The crypto market has flipped bullish altcoins due to renewed optimism following a clean break from the downtrend on Bitcoin established since 2021. Despite many gains of 500% to 2000%, there are many coins that have not moved yet. There are rhymes and reasons why certain coins have moved and some have lagged.

Today we look at some of the narratives that we believe will be strong during the next crypto bull run. However, as always, be mindful that despite large growth it’s common for coins to retrace 70% plus. Only invest what you are prepared to lose or HODL.

Scaling Solutions

During the last bull run in 2020 and 2021 there was a strong narrative around alternative layer 1 chains. BNB lead the way, then Luna then FTM as liquidity flowed from one to the next. This was in large part due to extortionate gas fees on the Ethereum network and despite MEV projects (Miner Extractable Value) the costs were ultimately too high for developers to build on top of Eth and therefore alternative chains provided better solutions. One of our biggest wins was Polygon with prices going from $0.03 and we cashed out at $2.20. This was the dawn of the Layer 2, which was a scaling solution built on top of Eth.

There are a number of different types of scaling solutions today built on top of Ethereum using different technology such as plasma, optimistic roll ups, ZK proofs etc. The battle ground is set to see which scaling solution offers the best usability, utility and therefore garners the greatest adoption. Adoption is the key to our crypto game – the higher the adoption the higher the correlation with positive price appreciation for the underlying token.

Also don’t forget the partnerships that are forming between scaling solutions utilising different technology, particularly around the Polygon network. It will fascinating to see how these scaling solutions also fall in with top quality interoperability projects and oracles.

Gaming

At the end of the last bull run we saw Mark Zuckerberg launch his vision for a metaverse. As a result we saw a huge explosion in metaverse themed coins. The leaders in this charge was SAND and MANA which had already had significant gains during the run. However, as the narrative developed over the final 3 months of the 2021 bull run so did the liquidity to very speculative metaverse plays which also included many gaming projects.

Whilst we have been in a bear for 2 years now, the credible web3 gaming projects have continued to develop. The gaming narrative is probably the most natural fit for real world utility to plug into web3 technology, both a cryptocurrency and the use of NFTs for in game assets. Crypto enthusiasts are therefore incredibly excited about where this part of the market will go in 2024 and beyond.

Within gaming there are different sectors again, such as infrastructure, seed investing platforms, NFTs and actual game tokens themselves. The winners in the next run will be those that get the adoption. For example, Axi Infinity has massive adoption in the far East last time around and the price of the token exploded. Which projects will win in the next bull run? We have our own thesis and due diligence on relevant projects.

Artificial Intelligence

This is such as buzz word at the moment and whilst many artificial intelligence projects outside of blockchain are really just web2 tools marketed as AI, we feel the same is going to happen in web3 to begin with.

This is a sector we feel needs particular caution because “investors” buying tokens that fall into this category need to understand their own investment strategy first. What is your time horizon on this investment and what’s your position size as a %age of your net wealth. Now lay that over what crypto investing is all about which is growth in the value of your tokens, but over what time period? We invest in crypto for increase in value which occurs for two reasons – firstly due to great technology which genuinely garners adoption and therefore the token increases. The second is due to hype. There are many examples of absolutely rubbish projects that have no fundamentals, no technology and sometimes not even a team that have earned millions in token sales due to marketing around a narrative that has hype for it to just disappear. We will see a lot of that within the AI sector this cycle around so do your due diligence wisely, and don’t forget even the great AI projects that come out of the cycle will likely see astronomic crashes at the end.

Bitcoin Ordinals & BCP20

Bitcoin has gained significant adoption over the last 14 years because many would argue that it is the purest form of money ever invented. And over the last 4 or 5 years we have seen NFTs develop as an asset class and gain mainstream adoption, particularly with the likes of Bored Ape pictures. At the start of 2023 Casey Rodarmor has developed a Layer 2 chain (there is some debate if it’s layer 1 or 2, but we go with 2!) that inscribes NFT information into the Bitcoin blockchain. Basically, you can now mint NFTs onto the Bitcoin blockchain. The layer 2 chain is called Bitcoin Ordinals.

Without getting bogged down into the technical it means that as Ordinals becomes more adopted, it increases the demand for Bitcoin sats (the lowest denomination of a Bitcoin). This is good for the underlying demand and adoption of Bitcoin, and therefore price appreciation, but if Ordinals really takes off then the Ordinals protocol and related projects should do really well during the next bull run.

We are watching BCP20 related tokens, some have done exceptional growth already but based on logarithmic regression charts for the price action over a long period of time we could still be extremely early to the party. Get researching now!

Real World Asset Tokenisation

I’ve recently had some great conversations with guys at Animoca Brands at the recent Binance Blockchain Week in Istanbul about how they want to make further investments into projects that are tokenising real world assets. The most obvious choice is real estate but this is fraught with regulatory issues and fitting the global web3 model into individual countries with different regulatory frameworks is going to be an extremely difficult egg to crack. However there are other economies

that are more ripe for picking such as Education and Social Media. We’ve seen during 2023 the rise of Friends Tech and how they can fractionalise social media profiles, and Animoca Brands in particular are an investor in the Open Campus which tokenises educational resources. We remain on the look out for projects that have significant scale, have strong teams, and have a plan of action to tackle any regulatory issues that may arise.