资料来源：TradingView、CNBC、彭博社、Messari
The prediction turned out to be wrong for two years in a row!
Over the past few years, we have published forecasts every year, focusing on the growth sources and potential risks of digital assets. Over the years, we've had a few big ideas that were right and a few that were wrong:
- In early 2020, we wrote about the rise of DeFi and task rewards.
- Halfway through 2020, we discussed the rise of NFTs.
- In early 2021, we discussed the rise of social/sports tokens.
- In 2022, we did almost nothing right and didn't do everything in place.
- In 2023, we correctly predicted that distressed investments in digital assets would deliver alpha and that digital assets as a whole would decouple from traditional markets and re-emerge as an uncorrelated asset class, but we largely missed the themes that we thought would drive returns.
The most interesting thing about the last two years is that the 2022 consensus was wildly wrong, and the 2023 consensus was even more outrageously wrong. A survey conducted by Deutsche Bank in early 2022 revealed that only 19% expect a negative return for the S&P 500 in 2022, and only 3% expect a return to be below -15%. The S&P 500 ended up losing -19.6%. In 2023, the same survey by Deutsche Bank showed that 39% expected the S&P 500 to have a negative return of more than 10%, and of course, the S&P 500 ended up up +24.23%.
The consensus expectations for digital assets are difficult to summarize, but it's safe to say that few expect digital assets to plummet like they did in 2022, and almost no predicted that digital assets would become the best performing asset class in 2023, with returns close to triple digits. Heading into 2024, there may be more obvious reasons for optimism, but there are still plenty of reasons to be skeptical. Overall, we believe investors will continue to reap the rewards of investing in this asset class in 2024.
But in order to navigate the many ups and downs of the year, we must choose the right themes and narratives that drive performance. Admittedly, many themes and narratives change over time.
Prediction 1: Bitcoin is no longer boring and will outperform most stocks again, while stocks that own Bitcoin mining will outperform Bitcoin again
Like most people who entered the digital asset industry before 2018, the first blockchain network I used was Bitcoin, when I first bought BTC. This made sense from both a technical and macro perspective, especially since there were no other mature use cases for blockchain technology at the time. But over the past six years, our investment focus has shifted primarily to other applications and industries enabled by smart contract protocols. Frankly, Bitcoin has become a boring financial asset that you may have, but certainly don't need to discuss or study it because it has never changed. And the development of NFTs, stablecoins, DeFi, etc., is built on other chains and requires constant analysis and education.
This has changed in 2023. Over the course of the year, we have had more discussions and debates about Bitcoin than any other asset and chain, starting with the justification for owning Bitcoin (March regional banking crisis, Blackrock Bitcoin ETF application) and secondly new technological innovations (Inscriptions, Ordinals). As a result, Bitcoin is no longer boring, starting with the most obvious, to the least obvious, here are a few reasons to own BTC and Bitcoin-related assets:
- Bitcoin has had three halvings before, and all before the price rose significantly. You don't necessarily have to believe that the halving will change any fundamentals (and I certainly don't either), but at this point, it has become a self-fulfilling prophecy. The April 2024 Bitcoin halving is widely seen as a catalyst.
来源：TradingView
- The upcoming approval of Bitcoin spot ETFs will spark demand from new investors, primarily financial advisors and RIAs. I expect Bitcoin spot ETFs to have a knee-jerk rally after they are actually approved, which is mostly algorithm-driven, will last for a few days, and eventually the price will stagnate until the ETF actually starts accumulating assets. The second half of 2024 is likely to see greater increases than the first half. More than 30% of Bitcoin's total supply hasn't changed in five years, which can lead to a liquidity crunch as ETF issuers scramble to buy Bitcoin every time a new ETF is created.
- The US presidential election in November, coupled with the expectation of 3-5 rate cuts, will boost all risk assets as inflation takes a back seat to politics. Bitcoin is more susceptible to macro liquidity conditions than any other asset.
- The 60/40 portfolio is dead, and it's been dead for over two years. Over the past two years, the correlation between U.S. equities and bonds has been the highest since 1993-95. If bonds and stocks no longer have a negative correlation, new financial assets will be recommended for inclusion in the model portfolio. There is no asset with higher returns and lower correlation than Bitcoin. Bitcoin ETFs will naturally make their way into every modern portfolio allocation.
- The long-awaited Gox bankruptcy distribution will not affect the price of Bitcoin. While 142,000 BTC (more than $6 billion) is expected to be distributed to creditors this year, most of it will not be sold. First, over the past five years, most of Mt. Gox's debt has been bought by bad investors, and most of the risk to Bitcoin's price has been hedged. Second, anyone who owned Bitcoin back in 2013 and held its bankruptcy claims for 10 years is probably a fan of blockchain and Bitcoin, so there's no reason to believe that most creditors will sell their cherished assets, no matter how much the price has risen. Third, third, Mt. After Gox filed for bankruptcy, Bitcoin Cash (BCH) was forked from Bitcoin, which means that 143,000 BCH will also be distributed. Few, if ever, original BTC holders care about BCH, so BCH is more likely to be sold immediately than BTC.
- BITCOIN MINING STOCKS (I.E., MARA, RIOT, CLSK, CIFR, BITF, IREN, ETC.) WILL OUTPERFORM BTC AGAIN IN 2024. In 2023, mining stocks collectively rose by 399% (compared to BTC +155%). Historically, the BTC halving has been bad for miners because the block subsidy (which historically accounts for 98% of miners' revenue) will be halved, but now due to the rise of Ordinals and BRC-20s, this problem will be mitigated somewhat as they have become a major part of mining revenue. In the past, the analysis of mining stocks was pretty straightforward – fixed costs relative to variable income that fluctuates with the BTC price – but now, equity analysts need to consider these other revenue streams, and this hasn't happened yet. Bitcoin's transaction fees soared to an all-time high in Q4 2023, fueled by BRC-20 transactions and fungible memecoins issued using the Ordinals protocol.
Prediction 2: Tokenization of real-world assets (RWAs) will be realized, but only if you can trade tokens, stocks, and bonds in one place
The tokenization of RWA is one of the most talked-about new topics in 2023. But the data is misleading.
Tokenization of real-world assets refers to the tokenization of everything from financial assets, real estate, to personal items such as art and jewelry. Theoretically, by converting physical assets into digital tokens, blockchain can improve liquidity, transparency, and efficiency. Such innovation would allow for fractional ownership, wider distribution, and easier access to investments that have traditionally been illiquid or exclusive. The secure, immutable nature of blockchain transactions, coupled with the potential for smart contract automation and streamlined processes, has further attracted institutional adoption, signaling a new era in asset management and investing.
While RWA has a promising future, what has emerged so far is the rise of tokenized US Treasuries. The reason for this is not any of the above, but rather that DeFi applications and on-chain stablecoin issuers have an abundance of cash to invest outside of the blockchain ecosystem. As U.S. Treasury yields rise, tokenized Treasuries provide them with an on-chain solution. The on-chain token market, based on US Treasury yields, grew 7x in 2023 to $832 million. This is great, but it's just a very specific example of tokenizing real-world assets and simply doesn't solve any of the inefficiencies in the traditional financial system.
Source: Coinbase
Currently, only people who have already entered the cryptocurrency ecosystem care about the tokenization of RWA (specifically US Treasuries) because it solves a particular use case for them. To get more people concerned, tokenized RWA must offer a compelling value proposition. One or both of the above two conditions must be present:
- Someone tokenizes an asset that is in real demand. Tokenizing one-off hotel assets doesn't excite anyone. Tokenizing NBA contracts isn't exciting either. But if you tokenize something that has real value to people, like Apple stock, Mona Lisa, or a municipality's project financing debt, if you own the tokens, the residents can enjoy the benefits, and then you can generate new demand. Tokenization for the sake of tokenization does not drive demand.
- The chicken-and-egg question comes first, but as long as the brokerage industry and the cryptocurrency world are completely separated, there is no need to tokenize anything. At the end of the day, all assets need to be able to be owned and traded on-chain, otherwise they shouldn't be owned and traded. Those with brokerage accounts don't need to trade stocks and bonds on-chain, and those who trade entirely on-chain don't have a large enough financial audience to attract the tokenization of brokerage assets. The real value driver is that when you can bring all your valuable assets together on the same layer, you go beyond the traditional barriers to liquidity and promotion. For example, selling a collectible car on-chain to the mass market, using DeFi rates ranging from 2% to 3% per annum (compared to 5% to 30% in the global market) to borrow against the user's property, or spending "money" as a proportional reduction of all assets. Money is online, communication is online, news is online...... The world is online now. But money and assets are still separated, and it simply doesn't work.
Prediction 3: This is the last "supercycle" for digital assets until TradFi normalizes the industry.
The similarities between 2019 and 2023 grew and sentiment hit rock bottom, followed by a resurgence of Bitcoin and eventually the rise of other Layer 1 protocols and applications. After Bitcoin outperformed everything in 2019, we saw the rise of DeFi, stablecoins, and finally NFTs in 2020-2021. Eventually, 2024 may follow in the footsteps of 2020, with a resurgence of decentralized applications and the emergence of some new areas.
Currently, we are seeing a similar environment taking shape, and the adoption of digital assets and the appreciation that comes with them may be on the verge of another huge climax. One of the main headwinds, concerns about U.S. regulation, could also be a tailwind, meaning that TradFi participants are more comfortable as the regulatory environment becomes clearer, which could bring a lot of new capital to the ecosystem. After the last "supercycle", returns may become more normal.
While the liberal dream of no rules and no government for cryptocurrencies sounds good in theory, in order for digital assets to really exist, Wall Street is inevitably involved, and we're starting to see that happen.
- Blackrock, the world's largest asset manager, is likely to manage its largest BTC fund (ETF) by the end of the year.
- Citadel, Jane Street, Goldman Sachs and others will be the largest market makers.
- BNY Mellon will be the largest custodian of Bitcoin.
- The CME's Bitcoin futures trading volume has surpassed Binance's.
- The next wave of digital asset issuance is likely to come from corporations, municipalities, and universities, and will be underwritten by investment banks. To date, most tokens have been issued by decentralized and/or jurisdictionally ambiguous entities, however, the issuance of tokens by corporations, municipalities, and universities has helped align incentives for stakeholders.
But in 2024, the majority of investor and institutional funds will be invested in BTC through new ETFs. The rest of the digital asset industry will remain a flash in the pan for most investors and may still be too small for most investors. As a result, digital assets can still generate alpha for a small fraction of non-Bitcoin digital asset investors over the next 12-24 months. After this surge in expectations, I believe that the rest of the industry will also be institutionalized. However, in 2024, investors will still be able to receive airdrops, rewards, and on-chain data in advance. After another cycle, the old ways of investing will still work, but soon, too much popularity and homogeneous valuation techniques will shrink returns.
Prediction 4: Interoperability solutions will improve
At the end of the day, no one really cares which chain they're on and shouldn't be. Interoperability between chains was a topic we focused on last year, but the focus has shifted from Layer 1 and Layer Zero chains (such as Cosmos and Polkadot) to middleware providers (Chainlink CCIP, Layer Zero OFT, Circle's CCTP, etc.). Over the past two years, we have seen an increase in the number of new Tier 1 and Tier 2, which has led to the fragmentation of the market in general. While users have more options for new, faster and lower-priced chains, the problem they are now experiencing is a general lack of compatibility. Not all chains can communicate with each other, and many are incompatible when it comes to simply passing assets back and forth. The increase in bridging vulnerabilities illustrates the weaknesses in this area, as well as the need for technology that does not rely on the pegged asset.
Imagine if you could only send an email between two Yahoo Mail users or between two Gmail users. Or imagine if you could only play video games between people who use the same console or phone. It doesn't work, and it won't work in the blockchain world. End-users should not choose the chain they are on in order to use a blockchain application.
For organizations entering this space, what they need is technology that is more seamless and free of security risks. To date, a major focus for institutions has been to issue their own assets that are compatible in many different environments, including existing public blockchains as well as private enterprise versions (e.g., JPMorgan Chase's blockchain, Figure's Provenance blockchain).
While the final solution isn't necessarily obvious, one or more solutions must become the norm in order for more people to use it.
Prediction 5: The user experience will eventually improve, leading to some killer apps in gaming, artificial intelligence, and DePIN
In the early days of the internet, users relied on IP addresses to connect to different websites. For the average user, these strings of numbers are meaningless. In late 1987, the ARRPA network made two recommendations, RFC 1034 and RFC 1035. This was where the domain name service began. The Domain Name Service (DNS) converts these strings of numbers into names, such as amazon.com. This shift has led to a significant increase in the availability and searchability of the Internet, which is used by billions of people today.
In 2023, with the launch of ERC-4337, there is a similar proposal for digital assets to create "smart accounts". These accounts are designed to radically simplify the user experience of Web3. With a smart account, users don't need seed phrases, download browser extensions, and, in many cases, gas fees, to make transactions faster.
We need a solution like this before most new users can easily go on-chain. But the question remains, whether there will be a "killer" app before the user experience and infrastructure improves, or will a better user experience and infrastructure lead to a "killer" app? The following is an excerpt from Myth of the Infrastructure Phase:
"A common view in the web3 community is that we are in the infrastructure phase, and what should be done now is to build the infrastructure: better base chains, better interoperability between chains, better clients, wallets, and browsers. The rationale for this is: first, we need tools that make it easy for people to build and use applications that run on the blockchain, and once we have those tools, we can start building those applications. But when we talk to founders who are building infrastructure, we keep hearing that the biggest challenge they face is how to get developers to build applications on top of it. "
It is widely accepted that the initial phase of a new computing platform is a separate infrastructure phase, followed by an ecosystem of applications. The reality, however, is that new computing platforms start with killer applications that inform the type of infrastructure that needs to be built. This kicks off the "application infrastructure cycle".
The digital asset market has been building infrastructure for years, and much of that infrastructure has been battle-tested to build true consumer applications on top of it. To date, the most successful application of blockchain technology is the USD stablecoin. We saw early traction from NFTs and DeFi in 2020 and 2021, but more user growth is still needed before it becomes "mainstream". In 2024, similar early growth trajectories are expected for artificial intelligence, gaming, and DePIN (decentralized physical infrastructure networks). While this may push up the token price of individual projects, the entire digital asset market will not grow until a few of these projects become "hot".
- Gaming – Perhaps Web3 gaming is most likely to bring in the next million plus users. A few years ago, Axie Infinity paved the way for blockchain-based games, which at its peak set a record of 1 million active users, but the game eventually fell flat due to design flaws and overhype. Many companies have been grappling with flaws in the first iteration of web3 games. As a result, we expect to launch several commercial games in 2024, some of which have already gone through alpha and beta testing phases in 2022 and 2023. We predict that mobile gaming will be a major focus, with Asia leading the way in bringing in a new wave of users. These games may be available on the Apple App Store and Google Play Store, and the stablecoins will be used for in-game purchases. Major players in the online gaming industry, such as Ubisoft, EA, and Zynga, have already embraced online games and are partnering with traditional companies to bring these games to the masses. In addition, blockchain technology gives the gaming community a greater say in the direction and development of the game, which will help create more loyal users and make them the disseminators of the game.
- DePIN – This is an area that can clearly benefit from blockchain and tokenization, although the project is still in its early stages. The idea is decentralized access to resources that would otherwise be unavailable – compute, wireless, storage. Blockchain provides a way for users to access these resources, pay for them, and be rewarded for providing them. The current version of the DePIN project is showing promise in design, but has not yet gained real traction. However, the new generation of projects is more focused on creating a healthy demand side than just incentivizing the supply side. The growth of AI-related technologies is driving use cases for DePIN projects such as the need for computing.
- Artificial Intelligence – The intersection between blockchain and artificial intelligence is a match made in heaven. Any data trader knows that "garbage input = garbage output". While the few companies that train today's AI models (Microsoft, Google, Open AI) don't provide junk data, their inputs are naturally biased. A 2016 Microsoft AI experiment on Twitter showed the drawbacks of incorrectly training AI models. The incentive model naturally created by blockchain can help solve this problem. By decentralizing and rewarding trainers and validators in the network, these models will organically reduce bias and ultimately produce better models.
Prediction 6: Ethereum re-emerges as a universal asset on the "long blockchain".
In 2023, Bitcoin has soared, with newer, faster Layer 1 protocols (SOL, AVAX) rising even more, but Ethereum (ETH) has lagged behind. However, the tuyere is coming. Ethereum is likely to outperform Bitcoin in 2024, driven by the expected EIP-4844 upgrade, which will improve Ethereum's network efficiency and favor Layer 2 solutions, resulting in a 90% reduction in fees.
What's more, ETH is likely to be the next asset to Wall Street to watch after the Bitcoin ETF goes public. While Bitcoin is a great asset, it doesn't give you exposure to much of the growth of blockchain. If you want to go long DeFi, NFTs, stablecoins, DePIN, AI, and RWA, you need to own a large number of different types of assets, which basically means that you need to be an accredited investor and invest in funds, or you need to quit your day job and immerse yourself in the world of digital assets around the clock.
Or – you can own ETH. In 2024, ETH will no longer be interpreted as "hard currency," or a decentralized technology with hundreds of developer upgrades. Instead, it will be described as the number one app store for all blockchain applications. Who wouldn't want to invest in the "Apple App Store of Blockchain"?
If you just want to be "blockchain long...... You can embrace ETH and reap the benefits of every application built on or adjacent to ETH.
Conclusion
The biggest benefit of running multiple fund strategies at Arca is our ability to invest in almost any type of blockchain innovation in at least one fund strategy. But more importantly, the token's liquidity gives us the ability to change our minds and invest instead when we're wrong or see something more right.
Inevitably, many of these predictions will prove wrong. However, by challenging these assertions and looking for where our mistakes lie, we will inevitably discover new themes and narratives that will be even more interesting as investors and blockchain enthusiasts.