Crypto Market Faces 2024 Bearish Trend Amid Institutional Growth

Crypto assets have been experiencing a decline in value since late February, which has led some investors to question the future viability of cryptocurrencies. However, it is important to note that volatility has always been a characteristic of crypto assets. While the price of Bitcoin (BTC) has been more stable in recent years, it remains a volatile asset. Despite the current bearish trend, exchanging USD for Ethereum (ETH) or BTC can still be part of a well-thought-out trading strategy.

Since 2020, several trends have emerged in the crypto market. Decentralized Finance (DeFi) gained significant attention during the bullish trend of 2020, with Ethereum and similar chains experiencing substantial gains. Non-Fungible Tokens (NFTs) also drove a new artistic movement within the crypto space, with digital art being traded at traditional auction houses. The common element between DeFi and NFTs is smart contracts, first introduced by Ethereum. While smart contracts remain relevant, it is worth considering whether NFTs and the DeFi ecosystem have lost their importance.

Although DeFi and NFTs may not be making as many headlines, the DeFi ecosystem is thriving. Top coins by market capitalization are mostly related to DeFi and smart contracts. In fact, there is over $90 billion locked in DeFi protocols across different chains that support smart contracts. In the case of NFTs, while digital art marketplaces have faded, the technology is increasingly being used for tokenizing real-world assets. However, it is important to be aware of the risks involved and to choose established blockchains for participation in the Ethereum DeFi ecosystem.

Institutional adoption has been growing, with the launch of Exchange-Traded Funds (ETFs) for BTC and ETH in 2024. This trend is likely to continue in 2025. The rise of Real-World Assets (RWAs) tokenization is also driving more Ethereum investments, as this blockchain is the most solid option for smart contracts and NFTs. The road to Bitcoin ETFs was long, but in January 2024, the first spot ETF for BTC was issued to a wide positive reception. Over the following months, ETFs for Ethereum also made their way into the market, and institutional adoption kept growing. The process of entering mainstream adoption is bumpy, with price dips and instability. It is worth analyzing each case closely to recognize which coins have a more grounded project.

Besides ETFs, blockchain adoption is also growing among companies as a way to optimize their operations. Ripple, a project focused on providing blockchain solutions to banks and financial enterprises, is already working with major banks. After a long legal feud with the SEC, the case seems to be coming to an end. If the outcome is positive for XRP, it can give way to other developments. The use of trading bots is not new, but the rise of AI in the last couple of years opens new possibilities for trading. The ecosystem is still exploring all the use cases for AI algorithms in crypto. For example, AI can analyze the market and predict future dynamics more accurately, as emotional responses do not condition it. It also serves to automate trades. Considering that timing is key in crypto trading, it is an advantage to analyze current price movements and buy or sell automatically. AI can be a useful tool to improve trading strategies. With further development of this technology during 2025, more use cases will be available.

Most people think that NFTs are just digital art on a blockchain. But the concept of non-fungible tokens goes way beyond that. The uniqueness of NFTs makes them useful for tokenizing real-world assets. These tokens can represent, for example, traditional stocks and commodities to trade in DeFi protocols. But they can also represent ownership of real estate, even enabling multiple proprietaries to own shares of the property. It also increases the liquidity, because more investors from all over the world can access these markets. In the coming months and years, we are going to see blockchain technology disrupting more traditional industries through RWA tokenization and market optimization.

In 2025, the trend of institutional adoption is poised for more growth and development thanks to a clearer regulatory framework. In the US, there is a focus on providing a less restrictive space for crypto projects. In Europe, the new year came with a clearer regulation of cryptocurrencies, allowing traditional companies and banks to explore the adoption of blockchain in a safer environment. Regarding banks’ involvement with blockchain, some predictions believe that Central Bank Digital Currencies (CBDCs) will fade, but institutional usage of blockchain and tokenization will increase. It means that end users will not likely have digital dollars or euros, but the banks themselves will use them for internal transactions.

Bearish trends are temporary and a necessary part of every market. Despite price drops, institutional and government research and investments continue. This is evidence of the trust in the future of the crypto ecosystem. Besides tokenization, AI trading, and DeFi, it is worth taking the time to look for the next crypto trends and make early investments. Stay cautious because profits are never guaranteed. However, learning the market trends can help you be more informed and lay a foundation for more solid investment strategies.