The cryptocurrency industry has entered a new stage of maturity, driven by increasing global adoption, continued innovation, and deeper integration with traditional financial systems.
This year, Bitcoin hit new all-time high prices in March and December, reflecting huge demand. At the same time, DeFi’s position in the global economy is continuing to consolidate, and global capital inflows are approaching new highs. In addition, traditional finance (TradFi) is revitalized and funds are pouring into industries such as stablecoins and crypto exchange-traded product (ETP) markets, indicating that cryptocurrencies are quietly delivering on their promise to reshape global financial infrastructure.
This is not just another market cycle; it is a critical moment for cryptocurrencies.
Atypical Bull Market
At the end of 2023, Bitcoin began to rise, symbolizing the start of a new round of bullish trends.
Image Source: Chainalysis
On March 5, 2024, Bitcoin broke its previous all-time high, rising above $73,000; in December of the same year, it broke the $100,000 mark again.
Additionally, the transfer activity of all digital assets has surpassed the historical peaks of late 2020 and 2021, indicating that the activity level of this market cycle far exceeds the last bull market.
Image Source: Chainalysis
From the end of 2023 to the beginning of 2024, DeFi began to show signs of recovery, with activity levels reaching previous historical highs, as shown below.
Image Source: Chainalysis
Current asset prices and DeFi activity are not the only indicators of market adaptability and resilience—global adoption of stablecoins, explosive interest from traditional finance (TradFi), and the rise of services targeting new application scenarios like tokenization (as discussed below) all indicate that cryptocurrencies are being more broadly accepted and integrated into the global economy.
Global practicality drives the rise of stablecoins
Stablecoins are typically pegged 1:1 to the US dollar or other fiat currencies, combining the efficiency, security, and transparency of cryptocurrencies while avoiding the volatility risks commonly found in other crypto markets.
Although major cryptocurrencies like Bitcoin and Ethereum often dominate headlines and provide returns that stablecoins cannot match, stablecoins have surpassed other types of cryptocurrencies in terms of adoption. In recent months, the on-chain trading volume of stablecoins has accounted for over half, even reaching 75%.
Image Source: Chainalysis
By providing stability in dollars to anyone with internet access, stablecoins offer a crucial solution for residents of countries facing currency volatility, which can be used both to protect savings and to facilitate commercial transactions.
The increasingly prominent role of stablecoins in overall trading activity indicates that this asset class has achieved extremely high utility among crypto users.
Bitcoin and Ethereum ETPs symbolize the historic convergence of cryptocurrencies and traditional finance.
Traditional finance (TradFi) reached a historic milestone in 2024 in validating cryptocurrencies, with the US market launching spot Bitcoin exchange-traded products (ETPs) further enhancing institutional investor interest. Exchange-traded funds (ETFs)—the most popular form of ETPs—have attracted significant interest from both retail and institutional investors.
With the launch of cryptocurrency ETFs, the entire market has experienced a rise based on this, as these funds provide regulated mainstream investment tools capable of accessing cryptocurrencies, which typically attract investors who may hesitate due to the complexities and security issues of directly using traditional crypto trading platforms.
Image Source: Chainalysis
The daily trading volume of Bitcoin ETFs surged in March, approaching $10 billion per day. The inflow of funds into Bitcoin ETFs has also surpassed the net inflow of Gold ETFs, which debuted in 2005 (adjusted for inflation), making it the fastest-growing ETF in history, as shown in the chart below.
Image Source: Chainalysis
On January 10, 2024, following the news of Bitcoin ETF approval, Bitcoin prices began to rise rapidly and started trading shortly thereafter.
Image Source: Chainalysis
By providing easier access to cryptocurrencies through traditional trading platforms, ETPs can unlock new sources of demand for the underlying assets, which seems to be one of the key factors driving the recent price increases of Bitcoin ($BTC).
Although it is difficult to accurately define the specific impact of the launch of Bitcoin ETPs in the United States, it is widely believed to have enhanced market optimism and expanded institutional investors' exposure to Bitcoin. The surge in demand reflects the unique appeal of ETPs among retail and institutional investors, providing a regulated and familiar way to access Bitcoin without the complexities of managing private key wallets.
Tokenization: Real-world assets (RWA) are growing
The excitement surrounding the tokenization of real-world assets (RWA) is quietly transforming the landscape of asset management and investment, with many traditional finance (TradFi) giants, such as Franklin Templeton, already securing a foothold in this market. Reports indicate that Goldman Sachs plans to launch a tokenization-focused crypto trading platform in the next 12 to 18 months.
RWA refers to any asset of value—whether tangible or intangible—whose value derives from outside the blockchain. Through tokenization, the rights to these assets (ranging from real estate and artwork to intellectual property) are represented as tokens on the blockchain. This process not only simplifies the sale and trading processes of these assets but also enhances their accessibility to a broader audience, creating a more efficient and liquid market. RWA also promises to enhance transparency in the investment market, as all transactions are recorded on-chain.
Currently, most RWA projects focus on tokenizing relatively simple and stable financial instruments, such as US Treasury bonds. Lending platforms like Goldfinch and Ondo Finance, which rely on tokenized RWA as their core, have captured a large market share of the RWA market. According to data compiled by asset management firm 21.co, the total market capitalization of tokenized projects has exceeded $100 billion.
Image Source: Dune
Despite still being in its early stages, the increasingly important status of RWA is a key step toward the future, where most value transfers will occur on the blockchain, facilitating a unified, open, and frictionless global market.
What the maturity of the cryptocurrency industry might mean for organizations
As we examine the progress of the crypto ecosystem, it is evident that we are experiencing a tremendous shift in perception and usage. While the cryptocurrency market may undergo volatility and prolonged bear market cycles, one trend remains consistent: the number of wallets holding positive balances is growing linearly and continues to rise. Currently, over 400 million wallets hold cryptocurrencies.
Image Source: Chainalysis
Although a wallet does not mean there is only one user, as institutions and individuals can manage multiple wallets, the growing large number indicates that cryptocurrency adoption is steadily increasing.
As the influence of cryptocurrencies continues to expand, it becomes increasingly important to assess the criteria for success in this new paradigm. For organizations, adapting to on-chain realities is not just about keeping pace with technological advancements—it also requires a thorough reevaluation of operating models to leverage the unique opportunities presented by blockchain.
[Disclaimer] The market carries risks; investment should be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views, or conclusions herein are suitable for their specific circumstances. Investing based on this is at one's own risk.
This article is reprinted with permission from: (Foresight News)
Original Author: Chainalysis
‘From data research to a new world of crypto, these ‘three’ tracks are expected to rewrite the global financial landscape!’ This article was originally published in ‘Crypto City’
