Three Trends Shaping Crypto in 2024
As prices rise, applications mature, and institutional adoption hits a tipping point, a new era of growth has begun in the crypto world. These trends are coming together as new regulations could bring much-needed stability to the industry, which sets the stage for a big year for crypto innovation. Here are three current trends:
1. Payments Gain Traction as the Killer App of Crypto
Stablecoins are becoming a major force in digital finance. These fiat-backed digital assets have the potential to greatly reduce friction in international money movement, benefiting regions traditionally underserved by conventional banking systems. Worldwide, cross-border payments are growing annually, creating a significant market opportunity that financial institutions are taking note of.
Note: Stablecoin volume includes USDT, USDC, Dai, EURC, PYUSD, USDe stablecoins Sources:Visa Onchain Analytics Dashboard, Visa Earnings Reports, Artemis.xyz, DappRadar, A16Z, PitchBook Data Inc. and SVB analysis.
The integration of blockchain technology into conventional fintech is accelerating. In 2024, almost 20% of fintech venture capital investment went to companies using crypto technology, more than double the share from four years prior.
Note: 1) Financial services industry companies with a crypto/blockchain vertical tag in PitchBook. Sources: S&P Capital IQ, US Comptroller of the Currency, FDIC, Robinhood 10k filings, PitchBook Data Inc., SVB Future of Fintech 2024 and SVB analysis.
2. Decentralized AI Enters the Conversation
Decentralized AI is emerging as one of the most promising crypto use cases. Networks specifically designed for AI tooling are seeing explosive growth as developers and crypto miners use the benefits of decentralized computing to build an on-chain AI ecosystem. The top six AI-focused blockchain networks have seen an 8x growth in market cap since January 2023, which is twice the pace of the overall crypto market. Decentralized AI aims for more trustworthy and efficient models by removing centralized control, potentially enhancing data security. Manifold Labs, an Austin-based developer, is one of the companies building decentralized AI on Bittensor.
Sources: CoinGecko, CoinMarketCap, Forbes and SVB analysis.
Note: AI Blockchain Networks include NEAR Protocol, Bittensor, Render, The Graph, Internet Computer and Artificial Superintelligence Alliance, which are purpose built for AI functionality. AI development is not limited to these chains. Large cap coins are the top five by market cap: Bitcoin, Ethereum, Tether, XRP and Solana. Source: CoinGecko, CoinMarketCap, Forbes and SVB analysis.
Notes: 1) Sectors according to PitchBook verticals. 2) AI Blockchain Networks include NEAR Protocol, Bittensor, Render, The Graph, Internet Computer and Artificial Superintelligence Alliance, which are purpose built for AI functionality. AI development is not limited to these chains. Large cap coins are the top five by market cap: Bitcoin, Ethereum, Tether, XRP, and Solana. 3) Total value locked is based on estimates of the AI-focused crypto networks previously listed. Sources: CoinGecko, CoinMarketCap, Forbes and SVB analysis.
3. Web3 Gaming: If You Build It, They Will Come
Web3 gaming is experiencing strong growth, with on-chain games attracting millions of daily active users. In Q3 2024, on-chain games attracted 5.5M daily active wallets, the most of any sector. The growth of this industry reflects the potential of blockchain technology to enhance the gaming experience, particularly through true ownership of digital assets and in-game economies. While retaining users is still a challenge, community-driven projects show innovative trends in gameplay.
Notes: 1) Blockchain markets as defined by DappRadar. Quarterly rankings taken for the end month of the quarter. Data as of 12/12/24. Sources: DappRadar and SVB analysis.
In 2024, approximately 23,000 developers were actively building crypto games every month. That number looks to rise this year as lower fees on L2 solutions continue to incentivize builders and users alike.
