The recent market conditions in the crypto market have shaken the confidence of many people. The bull market that everyone is looking forward to has been plagued by the previous highs of the previous bull market, coupled with the uncertainties in the external market. Although BTC ETF has been listed and ETH ETF is a foregone conclusion, market sentiment is still very pessimistic amid the sharp drop. The drop of dozens of points in altcoins has led some people to believe that the bear market has arrived.
For players who entered the market in the last bull market, the biggest difference in this bull market is not only that there is no driving technology to bring about a general rise in the market, but also that there is a lack of off-market funds entering the market. In other words, there are fewer newcomers entering the market and less incremental funds. The corresponding currency circle naturally has no momentum to rise. You can't just step on your left foot and reach the sky.
So for the cryptocurrency circle, whether the demographic dividend has ended has become a key topic.
Investment population perspective
This question reminds me of a news flash about Binance a few days ago, saying that the number of Binance accounts worldwide has reached 200 million. According to the United Nations' estimates, the global population may reach 8 billion in 2024, which means that the number of Binance accounts has reached 0.4% of the world's total population, and this also includes the population in poor areas of Africa, as well as minors under the age of 18 and the elderly over 70 years old around the world, while most of the real investors in the cryptocurrency circle are between 20 and 40 years old.
We assume that all cryptocurrency investors have a Binance account, and that in some countries, they cannot register and use Binance, and they will have other alternative exchanges. In other words, the number of people speculating in the cryptocurrency circle must be more than 200 million. This group is very high. In other words, the number of cryptocurrency investors has reached a very high level. According to institutional estimates, the number of cryptocurrency investors in 2022 will be 402 million, accounting for 5.1% of the world's total population.
Let's make a comparison here. As of 2014, the number of Chinese stock investors has reached 220 million. Here we compare the proportion of stock investors to the total investment population in various countries around the world. In financially developed regions, investors account for more than 50% of the total population.
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Considering that China and India are the world's most populous countries, we use them as the main reference points here. By comparing India with China, we can see that the data is around 25%, and China is around 15%. In other words, under normal circumstances, investors accounting for about 15%-25% of the total population is a temporary high point, which is the peak of the pure demographic dividend.
What we need to understand here is that the stock market has a long history of development, while cryptocurrency has only a history of less than 15 years this year. Therefore, from this situation, the number of global cryptocurrency traders at 10% will become a stage-by-stage dividend peak. Compared with the relatively short development time of cryptocurrency now, 5% is already a high point in a short period of time (1-2 years).
As for long-term development, it is expected that around 2030, the number of people in the cryptocurrency circle will reach the peak of the demographic dividend, which is estimated to be about 10% of the world's total population. There will be two rounds of bull market development in between. Here we mainly discuss direct cryptocurrency investors, rather than indirect investors (passive investors packaged through funds and other investment products, or users who indirectly use cryptocurrency or blockchain technology).
The growth in the number of people is presented exponentially. We roughly estimate that the number of people in the cryptocurrency circle may reach 600-700 million in 2025 and around 900-1 billion in 2030. That is to say, there is currently a growth space of 100 million. If the entry amount is US$5,000 per person, this bull market will increase the off-market funds by a maximum of 500 billion when it reaches its peak.
So how much is 500 billion in OTC funds? Compared with the total market value of the cryptocurrency world, this number is not high.
In other words, if you want to rely on the increase in population to bring dividends to the cryptocurrency circle, it is basically in the medium term now, and the increase will be relatively scarce. From the perspective of the overall experience of investors in the market, it is obvious that the number of new investors is much smaller now.
From the perspective of technological development
Above we mainly discussed the comparison of the number of mature investors such as stocks to determine the demographic dividend of cryptocurrency investors. If we use technology to make inferences, there may be other results.
The main paths of technological development in the cryptocurrency world are as follows:
Bitcoin - Ethereum - Smart Contract - DeFi - NFT - Blockchain Game - Layer2 Chain - DePIN/AI, etc.
A more concise version is as follows:
Value (BTC) - Infrastructure (Ethereum EVM, Layer2, etc.) - Finance (ICO/DeFi, etc.) - Entertainment (GameFi, NFT) - Non-financial applications
Currently, it is mainly non-financial applications, which include many applications that we can say are replacing Web2. The scope of non-financial applications is relatively wide, so the effect period is relatively long. At the same time, its weakening of investment will be strengthened. For example, the popular DePIN is somewhat far away from the investment attributes of DeFi. The corresponding effects of these hot spots on the market will also be weakened accordingly.
Therefore, our intuitive feeling is that from last year to now, many new tracks have been proposed, but everyone still mainly concentrates funds on financial applications such as DeFi, because it has a greater impact on cryptocurrency investment, because no matter how many positive factors there are, they will eventually be reflected in transactions. Transactions are a big part, but now the growth space is limited.
For this reason, when the cryptocurrency circle transitioned from financial applications to non-financial applications, we felt that this track was not as hot as before, and it was more difficult to have another DeFi Summer. The advantage is that non-financial applications will bring more user groups and potential investors.
In other words, although the number of people in the cryptocurrency circle will increase in the future, the value will not be as high as before.
Summarize
We can draw a conclusion that although the number of cryptocurrency investors will far exceed that of before, the energy it brings will be weakened. In other words, although there will be a demographic dividend period for cryptocurrency, the development speed will definitely not be as fast as before.
