Top 5 Crypto Narratives to Watch in 2024

In the cryptocurrency market, narratives refer to overarching storylines or themes that gain prominence and influence market sentiment. These narratives can shape how investors and traders perceive the value of certain projects or the overall industry. Typically, there are a few overarching narratives in each crypto 4 year cycle- DeFi and NFTs being popular examples in the last cycle.

Crypto narratives often emerge in response to technological developments, market trends, regulatory changes, or shifts in public perception.

Here are some of the most significant narratives to follow in 2024, along with some examples of each:

Gaming/GameFi

One of the newer narratives, gaming, refers to the growing intersection between the gaming industry and blockchain technology. This includes the integration of blockchain features into games, the rise of player-owned economies, and the emergence of new gaming platforms and ecosystems. The potential disruption of item economies in games highlights the potential for blockchain tech to revolutionize the gaming industry, and will create new opportunities for developers, players, and investors.

• IMX, BEAM, GALA, RON

AI

The performance of AI related tokens so far in this cycle have showed some of the excitement and positive sentiment around the potential application of this tech to the crypto space. It is also most likely a reflection of the growing momentum and interest in AI outside of the crypto markets and the start of large amounts of funding to AI in traditional public companies. This flood of interest could start to carry over to the crypto markets and create hype around small, emerging AI tokens.

• RNDR, AKT, FET

Ordinals/BRC-20

BRC-20 tokens are fungible digital assets that are created on the Bitcoin blockchain. This experimental standard aims to expand the utility of Bitcoin into the fields of tokenization and decentralized finance. Caution is needed here if investing in this narrative as historically projects that aim to upend the status quo of Bitcoin do not tend to do well. While it is a controversial concept, it is worth watching closely if this sector gains steam in this cycle.

• ORDI

Decentralized Finance (DeFi)

DeFi refers to the growing ecosystem of financial applications and services built on blockchain projects, usually Ethereum. The idea is to recreate the traditional finance field by implementing services such as lending, borrowing, and trading in a decentralized manner. DeFi is a traditional narrative and established sector but will most likely continue to perform well. New and upcoming projects still have the potential for large gains and with the performance of Solana up to this point, SOL based DeFi projects could offer new opportunities this cycle.

• AVAX, INJ, LINK

Layer 2:

Layer 2 projects refer to secondary protocols built on top of existing blockchains (layer 1) that improve scalability and reduce transaction costs. These projects implement different methods of processing transactions off-chain. Layer 2 protocols are not new and were a significant narrative in the last cycle. Demand for layer 2 solutions is still high and as the popularity of cryptocurrencies increases there is a need for handling congestion, high fees, and increasing throughput.

• OP, MATIC, ARB, MNT

It is worth noting that narratives sometimes rely entirely on perception and sentiment and not objective demand. The need for AI in blockchain projects may seem tenuous, but hype from mainstream sources could bring fresh capital to small AI projects and outperform more traditional narratives. This is why trading based on narratives can be seen as a form of information arbitrage.

Analyzing emerging narratives is a good exercise in the beginning of each 4 year cycle; it provides insight into building a portfolio, a way to segment projects, and can aid in the allocation of capital to certain parts of a portfolio you think will perform well.