 23 (and subsequent ETF decisions)
Altcoins
After the manic rally in Q4 2023, many altcoin pairs dropped significantly last quarter. This makes sense given:
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Institutional focus on Bitcoin (spot ETF approval and upcoming halving)
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Meme coin mania
I’ve spoken with many builders in the space, highlighting concerns that this distorts incentives for legitimate builders. Why grind on infrastructure or protocols meant to underpin future finance when you can just launch a meme coin? I do believe this will shift at some point.
At the end of the day, crypto markets (like all markets) are an attention game. The goal for any project is to remain relevant and capture eyeballs. While existing meme coins have actually suffered losses, new tokens (like ETHFI, DYM, JUP, etc.) have performed well since launch. Again, this comes back to attention.
So what could trigger another altcoin rally? Two main catalysts come to mind:
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Positive SEC ruling in the Coinbase lawsuit (regarding whether tokens are securities)
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Implementation and rollout of Uniswap V3 governance fee switch
I expect both of these to occur at some point during Q2.
In the meantime, some altcoins will continue to outperform, as they have over the past few months. Too many to list exhaustively.
NFTs
In September 2023, mainstream media widely declared NFTs dead. Since then, we’ve seen signs of recovery—here and there. But we’re still far from the peak activity levels of late 2021 and early 2022. Why?
In my view, two reasons:
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Meme coins satisfy gambling/speculative urges
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Market fatigue from oversupply of NFTs
However, over the past quarter, Bitcoin-related NFTs have shown clear outperformance. I believe market leaders like puppet, nodemonkes, and RSIC will continue to perform well in Q2.
To summarize why (not just for NFTs, but across sectors), the factors I observe are:
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New technologies emerge, clearly identifying market leaders
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Technology becomes more accessible—easier to buy, easier to mint NFTs
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Copycat projects are created with extremely high expectations (“we’ll be the next Cryptopunk/Bored Ape”)
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Only a few of these projects succeed; the vast majority do not
Between the last two points, supply overwhelms demand, and the market starts to decline. To make matters worse, NFTs have poorer liquidity compared to meme coins and governance tokens. Strong liquidity fuels rallies—that’s why BAYC went from 5 ETH to 40 ETH. But when participants rush to exit, poor liquidity becomes a bug: during downturns, who are the incremental buyers providing exit liquidity?
Where are we today?
During the brutal bear market, a few communities held strong. The most notable are Pudgy Penguins and Mad Lads. Anecdotally, you often see industry leaders and early supporters using Mad Lads or Pudgy Penguins as their profile pictures (PFPs). Judging by their price surges in Q4 2023 and Q1 2024, holding either means you're either an early holder (with enough conviction not to sell) or a late buyer with deep pockets.
Either way, builders now target holders of these NFTs, hoping to leverage their communities for their own projects. As a result, these communities have become frequent airdrop targets.
This trend will likely continue in Q2, and with more Bitcoin-related protocols emerging, we may start seeing puppets/nodemonkes communities targeted too.
Airdrops and New Tokens
Q2 will bring a flood of airdrops. Many projects that have been quietly building will now distribute tokens. Key observations I’ve gathered include:
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Liquidity Bootstrapping Pools (LBPs): Smaller projects love using LBPs to bootstrap liquidity. Essentially, LBPs allow projects to test token demand while rewarding early (and smaller-scale) buyers. For more details, see this tweet, which provides a great ELI5 explanation of LBPs.
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Points Programs: We’re all familiar with these. Some protocols have run programs for over a year (though market attention spans are short). Whales Market and Aevo are platforms where you can hedge/trade your points and pre-launch tokens, though with friction—e.g., on Whales, you must post collateral, and there’s information asymmetry regarding total points or conversion mechanics. Another approach uses liquidity mining points; Gearbox and Pendle are good examples on Ethereum.
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Staking Airdrops: Simply put, stake a governance token and receive airdrops from protocols integrated with that staked token. This originated with Celestia and made sense—protocols using Celestia save heavily on data availability fees. If TIA prices fall, network security weakens, so protocols economically benefiting from Celestia’s DA tech should reward TIA stakers, supporting price stability. Recently, this model has expanded to projects like PYTH and JUP, and I expect this trend to continue.
Most anticipated upcoming airdrops include:
Confirmed Dates:
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Ethena ($ENA), April 2
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Wormhole ($W), April 3
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Zeus ($ZEUS), April 4
Solana:
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Parcl ($PRCL)
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Tensor ($TNSR)
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Kamino ($KMNO), possibly within April
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Drift Protocol ($DRIFT), sometime in Q2?
Modular:
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Nim Network ($NIM)
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Rivalz Network ($RIZ)
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Avail
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LightLink
Restaking:
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Renzo
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Eigenlayer
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Swell
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Kelp
Artificial Intelligence:
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GetGrass
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io.net
Others:
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ZKSync
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LayerZero
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Hyperliquid
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Blast
I’m sure I’ve missed a few—let me know if anything important is missing.
Narratives
Bitcoin Halving – BTC Beta
I'm seeing more Bitcoin-related protocols being built, many of which don’t yet have tokens. Given recent performance of Stacks (STX), this is expected. We saw a mini version of this in December 2023, ahead of the spot Bitcoin ETF approval. Coins like MUBI, BSSB, ORDI, and TRAC surged dramatically. I expect a larger-scale version before and after the halving in the coming weeks/months.
ETH ETF / Restaking – ETH and Restaking Beta
Over the past few months, ETH has taken a beating, with many calling for ETH’s death (myself included). ETH had moments of strength, most recently before its run from mid-2000s to $4000.
It now faces several exciting catalysts—mainly the spot ETH ETF decision and the launch of Eigenlayer restaking / LRT tokens. Seeing EtherFi’s TGE go so smoothly (reaching an $8B FDV peak within days of launch) shows strong market appetite for restaking. With Eigen’s launch, I expect ETH’s narrative to mirror Celestia’s: users participating and restaking to qualify for airdrops (using restaking as an airdrop strategy).
Additionally, Karak is a protocol to watch—they’re building universal asset restaking. If Eigen launches successfully, Karak should perform strongly as well.
SocialFi
Given Farcaster and $DEGEN’s momentum, FriendTech clearly spotted the demand here. Just recall how fast FriendTech grew in August/September 2023. The V2 launch and airdrop are highly anticipated, especially given how actively points are traded. If FT V2 delivers, it could become a powerful catalyst for SocialFi projects like Fantasy top.
Lastly, if FriendTech points trade above $10 each, I believe Farcaster will likely issue a token...
Crypto x AI Tokens
I divide AI tokens into two categories:
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Decentralized compute/storage/bandwidth
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Machine learning/AI/LLM wrappers
With GetGrass and IONet launching, this should reignite momentum for the first category. Render is the market leader here and performed exceptionally well last quarter. Strong continuation of NVIDIA earnings should also rekindle interest in this sector.
For the latter, any updates to existing LLMs or AI capabilities should act as catalysts. Most existing projects are wrappers, so updates to ChatGPT, Sora, Bard, and other models typically serve as positive catalysts. Bittensor leads this space, so most others will move relative to it—the higher TAO goes, the better the wrapper projects perform. Recall that Bittensor had a very strong Q1, with TAO rising from ~$200 to ~$700.
Another positive catalyst is the launch of Wayfinder ($PROMPT), an LLM built by the team behind Parallel TCG and Colony specifically designed to navigate on-chain everything. As we learn more and get updates on what they’re building, I expect renewed energy around AI/LLM-related projects.
Disclosure: I am an investor in Parallel / Wayfinder
Modular Blockchains
After a sharp rally in late Q4 2023, Celestia (arguably the market leader in modular blockchain infrastructure) has been consolidating.
Beyond price action, actual progress appears to be happening—apps like Aevo, Lyra, Conduit, Polygon, and RitualAI are beginning to use Celestia for data availability. Similar trends are unfolding with Dymension.
As more projects built atop this modular infrastructure succeed and begin airdropping tokens to stakers, attention will inevitably shift back to the modular blockchain category. Thus, I expect another round of repricing upward—especially if we get positive news in the SEC vs. Coinbase case regarding tokens as securities.
Additionally, as team unlocks approach toward the end of 2024, I expect coordination between infrastructure projects (e.g., DYM/TIA) and integrated dApps to develop strategic plans around team and investor token unlocks.
Looking further ahead (beyond Q2), I believe this modular narrative will eventually become exhausted as initial market leaders are repriced and succeed. My base case for how this cycle ends:
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Infrastructure projects helping dApps/middleware save money → airdrops → higher repricing
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Follow-on / beta projects launch → some deliver value, but far less than market leaders
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More projects launch with no real utility—just building "cool" tech on investor capital, missing the first two waves.
Other potential narratives: RWA, DEX, DePIN, Blast.
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