The adoption of crypto has begun a new cycle in the first half 2024. This new cycle was driven by the long-awaited approval of Bitcoin exchange traded funds (ETFs), as well as a strong price trend that drove bitcoin to a new high. The approval of Bitcoin ETFs was a decisive factor for this new cycle, along with strong price momentum that led to bitcoin reaching a new all-time high.

The introduction of new digital assets, such as ZKSync and Bonk, and the strong price appreciation for many digital assets have marked these cycles. Assets of all sizes and sectors experience higher volatility when compared with bitcoin. This is due to the higher beta.

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In 2024, the altcoin industry will be shaped by several trends that emphasize innovation, sustainability and exploring new uses, which are driving growth.

Re-staking is a new vertical that has gained prominence in this cycle. It involves continually staking rewards from staking tokens to compound the returns. Renzo (REZ), EtherFi, and EigenLayer have all implemented mechanisms to encourage users to restake staking rewards. This increases their stake and contributes to the security and stability of the network.

Altcoins adopt Layer2 scaling solutions, such as Optimistic Rollups (OR), zkRollups (ZK) and side-chains in order to reduce transaction fees and improve transaction speed. Projects that fall into this category include Arbitrum, Optimism, Polygon (MATIC), Starknet and many more. This trend is aimed at enhancing the user experience and attracting more users to platforms of these projects.

The trend of interoperability among blockchain networks is growing. Several projects collaborate and build bridges in order to facilitate asset transfers and communication between disparate blockchains. This trend is aimed at creating a more efficient and interconnected blockchain ecosystem, instead of multiple siloed ones. Axelar, Across and Stargate are examples of projects in this category.

Modular blockchains are the next evolution of digital assets, with the advent of Layer 2 and interoperability. These modular blockchains offer developers a flexible framework with their adaptable, customizable design. They can plug and play modules such as consensus mechanisms, token standard and governance models. This modularity is used by blockchains like Celestia (TIA), Dymension (DYM), and others to improve scalability.

Parallelized Ethereum Virtual machines (EVMs), which harness the power of many nodes at once, break smart contract execution down into parallel tasks. Parallelized EVMs such as Sei, Canto, Nomad and NeonEVM are attempting this by processing off-chain transactions, then aggregating these back onto the Ethereum Mainnet. This approach dramatically improves transaction performance and reduces the latency of Ethereum.

The current crypto market prices indicate that there is a bull-market in progress. Mega caps still may have room to grow, before smaller coins overtake the rest of market. This phase is not far away, but being under-positioned will be costly and difficult, especially with the increase in institutional adoption and need for alpha.

Note : The views expressed by the author in this column do not necessarily reflect those held by CoinDesk, Inc., its owners, or affiliates.

Benjamin Schiller is the editor.