Research Summary
The report by Cobo and F2pool co-founder Shenyu discusses the potential impact of the Bitcoin Spot ETF approval in 2024, the future of decentralized finance (DeFi), and the challenges and opportunities in the crypto industry.
Key Takeaways
Bitcoin Spot ETF Approval in 2024
- Significance of ETF Approval: The approval of the Bitcoin Spot ETF in 2024 is expected to open new channels for traditional financial funds to enter the crypto industry, enhancing compliance. The report suggests observing the changes in asset size post-ETF approval, the emergence of derivatives based on ETFs, and the development of asset management in various countries.
- Extension to Other Currencies: Post-ETF approval, attention should be given to whether it will extend from Bitcoin ETFs to other currencies like Ethereum. This would indicate that blockchain assets like Bitcoin and Ethereum are being accepted similarly to traditional assets.
Key Events in 2024
- US Financial Accounting Standards Board Cryptocurrency Accounting Rules: Expected to take effect at the end of 2024, these rules will allow banks and enterprises to include crypto assets on their balance sheets, potentially strengthening their willingness to hold digital assets.
- Digital Asset Reserves in Small Countries: The report suggests observing whether central banks of small countries start holding digital assets as an alternative to gold, which could be a significant trend.
- Cryptocurrency Usage in High Inflation Areas: The daily use of cryptocurrencies by ordinary citizens, especially the younger generation, in third world countries and areas with high inflation should be observed. If the trend strengthens, there might be new challenges and risks related to regulation.
DeFi vs. Traditional Finance
- Efficiency and Transparency: Compared to traditional finance, DeFi is much more efficient and purely transparent. DeFi’s efficiency means a faster iteration speed, roughly 50–100 times that of traditional finance. As DeFi is based on the blockchain, all its code is open source, acting like a transparent box.
Future Prospects: Promising Tracks and Trends
- Layer 2: The report highlights the importance of making Layer 2 run better, whether it’s Ethereum’s Layer 2 or Bitcoin’s Layer 2, to provide underlying basic services while reducing costs.
- Smart Wallets: The combination of AA wallets and PassKey may be a problem that must be solved in the future, according to the report.
- AI, Robots, and IoT Devices: The report suggests that AI, robots, and IoT devices might be the ones using on-chain wallets in the future. These devices will be associated with addresses holding digital currencies, authorized to use some assets, resulting in data exchange and obtaining human authorization to conduct some transactions.
Actionable Insights
- Monitor the Impact of ETF Approval: Investors should closely watch the impact of the Bitcoin Spot ETF approval on the crypto industry, including changes in asset size, the emergence of derivatives, and the development of asset management.
- Observe Extension to Other Currencies: Post-ETF approval, it would be beneficial to observe whether it extends to other currencies like Ethereum, which would indicate wider acceptance of blockchain assets.
- Track Key Events in 2024: The implementation of the US Financial Accounting Standards Board Cryptocurrency Accounting Rules, the movement of digital asset reserves in small countries, and the usage of cryptocurrencies in high inflation areas are key events to track in 2024.
- Understand DeFi’s Efficiency and Transparency: Understanding the efficiency and transparency of DeFi compared to traditional finance could provide insights into its potential growth and challenges.
- Research Promising Tracks and Trends: Layer 2, smart wallets, and the use of on-chain wallets by AI, robots, and IoT devices are promising tracks and trends that warrant further research.