Let’s start with a simple question: what are crypto narratives? How can a simple story move gigantic market caps and decisively affect market sentiment?
What are narratives in crypto?
Imagine yourself as a confused little boy preparing to go into a fight with a bully. You are afraid, you don’t believe in yourself… You want to run. Then, an older brother says that the guy in front of you is not that strong and you can easily win. Others start encouraging you saying that courage beats strength and the victory is one hit away.
Well, this story has two possible scenarios:
- A little boy believes in himself, rushes into the fight, and wins thanks to the encouragement of others. The story ends well and the impact of the rapidly forming narrative makes it possible for you to find the necessary resources to win.
- A little boy believes in himself, rushes into the fight, and receives a beating like never before in his life. This ending is the result of a story full of lies that inspired someone to act on false promises and unfounded hype.
The same is true for top narratives in crypto. A story can stand on a solid foundation of technology, utility, or confidence. It can also be haphazardly put together by a group of individuals with malicious intentions. It is hugely important for an investor to understand fresh concepts and ideas as they are taking shape and make informed decisions based on personally conducted research.
If you are trying to diversify a portfolio and make it a little bit more resilient toward different market risks, you should do your due diligence zealously. Diehard enthusiasts and cautious skeptics, all must be very careful when dealing with speculative digital assets like crypto. Any story can have a profound effect on price action due to the lack of many fundamental factors like real assets, brand value, proprietary technology, manufacturing capacity, etc.
A smart investor seeks a perfect balance between his faith in what is pushed by the vocal minority and the true potential of an asset or a group of assets estimated with technical analysis and insights into the industry. Unfortunately, even the best analysts and experts often fail to recognize top crypto narratives. We are here to discuss some of the most prominent ideas and concepts that invite discussion, feed the engine of the bullish crypto trend, and inform newcomers about the most promising products, technologies, and tokens in the market. Let’s dive into the “Crypto Narratives 2024” list and learn a little bit more about each.
Memecoins: one of the biggest 2024 crypto narratives
The power of word was demonstrated by the event in 2019 when Elon Musk made a tweet with a favorable mention of Dogecoin which was a relatively small token at the time. The effect of this single social media post was incredible and pushed the price by 30% in less than a week. Interestingly enough, tweets from the multibillionaire today do not have the same impact on the market.
Nevertheless, memecoins are even more speculative than other tokens that actually provide meaningful utility and can be used for more than social media clout. This fact does not scare away risky investors who are willing to gamble on a variety of tokens inspired by nothing but jokes and memes.
Here are some reasons the community believes in meme coins:
- Accessibility for retail investors. The new wave of traders is comprised of Gen Z and millennials who often make financial decisions based on hype and social media discourse. Finder conducted a survey among retail crypto investors and found that over 30% of young investors are highly interested in Dogecoin. $DOGE or $SHIB are also quite cheap allowing people with small capital to start investing.
- Explosive social media hype. Many of the most influential stories with a big potential to change everything are formed on platforms like Instagram, Twitter, Reddit, and Discord. Influencers became quite good at inflicting fear or missing out on their audiences and forcing them to buy meme coins that have a good potential for growth in the near future. While such hype trains often run on nothing but empty promises, they do produce visible price spikes in memecoin markets.
- High yields… If everything goes right. Sometimes, a miracle happens when no one expects it. Dogecoin made a wild surge toward its ATH in 2021. Can you imagine the growth of over 15,000% in a couple of months? The funny dog turned thousands of people into millionaires overnight! This potential attracts investors who are willing to bet on tokens that may follow the path of $DOGE. It is the main reason why retail traders rushed to buy $SHIB and $PEPE.
- It’s my culture! Memecoins are unique assets that do not have any analogs in the stock market in terms of reasoning behind purchasing them. The GME story of millions of games and financial anarchists uniting against massive institutional investors is fun, but it was a moment of unification around a common enemy. $DOGE and $SHIB have communities that are dedicated to the culture of memes. Many hold tokens without any financial incentive.
While it is one of the most popular crypto narratives in 2024, we have to remember some downsides:
- Memecoins are highly speculative. There is literally zero utility behind some of them. For example, the “official” website of Dogwifhat explicitly says that the token is just a “dog wif hat”. No utility, no use cases. Still, it reached a $2.7 billion market cap.
- The hype never lasts. $DOGE has been a consistent performer throughout the years but many other tokens disappeared into obscurity or failed to meet growth expectations.
- Lots of copycats. $SHIB was a success and it simply cloned $DOGE. However, many other tokens trying to capitalize on the happy ending on several huge memecoins just contribute to market saturation.
- No game plan for the distant future. The developer of $DOGE had to step up and make some important changes to the token. For example, deflationary mechanisms were introduced to ensure the long-term financial viability of the coin. However, the vast majority of memecoins do not have any such plans for the future.
AI tokens: one of the new crypto narratives
Several DeFi projects and blockchain companies shifted their focus to artificial intelligence technologies sometime in 2023 during the AI boom which is still going strong in 2024. The integration of various AI systems into web 3.0 applications, DeFi platforms, and programmable blockchain solutions seems like a great idea on paper. The jury is still out on whether it is actually worth exploring.
The following reasons serve as the foundation for the hype around this particular story:
- Everybody and their granny are into AI. Expert artificial intelligence systems have been around for decades, but the recent surge in machine learning algorithms led to a paradigm shift in the industry with the impact made by OpenAI’s ChatGPT. Grand View Research published are report estimating the AI market size at $63 billion in 2021, way before the shocking launch of the hype train in 2023.
- Disruptive potential. AI tokens are often described as potential industry killers. Just like many blockchain products were aimed at disrupting certain sectors of the economy like marketing, supply chains, logistics, and more. Artificial intelligence is going after much more sophisticated fields like healthcare, finance, and HR management.
- Unexpected use cases. The utility offered by AI tokens is quite different from what we are used to. AI can improve many processes on the blockchain. DeFi protocols hope to use these technologies to strengthen security measures, optimize data handling, and make scaling easier.
- AI attracts investors. One of the reasons why tech giants and everyone in Silicon Valley cannot stop talking about AI is money. Venture capitalists are tired of failing startups that never deliver on their promises. Now, artificial intelligence is their new favorite toy. The same is happening in the crypto market where tokens with “AI” attached to them outperform other digital assets.
- Let’s keep the tradition going and add a bitter aftertaste to one of the most frequently mentioned topics:
- The complexity of the technology. Not a single AI startup has made a profit despite the interest from the general public. Training new models is an incredibly costly and complicated endeavor that casts a shadow of doubt on the future of AI tech.
- Uncertain legal status. Generative AI systems are facing juridical scrutiny because of the origins of the data they are trained on. Copyright infringement is a big deal in many Western countries. At the same time, regulators in many regions are still not interested in addressing the legal status of AI agents in many industries.
- What if it’s all just a nice anecdote? The only kind of real thing is ChatGPT and, to some degree, Claude 3. While its ability to create videos and pictures from descriptions or unveiled voice assistant looks impressive, the chat itself did not improve much and still regularly pits out gibberish and hallucinates. It is possible that machine learning has limits that will prevent it from taking over many industries.
Fetch.ai with its unique economic model powered by AI agents has a $4.3 billion market cap. Render and Bittensor are just behind with $3.6 and $2.4 billion respectively. These are impressive numbers, but even memecoins dwarf them.
Layers 1 and 2: one of the best crypto narratives in 2024
L1 networks like Ethereum serve as the foundation for blockchain ecosystems. They provide essential tools for developers and a digital infrastructure within which decentralized applications can be easily deployed. The strong support of L1 is all about the potential of large networks like Polkadot, Cardano, and BNB to continue growing and scaling up.
The growth of many L1 networks is bottlenecked by throughput and performance issues as well as security concerns. In theory, roll-ups on layer 2 can solve these issues. Networks like Polygon, Mantle, Arbitrum, and many others look like useful expansions of underlying layer 1 infrastructure. The combined market cap of all relevant L2 networks is close to $40 billion.
Why layers are considered one of the most important stories in the industry?
- The promise of scalability. Blockchain enthusiasts are always happy to talk about improvements that increase throughput and allow for faster and cheaper transactions. However, they always forget that established systems like SWIFT can handle millions of transactions each hour without any issues and only minor setbacks here and there. Cryptocurrencies must scale up to reach widespread adoption. L2 solutions promise to move us closer to this brighter future.
- Too big to fall. Layer 1 networks like Bitcoin and Ethereum already appear too large and decentralized to be vulnerable to economic uncertainty and even technological failures. The hype around established L1 blockchains is justified. Their combined market cap is over $2 trillion even after the crypto winter and several bearish trends in the market a couple of years ago.
- Someday we all interconnect. Layer 2 solutions are increasingly more interconnected with each new generation. Web 3.0 may become a reality after all if DeFi platforms are flexible enough to allow for swift cross-network transactions and convenient asset swaps. Many investors are hopeful and buy L1 and L2 tokens with an expectation of growth warranted by the continuous improvement of networks in the future.
- The risky side of this particular fairytale is comprised of the main talking points from skeptics:
- Unregulated and uncertain. L1 networks are just now entering the spotlight causing lawmakers to scrutinize them. We still do not have any legal frameworks for cryptocurrencies outside of some taxation rules and very unclear laws in the EU.
- The needed scale may never be reached. One of the biggest fears of crypto enthusiasts is that not a single L1 token will reach the necessary performance and throughput to compete against established settlement systems. It is possible that $BTC will never be used to actually buy stuff.
- Disappointing L2 projects. Many secondary networks did not deliver anything exciting and provide some utility in niche scenarios. Gnosis, Polygon, and Mantle promise millions of whistles and bells but have low user counts and the value of their utility is still debated by experts.
NFTs are coming back: a weird entry in our crypto narratives list
Non-fungible tokens were quite popular just two years ago, but the market quickly dissipated due to the prevalence of scam projects and NFTs that did not carry any utility. While it is a great idea to allow artists to make money by directly selling their works to supporters, such a game plan would have never worked out and it didn’t.
Investors are looking for things that carry some cultural significance (like memecoins) or provide utility (AI tokens are a great example). The long-term fate of any asset depends on having something of value beneath the exciting marketing. Unfortunately, the NFT industry in its previous form was not a sustainable ecosystem that could not promise growth to serious retail investors. Whales may be able to carry games but they cannot support an active market.
Despite many arguments against it, the concept of NFTs is making a comeback. They are used in some RWA projects, offer utility to web 3.0 retail platforms, and seem like an interesting tool for marketers to enhance real-world products. Disney, NBA, FIFA, and many other household names are still interested in using NFTs albeit to a lesser degree than the industry hoped for in 2019.
Here are the talking points that form the supporters of this idea:
- High returns. The potential for explosive growth is still here. The Beeple’s “Everyday” collection did not disappoint its creators! It made over $70 million in 2021. People behind it spent a fraction of that sum on minting tokens. In general, the market grew by 800% in just four years! Such spurts are unlikely to happen in the near future, but all speculative markets promise huge returns to brave investors.
- Diversification of investments. Some experts argue that the inclusion of NFTs into a portfolio allows investors to further diversify assets and reduce risk. The absence of correlation between non-fungible tokens and other asset classes is recognized by some as a great way to bring balance to a portfolio that leans too much toward bonds, stocks, and real estate.
- The cultural impact. It is true that during the short period between 2018 and 2022, NFTs ruled the world. This glorious time is long gone. Nevertheless, NFTs are still out there on digital ledgers and some marketplaces boast good trading volumes. The return to cultural relevance is still possible which is one of the most frequently spoken ideas in many blockchain-related communities.
Here are the downsides of this commonly held belief that NFTs may come back:
- A bad aftertaste. Many investors lost money on unfortunate NFT investments and may not be willing to trust the technology again. While it is possible that other retail traders will infuse this niche sector with life, bad word of mouth is already out in the open.
- Many marketplaces are going under. NFT marketplaces could not survive the crypto winter, which is good according to many experts who believe that it is necessary to throw out the chaff and allow the strongest to keep going. Is it even possible for large NFT marketplaces to return?
Web 3.0 gaming: one of the biggest crypto narratives in 2024
Many play-to-earn games are taking off rapidly. Floki and Crypto Unicorns made some noise at the beginning of this year by making some bold promises. The latter is already available to players who are quite interested in the concept of the base-building game set in a universe full of funny fairytale creatures. The economy of $CU tokens is quite volatile, which is expected for a coin that has been around for less than a month.
Web 3.0 gaming can be one of the most impactful stories developing in this year. The interconnectedness of the blockchain ecosystem allows for cross-network deployment of tokens and NFTs while providing a robust foundation for high-performing in-game economics. The issue is that games rarely look comparable to established mobile games in terms of visual fidelity and overall experience.
If more highly polished products like Axie Infinity were to appear in the industry, its tokens would go through the roof. Unfortunately, many games in development sound promising and fun but look like something that a team of rookies could put together in Unity as a passion project.
Here are some of the hot topics discussed by the proponents of this storyline:
- Decentralized ownership. As a tradition, all crypto enthusiasts immediately mention blockchain technology as the driving force behind any new trend in the world of cryptocurrencies. The idea of fully decentralized ownership of in-game items and even real estate is the dream for any game that deeply enjoys escapist imaginary universes.
- Increased interoperability. Cross-network interactions and the ability of contemporary blockchain infrastructures to effortlessly toss around various assets packed as NFTs or smart contracts make it possible for gamers to actively participate in the in-game economy and move their assets between different gaming systems and technological platforms.
- The power of the community. The democratic governance of many DeFi platforms is the only reason why some of them even exist. On the other hand, thousands of people are attracted to play-to-earn games which survive only when they have massive player bases with dedicated market participants to ensure liquidity.
- Web 3.0 gaming is great and all, but let’s hear the opposition:
- Most play-to-earn games ultimately fall apart due to the unsustainability of tokenomics and inflation. Even games with virtual currency that may not even have any value in the real world experience difficulties with managing economics (we are looking at you, EVE Online).
- NFTs must make a comeback for Web 3 gaming to flourish. Many games developed as parts of the growing Web 3 ecosystem advertise NFTs as the main drivers of their in-game economies and focus on the utility of items represented by non-fungible tokens. As mentioned previously, NFTs do not have a great public image at the moment and may slow down the growth of the Web 3 gaming industry.
Honorable mentions: 5 more top narratives in crypto in 2024
There are some other important stories that are developing and influenced by the crypto community. Here are some concepts and ideas that you should be aware of in 2024:
- Using AI automated trading systems. The trading automation industry has been tied to the cryptocurrency market since its inception. Today, many companies are focusing on deploying unique AI trading bot systems that leverage the power of expert artificial intelligence agents to enhance their analytical models, algorithms, and execution speeds. For example, the WunderTrading platform is conducting an open beta test of its AI-assisted statistical arbitrage system capable of trading all types of digital assets.
- Bitcoin Layer 2. Honestly, such stories in crypto should have been higher on our list. BRC-20 is a new exciting standard allowing users to mint inscriptions (Bitcoin NFTs) using the Ordinals protocol that was deployed in early 2023. Given the current strength of Bitcoin dominance and the mood that surrounds the most prominent cryptocurrency in the world, including anything related to it in the list of the biggest crypto narratives seems like a no-brainer. In reality, layer 2 solutions for Bitcoin are not impressive or groundbreaking enough to really affect market prices.
- DePIN and DeSCI. Decentralized physical infrastructure networks or DePINs are a popular talking point for blockchain enthusiasts who point in the general direction of projects like Render, which provides decentralized GPU computation, and Theta offering a video streaming service to creators and consumers. Together with decentralized science projects, DePIN promises to make a notable impact on the real world using blockchain technology.
- Real World Assets or RWA. It is one of the best stories to follow simply because the whole blockchain industry is in a very hard place at the moment due to issues related to regulatory risks, economic uncertainty, and the shakiness of the global financial system. It is important to convince retail investors that the connection between DeFi and something tangible like real estate can be established and beneficial in the long run.
- GambleFi is the last entry on our list. The idea of gambling away crypto assets took off during the crypto winter when it seemed like a good idea to some coin holders who lost hope when markets started going down. Right now, the validity of this set of ideas is questionable, to say the least. Nevertheless, people are still quite excited about on-chain gambling solutions.
The main takeaway
When seeking potentially useful stories to follow, one should be aware of potential risks associated with investing in assets that no one fully understands. Many stories sound incredibly sweet and convincing yet carry a scary threat to your portfolio. On the other hand, avoiding exciting trends like the use of expert AI agents in a crypto trading bot can be detrimental to your financial well-being in the long run. It is hugely important to adopt promising technologies early.
Trust all ideas from influencers and power users from popular forums with a large grain of salt and do your own research before making a serious investment decision. Some developing stories can be excellent signals to start buying certain tokens while they are cheap. However, they can also give you a false sense of security by providing talking points aligning with your beliefs about the crypto industry and its general direction. Be very careful with your investments!