3 Hottest Trends Impacting FinTech Trading in 2024

The digitalization of real-world assets (RWA) becomes the pioneer of FinTech in 2024. CoinGecko Reports that commodity-backed tokens reached a market capitalization of $1.1 billion, with gold being the most popular commodity. Tokenized treasury products have also increased by 782% in 2023 alone to reach a value of over $931 million. In 2023, the total value locked (TVL) of on-chain RWA doubled from the previous year to $2.5 billion.

These trends, catalyzed by advances in artificial intelligence (AI) and the continued growth of decentralized finance (DeFi) services, signal a fundamental shift in market accessibility and global liquidity. Blockchain startups that focus on RWA are bridging the gap between traditional finance and the opportunities offered by blockchain-powered markets.

In this article, we will look at three trends that will have a big impact on FinTech trading this year.

Trend 1: AI-powered trading

AI and machine learning (ML) are no longer just buzzwords in FinTech. These are already an integral part of the industry. AI-based algorithms now process massive data sets at lightning speed, and these identify patterns and insights that would otherwise elude traditional human understanding and analysis.

This trend includes several key developments.

For example, algorithmic trading uses AI to make trades at the best times and prices, capturing brief market opportunities that human traders cannot follow. Additionally, AI performs sentiment analysis, taking into account current events and real-world data to predict trends before they develop. Sophisticated risk models can also enable traders to make more informed decisions, thereby reducing risk.

Machine learning is also capable of personalizing investment and trading strategies. This is seen with the trend of automated advisory services, which can cater to a wide range of clientele, from casual traders to high net worth individuals in need of portfolio management.

A technology-driven approach can do wonders for finance. “This would enrich users’ banking experience and allow them to seamlessly interact with an endless range of financial services, like a plug-and-play model, with little friction,” Vertex Ventures partner in South Asia. East and India. Genping Lui wrote on TNGlobal. “In this new paradigm, key services such as depository service, asset custody, insurance, lending services, risk management and securities offering, etc. will be redistributed among different layers technology and service providers.”

Trend 2: Unlocking global liquidity with tokenized RWA

The tokenization of RWA blurs the lines between traditional and blockchain-based markets. Earlier, we saw this come to fruition with stablecoins tied to fiat currencies. Now, tokenized commodities such as gold and stocks become tradable on decentralized exchanges (DEX).

This trend offers advantages such as global accessibility, in which RWAs can be traded 24/7 by anyone online, thereby removing geographic barriers and bypassing many of the limitations of trading houses. traditional brokerage. These can be any commodity, from traditional commodities like oil, wheat, and precious metals, to tech-focused funds like Bitcoin and Ethereum.

Tokenization can also improve liquidity through fractional ownership. This means that individual or smaller-scale investors can trade assets that only large institutional investors could previously access.

The transparency of public blockchains will also build trust in the market by providing a verifiable record of transactions and asset ownership. At the same time, the tokenization of RWAs makes blockchain-based trading more attractive to traditional and tech-savvy traders.

“Institutions will come when more real-world assets can be confidently traded on-chain with perpetual swaps, futures and options contracts,” says Jonathan Caras, head of communications at Levana, a fully collateralized perpetual swaps exchange. “Platforms like Levana provide a soft landing for traditional investors because they come to our platform and start trading the assets they are already familiar with.”

The vision of RWAs is to democratize access to business opportunities through FinTech solutions. “Levana envisions a future in which traders of any technical background can come and easily trade a variety of global assets such as currencies, commodities, crypto assets and crypto derivatives,” adds Caras.

Levana enhances its siled liquidity markets by enabling up to 30x leverage with low fees, ensuring each market operates efficiently and independently. Additionally, the concept of “well capitalization” ensures that all open transactions within these siled markets are fully backed by adequate collateral, thereby maintaining the overall stability and transparency of the platform.

Trend 3: The evolution of DeFi

DeFi expands the possibilities for traders seeking access to innovative financial instruments. These solutions leverage smart contracts to facilitate financial services without the need for traditional intermediaries.

Through permissionless protocols, DeFi solutions enable access to anyone with a compatible crypto wallet, creating a more inclusive trading environment. Traders also maintain full autonomy and control over their assets, unlike custodial platforms where third parties hold direct access to transactions and assets.

DeFi solutions continue to evolve, offering new types of products and structures, such as lending/borrowing protocols and yield farming. Examples include lending crypto assets for interest or borrowing using crypto as collateral. DEXs allow users to trade cryptocurrencies directly without the need for a centralized exchange.

The growing importance of RWAs will also play an epic role in the growth of DeFi. As Galaxy states: “As RWA adoption grows and token development/composability improves, more DeFi protocols are likely to open up to accepting RWA tokens from end users to fulfill functions such as issuing stablecoins and acquiring leverage.

Takeaways

2024 will see the reshaping of FinTech trading with innovation and growth in AI-based solutions, RWA tokenization and DeFi use cases. AI enables traders to make faster, more informed decisions based on data. RWAs will open global markets to traders of all sizes. DeFi is already expanding the toolbox of available financial instruments and modalities that give traders greater autonomy and power.

What was once just access to mega-corporations and unstoppable financial institution executives can now be accessible to everyone. This pivotal year could mark the dawn of a new financial era, as these advancements catalyze a shift towards a fully inclusive and technologically enabled business environment.

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