This market analysis covers the general state of the market, current events, and some
expectations moving forward.

We left the overall accumulation and bear phase in October 2023 with a strong upward
move in the market, which brought many sectors into the spotlight. With the ETF approval and institutional buying, there is strong buy pressure on Bitcoin. The upcoming
Bitcoin halving will cause a substantial shift in the current supply and demand ratio
due to the reduction of newly mined Bitcoins. Given these factors, I believe Bitcoin will
not drop below $50k in this cycle anymore. While I expect the summer to be somewhat
quieter and to shift more towards altcoins, the overall market cap is unlikely to explode.
There is still the ETH ETF in the room which could change up the market sentiment
and possibly drive more liquidity into the market.

Regarding sectors to watch, the most promising ones with a high probability of success
are AI and DePIN, because of hype and real-world connections. Other sectors like
RWA could also perform well, especially with BlackRock discussing the tokenization
of financial assets to lower costs. It does not matter which project BlackRock uses
or whether they launch their own; the mere fact they are interested will increase the
money flow into RWA projects. To provide a rough sector overview, I will cover the
most interesting ones, with some projects that are worth watching.

Another very interesting development I did not expect was the growth of Memecoins in
the manner it unfolded. What we are witnessing is the emergence of a Meme culture
within the crypto market with test runs over the last cycles and now fully established in
the crypto space. While many new launches are driven purely by hype, speculation, and
insider trading, some projects have shown promise. This sector is highly volatile, with
a plethora of new projects emerging, but those worth noting are the main communities
like DOGE, PEPE, and WIF, which are truly unique. Given there is no actual product
beyond the community itself, it is challenging to predict and identify highly promising
projects due to the extreme influx of new Memecoins on a daily basis. Returning to the
sectors, I believe will perform very well over this cycle:

Artificial intelligence (AI)

Infrastructure
Given that AI is likely to remain one of the most hyped sectors for the remaining cycle,
actual infrastructure is required. This includes projects that consider all aspects of AI,
from data to compute and the models themselves. Example projects in this area are
Bittensor, BasedAI, and KIP.

ZKML
Zero Knowledge Machine Learning (ZKML) protocols are relevant for various reasons,
such as data privacy, generating proofs of authenticity to avoid censorship or malicious
actors. Moreover, real-world AI models benefit from the use of ZKML, making these
projects relevant for companies outside of crypto. Another interesting concept to watch
for is Fully Homomorphic Encryption (FHE), which allows for training AI models on
encrypted data to preserve privacy. There is a growing number of projects in this sector,
with many more expected to come.

Autonomous Agents
The discussion on the rise of autonomous AI agents has been notably advanced by
OpenAI, with a vision to create personal AI assistants for everyone. Developing a
framework for AI agents that leverages blockchain advantages such as smart contracts,
verifiability, and security, opens up new possibilities to empower these AI agents to
achieve new heights.
In the crypto space, some AI agent projects already have their tokens, and many more
are expected to launch in the next year, indicating significant interest in this sector that
could potentially generate its own hype wave. The most well-known project in this area
is Fetch.ai, while the most promising newcomer is OLAS. OLAS introduces a framework
for off-chain hosted AI agents that will be deployed in a decentralized manner, enabling
them to interact with on-chain services such as smart contracts or DApps, and even
entire blockchains.

Data Sources/Layer
It is widely recognized, though often overlooked, that data is the lifeblood of AI models,
essential for producing high-quality models. Generating high-quality and thoroughly
labeled data requires immense effort and is crucial for enabling AI to understand connections and produce a functional model. For instance, Chat-GPT3, trained on scraped internet data, emerged as a strong model but was also flawed with inaccurate or misleading information.
Projects like Get-Grass, AIT Protocol, and LayerAi, as well as initiatives like KIP that
create an entire AI ecosystem among different Value Creators, are notable in this context. KIP enables AI models to request required information on-the-fly using Retrieval
Augmented Generation (RAG) and ingest specific data only as needed to complete a
given task.

Decentralized Physical Infrastructure (DePIN)

Privacy
The crypto privacy sector is notorious for its regulatory challenges, especially concerning privacy coins. However, trends towards privacy infrastructure could be bolstered by
dedicated DePIN infrastructure. To my knowledge, only the ATOR project is working
on such an DePIN initiative. The ATOR project suffered a setback when the TOR
network banned their hardware nodes due to the cryptocurrency connection, a disappointment that eventually redirected them towards developing their own decentralized
privacy network. This move could potentially outpace the TOR network as the leading solution. An incentivized alternative with ATOR might achieve a higher degree of
decentralization and ease of joining with ready-to-use equipment. As privacy concerns
grow, regular people might turn to these privacy DePIN networks to protect themselves
and their data.

Computing Networks
The last bull run saw GPUs becoming scarce as individuals engaged in mining, and now,
with the rising AI hype, the demand for compute power is ever-increasing. This cloud
compute sector has been dominated by large monopolies capable of offering low prices
to edge out competition. However, this dynamic could shift with the further adoption of
decentralized compute provider networks, where providers can supply computing power
and earn by participating in the network, akin to crypto mining but potentially more
profitable and requiring less active management. When comparing compute providers,
those with a clear AI focus are anticipated to outperform others. There is significant
growth in new projects, with some highly promising ones like Render Network, Akash,
Io.net, GPU.net, Dynex, Edge Matrix Computing, Gensyn Network, and more.

Niche Use Cases
There are many more interesting DePIN projects that are more specialized but not less
significant than the others. For example, Auki Labs offers an innovative way to improve
GPS systems with spatial computing, not only creating a shared coordinate system but
also providing tools for AI to become aware of areas and space in the real world, with
possible use cases in robotics and automation. Furthermore, the Green Energy trend
is likely to grow and become more relevant, with leading projects being Energy Web
Token and Rowan Energy.

Usability

The aspect of usability is a significant topic in the crypto space and plays a major role in
mass adoption. Despite some flaws, Solana is currently the most user-friendly blockchain
in terms of speed and gas fees. However, the BASE chain from Coinbase is progressing
rapidly and, while it does not offer the same low fees as Solana at the moment, it has
better positioning due to Coinbase advertising it on their own exchange, which will push
new investors towards BASE. Moreover, Coinbase is working on Account Abstraction
and more user-friendly wallets so that users can use their Coinbase account to trade on
decentralized exchanges, for example.

Real-World-Assets (RWA)

The overall RWA sector benefits significantly from BlackRock discussing and planning
the tokenization of Real World Assets on-chain for increased efficiency. The RWA sector
stands out because the actual tokenization of real assets can be challenging from a
regulatory standpoint, potentially slowing down overall progress. There are various areas
within RWA projects, ranging from real estate to tokenized loans, as well as financial
markets featuring either synthetic or real tokenized assets like stocks and bonds.

Future Outlook:

After the halving, I will work on a halving analysis that will cover the current state of
the market with a more detailed look at the current Top 100 in comparison to 1 year ago
and the last cycle’s top to see how we differentiate from the last cycle and get a feeling
if we are still on track with my expectations. It will be a more statistical approach to
analyze how the top 100 changed and how many newly launched projects made their
way into the top 100.