Why I'm modestly crypto-bullish in 2024

Crypto seems to have two modes. The first is when your friends won’t stop talking about it. The second is when your friends want you to stop talking about it.

Having watched boom and bust cycles in the web3 world since 2013, I’ve learned to never write off crypto entirely, and to never expect the most bullish takes to come true — at least in the short-term.

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But in the last decade or so, blockchain-based technology has managed to not go away. No matter what the general public or investors think about it at any point in time, its community of believers and builders are willing to muddle through any downturn.

All that in hand, I think that 2024 is going be a good year for blockchain-based products and services, but not because I expect that 2021-era venture enthusiasm to rear its head again. No, instead, it seems that there are several market forces going in crypto’s favor that could yield a better year for the technology and its constituent startup cohort.

Rising prices are helping provide a boost to trading and consumer interest, for one. But there’s more that’s worth considering, including regulation and its possible crystallization, and the chance that there is a breakout consumer product to tout. Let’s dig in and see if we can find some good news!

Bullish 2024 signals for crypto

Fully anticipating texts from friends who are crypto-negative in response to this story, I think it’s important to write down here that I do not hold any material crypto assets. I own a de minimis amount of crypto tokens in a Coinbase account that I set up for testing purposes, and I believe I own some zero-value NFTs that are stored in a MetaMask wallet that I set up, once again, to tinker and learn. So, I am not talking my book here, and to my friends who consider anything that TechCrunch+ writes that has a positive take on crypto to be a personal failing on my part, please relax.

But first, let’s talk about why crypto prices matter. When the value of well-known crypto tokens — your bitcoins, your ETH, and so forth — is on the rise, there is a commensurate gain in media attention and consumer interest. This can be measured in several ways, but I have long favored the method of comparing search trend data from Google to price spikes to make the point.

Higher crypto prices and larger total worth for all web3 tokens and assets, then, do more than just make existing holders more wealthy: They can bring more people to the world of web3 by making it seem dynamic and worth learning more about.

This is in part why when crypto prices are up, trading activity also rises. There’s certainly some cause-and-effect mismatch in that comment, as certainly in some cases rising trading activity drives prices higher and not the other way around. But the relationship between crypto prices and crypto trading is well enough understood that we don’t need to unpack it further here.

We care about more trading activity because many well-known crypto exchanges eat off of trading fees, and more activity means that they have more money. In turn, that can lead to increased corporate venture capital activity. To make this point clear, observe Coinbase’s venture arm’s activity in recent years. When trading was going bonkers, Coinbase Ventures was busier than a lone bee in a meadow. In the last crypto winter, trading declined, Coinbase began to lose money, and it pulled back on its investing activities.

Recently, the share price of Coinbase has doubled from where it was back in October. Why? Rising trading volumes (higher prices?) imply that the U.S. company is about to report Q4 numbers that are more enticing than many may have expected before the recent reflation in the value of crypto assets more generally.

That was a long-winded way of saying: The current mini crypto bull run could help get web3 corporate venture capital out of its slump. That could yield more startups in the space and potentially provide enough oxygen for existing crypto startups to stay alive longer. And that’s bullish-ish for crypto writ large, I reckon.

Then there are the noninvestment things that I find more than interesting. Here’s Union Square Ventures’ Fred Wilson on what he expects in the realm of crypto progress this year:

That’s a good segue to web3, which has seen a full frontal attack from regulators and lawmakers in the US and elsewhere. 2023 was the year that web3 held its ground and 2024 will be the year that regulators and lawmakers come to terms with web3. We will finally start to see regulatory clarity emerge in the US like has happened in the EU and elsewhere.

If this comes true, it could not only help make crypto easier to invest in, and build atop of, but also help consumers feel more confident in using the stuff. Today there are still too many frauds, scams, trapdoors and other hidden dangers in crypto to make it a product that I can recommend to anyone in my family, for example. (I don’t want my semi-tech-literate parents to use a system of ownership and money that is reminiscent of a trapped room in Baldur’s Gate 3: Whoops, you stepped on the wrong stone, your health (money) is gone!)

There’s a lot of progress to be made in making web3 more user-friendly. Wilson agrees, writing in the same post that as “important as regulatory clarity is to web3, it pales in importance with the need for a ‘ChatGPT moment’ for blockchain-based technologies.” The VC is not mocking AI for having a breakout consumer event before crypto, as he considers the former to be about 40 years old and crypto younger. Still, he thinks that a lot of progress is being made on this front.

This is the year, per Wilson, that we will “see mainstream decentralized applications emerge.” If so, we could have quite the crypto year:

We’re starting the year with prices up, trading up and exchange revenue up.More total activity unlocks more venture investment, more startups and more innovation.Regulatory clarity helps cement good ideas as long-term viable.Potentially better and more popular consumer-facing apps that get built will help keep new folks rolling into web3, keeping the entire loop healthy.

I am, however, less certain that 2024 is the year that the average consumer gets into crypto. Wilson cited lower-priced and faster transactions as a point in his argument’s favor, which I agree with. However, he cited a recent Vitalik Buterin piece about Ethereum and the future of blockchain-based tech, which I don’t think makes the argument click.

Buterin, Ethereum’s co-founder, writes that “the greater Ethereum-verse (or ‘web3’) [is] creating an independent tech protocol stack, that is competing with the traditional centralized protocol stack at all levels,” which is a technically impressive accomplishment. He also discusses progress made against fraud and efforts to make crypto more consumer-friendly.

But to get the people in my life into the web3 space, it needs to offer something that makes their existing lives better, not invite them to a parallel value-movement-and-storage system that sits next to, but not on top of, what they currently use today. Crypto needs to be not only different and internally logically cohesive, but also better than what exists out in the world today.

I still believe that blockchain tech will do better as a hidden layer than a consumer-facing feature. My parents have no idea how debit cards work, or the fees thereof, or who pays them. But they do like the fact that debit transactions are effectively free, instantaneous and accepted everywhere. It’s not going to be easy to get folks — apart from those who use tools like stablecoins to avoid local inflation, which is super cool — to swap out something that works really, really well for something that is slower and often more expensive.

So call me a modest crypto bull in 2024. I am just not convinced that this is the year of Linux on the desktop.