Crypto investment firm Pantera Capital says tokens with promising underlying protocols and product market fit are set to outperform in the upcoming cycle.

According to a new report from Pantera Capital, tokens with promising underlying protocols and a demonstrated product-market fit are expected to outperform in the upcoming cycle “just as one would expect across other asset classes like equities.”

Although Pantera Capital did not name specific tokens, the firm said that over the long term, token selection will be “paramount because outperformance will be on a case-by-case basis and not necessarily in a certain sector or based on fickle, short-lived speculative narratives.”

“Our thesis is that altcoins underlying protocols that have product market fit and are generating real revenues with strong unit economics will perform best in the coming cycle, just as one would expect across other asset classes like equities.”

Pantera Capital

Pantera Capital’s managing partner, Paul Veradittakit, also revealed key predictions for 2024, spanning Bitcoin, decentralized finance (defi), and tech bridges. In the list, Veradittakit noted that Pantera anticipates Bitcoin’s renaissance driven by the fourth halving scheduled for April, institutional investors’ approval of spot Bitcoin exchange-traded funds (ETFs), and advancements in programmability features.

Beyond Bitcoin itself, the firm expects the growth of defi on the Bitcoin blockchain, with total value locked on the platform potentially rising to 1-2% of Bitcoin’s market cap.

“In this process, many Ethereum DeFi practices are likely to be transferred and ‘naturalized’ on Bitcoin, such as the recent rise of BRC-20 inscriptions and ideas such as staking like Babylon’s L2.”

Pantera Capital

Furthermore, Pantera anticipates a transition from finance to social experiences in web3, marked by experiments in tokenized social interactions and the emergence of bridges connecting traditional finance with defi.

Having potentially weathered the most challenging phase of the bear market, Pantera Capital concludes that the industry has now turned a page on a series of bankruptcies witnessed over the past eighteen months, adding that crypto “is no longer solely about financialization, but rather a broader idea of how we redefine consumer, social, and developer experiences using blockchains.”