The cryptocurrency sector is on the cusp of transformative growth, akin to the internet’s nascent stage in 1996, according to a compelling report from U.S. investment bank Jefferies released on September 21, 2025. Targeted at institutional investors, the report underscores the sector’s vast potential, projecting a $1 trillion market by 2029 driven by blockchain technology’s disruptive impact across industries. Jefferies advises a strategic shift from speculative investments to tokens and assets with real-world utility, urging investors to adopt a disciplined approach reminiscent of early internet-era strategies, with a focus on exchange-traded funds (ETFs), digital asset treasury companies (DATs), and publicly listed crypto-exposed firms.
A 1996 Internet Moment for Crypto
Jefferies draws a striking parallel between today’s cryptocurrency ecosystem and the internet in 1996, a pivotal year when nascent technologies like Netscape and Amazon laid the groundwork for a digital revolution. “Relative to the internet, it’s 1996 for the digital asset ecosystem, and the next leg of growth has just begun,” said lead analyst Andrew Moss, highlighting that the sector remains in its infancy with significant room for expansion. The global cryptocurrency market, now valued at over $4 trillion, is witnessing a surge in institutional interest, with only a select few traditional funds currently exposed to digital assets.
The report emphasizes that an overemphasis on Bitcoin’s price, currently stable at around $115,760, distracts from blockchain’s broader transformative potential. From supply chain optimization to decentralized finance (DeFi), blockchain is reshaping industries, driving innovation in tokenization, smart contracts, and digital identity. Jefferies forecasts 10–15 crypto-related initial public offerings (IPOs) within the next 18–24 months, signaling a maturing market poised for exponential growth.
Institutional Investors Embrace Diversified Strategies
Jefferies notes a growing appetite among its institutional clients for diversified crypto investments, moving beyond Bitcoin to include ETFs, DATs, and publicly traded companies with crypto exposure. The approval of 43 Bitcoin ETFs and 21 Ethereum ETFs globally, with inflows exceeding $625 billion in 2025, has lowered entry barriers, enhancing liquidity and accessibility. Digital asset treasury companies, such as Strategy and BitTreasury, are also gaining traction, with corporate Bitcoin holdings reaching 1.011 million BTC, or 5% of the circulating supply, valued at over $118 billion.
The bank advocates a selective investment approach, urging clients to analyze tokens as they would early-stage tech startups, prioritizing metrics like adoption, development activity, usage, and real-world use cases. “The market is shifting from speculative assets to tokens driving practical applications,” Moss noted, pointing to sectors like DeFi, real-world asset (RWA) tokenization, and non-fungible tokens (NFTs) as key growth drivers. This strategy mirrors the stock-picking discipline of the 1996 internet era, where discerning investors reaped outsized returns by backing companies with lasting utility.
Blockchain’s Disruptive Potential
Jefferies’ report underscores blockchain’s ability to revolutionize industries beyond finance, including logistics, healthcare, and gaming. The technology’s decentralized, transparent ledger enables secure, efficient transactions, reducing costs and intermediaries. For instance, RWA tokenization, projected to reach a $500 billion market by 2025, is transforming illiquid assets like real estate and art into tradeable digital tokens, unlocking liquidity and democratizing investment opportunities.
The bank also highlights the resilience of the cryptocurrency sector, bolstered by regulatory clarity, such as the U.S.’s first national cryptocurrency law and the EU’s Markets in Crypto-Assets (MiCA) regulation. These frameworks are fostering institutional confidence, with 41% of global NFT purchases and 30% of DeFi investments originating from U.S.-based investors. Jefferies predicts that this regulatory tailwind will drive further differentiation, rewarding projects with robust fundamentals while exposing weaker ones.
Challenges and Opportunities Ahead
While the outlook is bullish, Jefferies acknowledges challenges, including market volatility and the need for rigorous due diligence. The sector’s early-stage nature invites risks, such as speculative bubbles and regulatory uncertainties, but also presents opportunities for outsized returns. The bank advises investors to focus on tokens with strong adoption and developer ecosystems, citing Ethereum and Solana as examples of platforms driving innovation in DeFi and layer-2 solutions.
The shift from speculative to utility-driven investments requires a disciplined approach, as temporary revenue spikes from certain blockchains can obscure long-term viability. Jefferies’ emphasis on selectivity aligns with the growing sophistication of institutional investors, who are leveraging advanced analytics to evaluate projects in a market projected to grow at a 30% compound annual growth rate (CAGR) through 2030.
A Transformative Decade for Crypto
Jefferies’ report paints an optimistic vision of the cryptocurrency sector, likening its current stage to the internet’s transformative 1996 moment. By focusing on blockchain’s disruptive potential and advocating for strategic investments in ETFs, DATs, and utility-driven tokens, the bank positions the sector for a $1 trillion valuation by 2029. As institutional adoption accelerates and regulatory frameworks solidify, the cryptocurrency market is poised to redefine finance, technology, and beyond, offering investors a historic opportunity to shape the digital future.
