The cryptocurrency market continues to amaze with its volatility, expert opinions, and multifaceted prospects. Despite the temporary successes of individual projects, questions about whether the market has reached its peak or is just the beginning of the journey are only growing. Inversion Capital founder and renowned crypto analyst Santos shared deep thoughts about the future of cryptocurrencies in his recent tweet, which we will analyze today, supplementing with analytics and comments from other experts.
Market prospects: how far are we from the peak?
Santos claims that the cryptocurrency market as a whole has not yet reached its peak, although many individual protocols are already close to their peak. In his opinion, cryptocurrency as an industry remains a "beta test," with only 30-60 million active users, as confirmed by a16z's report. This figure seems insignificant compared to the potential user base, which could be counted in billions.
However, Santos emphasizes an important detail: cryptocurrency as a technology can become the standard for business. It is already showing early signs of justifying investments, but it does not yet ensure mass user adoption.
Quote from Santos:
"Cryptocurrencies have no technical problems — not anymore. They have a market access problem."
The difficulty of market access is related to the fact that much of the current value of protocols is based on growth expectations rather than the current user base. Many projects are valued at billions of dollars, even though their real user base remains minimal.
Why is price growth so important?
Speculation remains a key driver of activity in the market. Many users enter the industry solely for profit. If Bitcoin falls to $30,000, a significant portion of users will leave the market. This creates a vicious circle: prices determine interest, and interest influences prices.
Quote from Santos:
"We must break the self-referential and volatile nature of cryptocurrency. To do this, we need to focus on attracting millions of users who do not care what the price of Bitcoin is."
It is important to bet on products that work "under the hood," where users interact with the blockchain without realizing it. Such products include DePIN, stablecoins, and decentralized finance (DeFi).
Other experts' opinions
Cathie Wood, head of ARK Invest, recently stated:
"Cryptocurrencies are the next major technological revolution. Mass adoption is possible, but it will require many years of work and refinement."
Analysts from Chainalysis support this view, stating that only 4% of the global population has interacted with cryptocurrencies at least once. This creates enormous growth potential but also indicates a low level of penetration.
Brian Armstrong, CEO of Coinbase, noted in an interview:
"In the next 2-3 years, we will see a revolution in the Web3 space, where cryptocurrency will become the basis for daily financial operations, but for this, greater transparency and trust from users are needed."
Examples of successes and failures
Let's consider a few examples illustrating the current state of the market and its prospects:
Solana#solana
Solana is considered one of the most promising platforms due to its speed and low fees. Despite past technical issues, the project continues to attract attention and develop its ecosystem.Terra Luna
The fall of Terra Luna in 2022 was a lesson for the entire market. This case showed that even amid high popularity, a project can collapse if there is no real economic model behind it.Polygon (#MATIC)
The Polygon project became one of the first platforms to address Ethereum's scalability issue. Its use in real business applications, such as Disney and Starbucks, has proven that cryptocurrencies can be integrated into everyday life.
The problem of overvaluation
Most crypto projects are overvalued. Their current value is based on expectations of radical growth in the coming years. However, not all of them will be able to withstand competition.
According to Messari, of the 100 largest tokens by market capitalization, only 10% have a real business model and a product that is actively used. This means that a significant portion of projects may be displaced by new players.
Quote from Santos:
"Most existing protocols will not meet expectations. We will see new projects displacing the old ones."
How can the industry break the vicious cycle?
DePIN and stablecoins as two key directions. These products are already used in the real economy and have the potential for scaling.
Reducing dependence on speculation
To attract new users, it is necessary to create products that offer real value, not just the opportunity to profit from price increases.Regulation
Many barriers to the implementation of cryptocurrencies have already been removed. Santos claims that regulatory issues are being addressed, and this opens new growth opportunities.
Forecasts for the future
Analysts agree that mass adoption of cryptocurrencies is possible, but it will either take 10 years or a revolutionary leap within 2-4 years. Everything will depend on how quickly market access issues are resolved.
Quote from Michael Saylor:
"Bitcoin and other cryptocurrencies are the foundation of the future global financial system. However, building it will require removing barriers between technologies and users."
Cryptocurrency has not yet reached its peak, but many tasks need to be solved for its mass adoption. Investors should consider that current prices are largely based on expectations rather than real results.
The industry is moving towards maturity, and success will belong to those projects that can provide real value to users, not just speculative interest. There is a long way ahead, but the potential of the technology remains huge, inspiring millions of developers, investors, and users worldwide.