Crypto’s Long-Tail Disruptive Trends

The first half of 2024 has ushered in a new cycle for crypto adoption. The long-awaited approval of Bitcoin ETFs has been a decisive factor for this new cycle, along with the strong price momentum that has seen Bitcoin reach a new all-time high. This not only pushed Bitcoin back to the brink of institutional adoption, but also positioned the market for another potential bull market cycle.

These cycles were marked not only by the introduction of new projects, from Bittensor and ZKSync to Bonk and Dogwifhat, but also by the strong price values ​​of many digital assets. With a higher beta compared to Bitcoin, assets of different sizes and sectors generally experience greater volatility, reflecting investors’ expectations for higher returns.

You’re reading Crypto Long & Short, our weekly newsletter with insights, news and analysis for professional traders. Sign up here to get it in your inbox every Wednesday.

Several trends are shaping the altcoin market in 2024, focusing on innovation, sustainability, and the discovery of new use cases, driving growth among altcoins.

Re-staking has emerged as a notable vertical for this new cycle, which involves continuously staking rewards earned from staking tokens and compounding returns over time. Projects such as EigenLayer (EIGEN), EtherFi (ETHFI) and Renzo (REZ) have implemented mechanisms that encourage users to repurchase staking rewards, thereby increasing their stake in the network and contributing to the security and stability of the network.

Altcoins are increasingly adopting Layer2 scaling solutions such as Optimistic Rollups, zkRollups, and sidechains to increase transaction speeds and reduce fees. Projects in this category include Arbitrum (ARB), Optimism (OP), Polygon (MATIC), Starknet (STRK) and others. This trend aims to improve user experience and attract more users to the platforms of these projects.

Interoperability between blockchain networks is also a growing trend. Some projects are collaborating and building bridges to enable asset transfers and communication between different blockchains. This trend aims to create a more interconnected and efficient blockchain ecosystem rather than many different siled blockchains. Examples of such projects include Axelar (AXL), Across (ACX) and Stargate (STG).

With the rise of Layer 2 solutions and interoperability, modular blockchains represent the next phase of the evolution of digital assets. With their adaptable and customizable designs, they offer a flexible framework where developers can plug-and-play modules such as consensus mechanisms, token standards, and governance models. Blockchains like Celestia (TIA) and Dymension (DYM) use this modularity to improve scalability, interoperability, and security.

The story continues

Parallelized Ethereum Virtual Machines (EVMs) leverage the power of multiple nodes simultaneously by splitting smart contract execution into parallel tasks. The most popular parallel EVMs, such as Sei (SEI), Canto (CANTO), Nomad, and NeonEVM (NEON), attempt to do this by processing off-chain transactions and then collecting them back into the Ethereum mainnet. This approach significantly increases transaction throughput and reduces latency, eliminating Ethereum’s historical limitations.

Current crypto market prices seem to indicate that a bull market is ongoing; Megacaps may still have room to grow before smaller coins outperform the rest of the market. But this phase may not be far off, and once you start, it can be difficult and potentially costly to be underpositioned, especially as institutional adoption increases and the need to generate alpha grows.

Note: The opinions expressed in this column are those of the author and do not necessarily reflect the views of CoinDesk, Inc. or its owners and affiliates.