In November 2021, the combined market value of all cryptocurrencies soared to a record-breaking $3 trillion. However, adverse macroeconomic circumstances and the collapse of major players, most notably FTX, caused a sharp 64% decline in 2022, plummeting below $800 million. The market has since recovered in 2023, reaching $1.1 trillion, according to GlobalData.

Its latest report, “Thematic Research: Cryptocurrencies,” reveals that despite the volatility, institutional and retail interest in crypto has increased, and governments are positioning themselves as crypto-friendly hubs. The regulatory narrative has significantly shifted, from talks of outright bans to a focus on proper regulation.

Nicklas Nilsson, Consultant, Thematic Intelligence at GlobalData, said: “Tracking the crypto market is challenging due to its polarising nature and fast-paced evolution. GlobalData’s social media analytics indicates that major crypto events regularly spur discussions on social media platforms.”

Amidst the noise, the industry is making progress. The collective market value of cryptocurrencies has seen a near 400% increase compared to pre-pandemic levels, developer activity has reached new heights, and global crypto ownership exceeds 425 million. In addition, institutional interest remains high, as evidenced by BlackRock’s recent filing for a spot bitcoin ETF.

Nilsson added: “In addition, the crypto space continues to experience rapid innovation, from new token types to scalability solutions.”

However, regulation remains a critical issue, acting as a considerable barrier to broader crypto adoption. Many countries have sought to regulate crypto in some way, particularly in the wake of the 2022 crypto crash. Nonetheless, approaches differ widely.

Nilsson explained: “While the regulatory chaos in the US garners most attention, other jurisdictions are taking decisive steps towards providing much-needed clarity for the cryptocurrency industry. The EU leads the way with its Markets in Crypto-Assets (MiCA) bill, introducing tougher but consistent rules across member states by 2025. Additionally, the UK, Singapore, and Japan are actively developing their own crypto regulatory frameworks, reflecting the shift from calls of an outright ban to a regulation-focused approach.

“Cryptocurrencies face numerous obstacles to achieve mainstream acceptance, as they are still in the early stages. For instance, the world’s richest person, Bernard Arnault, could acquire most of the circulating bitcoins, and the total cryptocurrency value is still lower than Amazon’s market cap. The crypto market is expected to remain volatile, but significant changes are anticipated in the coming years. If recent history serves as a guide, progress can be expected amidst all the noise.”

Image by Eivind Pedersen from Pixabay