The Dream Quarter to Start 2024: What’s Next in Store for The DeFI Space?
Exceeding expectations has been the norm so far in 2024 and it continues to show stronger signs as we head to the second quarter of the year. With Digital Assets breaking an all-time high and growth starting to measure in X not percentage, are we heading for a repeat of 2021? Let us look at the DeFI Space journey so far in the first 3 months of 2024 and ponder what could be next for all of us in the rest of the year.
2024 — A Year of New Beginnings
Flash your mind back to 12 months from now and the sentiments you will hear was that 2023 going to be a year that DeFI somehow didn’t die. Everybody witnessed the events that unfolded in 2022 and thought that the DeFI Space would be in a long decline as the backlash of the FTX collapse starts to unravel for everybody who is involved. It was true for pretty much the majority of the year 2023 as DeFI firms started to be questioned by the SEC but nobody expected the rebound that came after.
The uncertainty for the year 2023 through the SEC proceedings undergone by Binance, Coinbase and Ripple was turned into excitement as the topic “Bitcoin Spot ETF” came into popularity in the middle of 2023. The victory in the ruling of Ripple and Grayscale was definitely a catalyst for the idea of adoption of Bitcoin into a Spot ETF while simultaneously the excitement surrounding the DeFI Space began to grow as it reclaimed back the $1 Trillion Market Cap.
Bitcoin also began to return to its former glory as it closes the year 2023 outperforming the S&P 500 once again with 154% return. It was during the last quarter of 2023 where enthusiasts are convinced that the “Winter Phase” is finally over and we are heading for something special in 2024. Optimism was definitely high as plenty of SPot ETF approached its decisive stage and halving became the most discussed topic to close out the year.
With all the factors combining together, analysts and predictions start to go higher as 6 figures was commonly associated with Bitcoin.The DeFI Space journey to 2024 is also without its uncertainties as the crackdown on DeFI exchanger and institution continues to be a factor while the U.S presidential elections could present new challenges for the space. This is why growth in the Asia region could also be a major factor in pushing new limits for space in 2024.
2024, projected to be the year of the dragon, came flying to the DeFI Space with excitement and new beginnings. The year started with another historic event when the U.S. Securities and Exchange Commission (SEC) approved the first Bitcoin spot ETF applications in the United States. The Spot ETF would begin trading immediately on January 11th and was instrumental in bringing inflows reaching one billion over a day to the DeFI Space.
This would bring about a slight increase in the Bitcoin price, which reclaimed the $40,000 Mark in January 2024 and contribute to a 4.29% increase in TVL within the DEX platform. Lending and Liquid Staking Platforms also posed similar increments as the adoption started to gain major traction back after the collapse of Celcius in 2022. The Approval of Bitcoin Spot ETF also triggers positive insights from Blackrock which fueled the optimism within the DeFI Space.
February is where the DeFI Space leaps to new heights as Bitcoin finally back to the $60,000 mark and clawing its way to the 2021 All Time High while the general Market Cap reclaimed the $2 Trillion mark. Bitcoin boasting more than 40% increase on a month to month basis also triggered significant increase in other digital assets such as Ethereum and Solana who both posted 30% increase. This then would prove to be a teaser of what’s to come in March.
Mirroring the market trend, the TVL posted within DeFI platform also posed a remarkable surge in its valuation as it now stands at an impressive $187.511 Billion, marking a substantial Month-on-Month (MoM) change of +55.94%. The main players within this space are obviously Lido DAO (LIDO) and AAVE (AAVE) who are slowly reclaiming its popularity and outshining the major players such as Maker DAO while indicating a great increase of inflows within the market.
The DeFI Space ended the first quarter with a dream start it could never imagine as Bitcoin finally breaks its historic all time high to reach the $70,000 mark on 12th March. The Market Cap of the DeFI Space is also slowly working its way back to the $3 Trillion record high while simultaneously inching to its historic $220 Billion of TVL valuation. March also brings us the conclusion on the trial of Sam Bankman Fried as the FTX founder was charged with a maximum sentence while the company says it will repay the customers in full.
Just like the high that the DeFI Space experienced in 2021, Memecoins are also back upon the popularity with Pepe and Dogwifhat growing amongst many speculators. One thing that is a certainty is this quarter has been the best possible start for 2024 with many interesting events still waiting to unfold over the rest of the year. We just need to strap in and embrace the right opportunity that is available within the DeFI Space!
What’s Next……
It is in every human instinct to always desire for more and certainly that is the general perspective of many analysts within the Space. With the current momentum that Bitcoin is heading, it is fair for many predictions to hit six figures within the rest of 2024 and there is plenty of reason why it could happen. Bitcoin halving that is coming within the 2nd quarter could be the major momentum swing that will really impact the space as it did previously.
It is exciting to see if the 2nd quarter could prove to be more record breaking than its current predecessor as the impact felt on Bitcoin usually resonates throughout the general DeFI Space. Blackrock and other investment firms’ proposal for Spot ETF could also finally see its approval within the 2nd quarter and this would be a major boost in providing inflows to space which could further push the momentum to the moon.
The DeFI Space high’s so far within the year are also shrouded in plenty of uncertainty as we enter the rest of the year. Plenty of Elections are going in major key countries such as India, Indonesia and obviously the United States which would bring new regulatory framework and new challenges for the DeFI Space moving forward. Its quick rise over the past couple of months could also trigger major crackdowns in order to ensure compliance.
All in all, it has been a much needed reset and head start that the DeFI Space deserved for quite some time. This experience will not only be beneficial in providing growth for the established platforms such as Bitcoin or Ethereum but also to smaller projects that are defining innovation and pushing the boundaries of blockchain technology. With Real World Asset establishing a new era within the DeFI Space, who can take the reign for the space moving forward?
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