Matthew Le Merle and Mitch Mechigian (Blockchain Coinvestors) on 2024 Predictions (EP.496)
Jan 8, 2024
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Matthew LeMerle and Mitch Mechegian from Blockchain Coinvestors discuss their 2024 predictions including the growth of stablecoins, factors influencing the price of Bitcoin, the potential impact of ETF approval on the RIA channel, the regulatory landscape of the cryptocurrency industry, and the intersection of blockchain and artificial intelligence.
Investors should not overlook the potential of blockchain technology due to negative sentiments and should learn from missed opportunities in the past.
Blockchain innovation is at an inflection point with the rise of layer twos and the improvement in performance and scalability.
The number of global crypto users is predicted to reach around 500 million by the end of 2023, driven by improved accessibility and increasing global adoption.
Emerging economies are leading the adoption of crypto due to high costs of traditional financial services and limited access to banking.
Central bank digital currencies (CBDCs) are expected to proliferate, reaching half of the world's population, but concerns about privacy and government overreach remain.
Deep dives
Prediction 1: The dot com crash provides insights for 2024
The longer the discussion went on about the outlook for 2024, the more optimistic the experts became. They believe that investors sometimes miss the big picture when negative sentiments overshadow the potential of a technology. Drawing from the dot com crash in 2001, where the entire world turned negative about the internet, the experts highlight that this led to missed opportunities for tech investments. They argue that the best innovations in the blockchain industry are yet to come, and investors should take a second look before dismissing blockchain's potential.
Prediction 2: Blockchain innovation at an inflection point
Blockchain technology has evolved at a rapid pace and has already reached commercialization faster than the internet did. With the rise of layer twos, such as rollups, and the continuous improvement in performance and efficiency, experts believe that blockchain innovation is at an inflection point. As costs decrease and scalability improves, the potential for blockchain to compete with traditional web two giants in terms of speed and customer experience becomes more tangible.
Prediction 3: Crypto adoption exceeding 500 million
The number of global crypto users is expected to reach around 500 million by the end of 2023. This prediction is based on the premise that the mass adoption phase of crypto is just beginning. While two-thirds of current crypto users are digital natives, there are still many more potential users who have yet to explore crypto. Improved accessibility, user-friendly interfaces, and the increasing global adoption of digital wallets and blockchain technology are expected to accelerate crypto adoption.
Prediction 4: Developing world leads in crypto adoption
The developing world, particularly emerging economies, are considered to be the fastest adopters of crypto. High costs of traditional financial services, inflation, and limited access to banking are driving people in these countries to turn to cryptocurrencies as alternative forms of finance and store of value. The use cases of crypto, such as remittances and access to stablecoins, are especially relevant and impactful in these regions.
Prediction 5: Central bank digital currencies go mainstream
Central bank digital currencies (CBDCs) are expected to proliferate, with about 4 billion people, or half of the world's population, being told by their respective governments to prepare for the arrival of digital wallets and digital monies. This massive push toward digitizing finance and commerce is seen as a turning point for the global financial system. While CBDCs offer benefits such as increased efficiency and easier cross-border transactions, concerns about privacy and government overreach remain.
The market cap of private stablecoins, particularly USD-denominated stablecoins, is expected to reach $250 billion by the end of 2024. The growth of stablecoins has been fueled by their efficiency, accessibility, and their ability to provide a borderless and stable digital asset. Major financial institutions and companies are entering the stablecoin space, driven by the potential profit and the growing demand for stable, low-cost digital currencies.
Prediction 7: Bitcoin reaches all-time high
Bitcoin is expected to reach an all-time high in the coming years. The halving of Bitcoin issuance, increasing demand from users worldwide, and the potential approval of Bitcoin ETFs are factors that contribute to this prediction. While the volatility of Bitcoin should be acknowledged, experts believe that its long-term trend is likely to be upward, driven by the limited supply and increasing adoption.
Prediction 8: US regulation catches up with global standards
The US is predicted to catch up with other countries in terms of crypto regulation. As more countries around the world establish comprehensive regulatory frameworks, there is increasing pressure for the US to do the same. While progress has been made, there is a need for clarity on the regulation of the spot market and the issuance of stablecoins. The prediction is that competition and the desire to avoid adopting European regulations will drive the US to improve its regulatory landscape.
Prediction 9: AI-powered schemes exploit internet vulnerabilities
Artificial intelligence (AI) is expected to be utilized by bad actors to exploit the vulnerabilities of the internet. The rise of AI-enabled scams, phishing attempts, and manipulative schemes is anticipated. However, this also prompts the importance of blockchain technology, which was originally developed to address the vulnerabilities of the internet. Blockchain provides identity, security, and decentralization, making it a superior solution to combat AI-driven attacks.
Prediction 10: 2024-2026 as exceptional vintage years for blockchain VC performance
The years 2024 to 2026 are predicted to be exceptional vintage years for blockchain venture capital (VC) performance. As with previous economic downturns, early-stage venture investing tends to thrive during these periods. Lower valuations, decreased competition, and increased investment activity by large companies after the depth of a recession are factors that contribute to the potential for high VC returns. To maximize returns, investors are advised to increase allocations to early-stage blockchain ventures during these years of innovation and opportunity.
