3 Big Predictions for the Future of Cryptocurrency

With countries and major financial institutions doubling down on crypto, a lot of changes will happen over the coming years. Three shifts in particular are likely to define the next big leg of the cryptocurrency sector.

Here’s what I predict will play out, and what it means for your portfolio.

1. The blue chips (finally) turn into financial plumbing

The first prediction is about utility beating spectacle or hype.

Blue chip cryptocurrencies like Ethereum (ETH), Solana (SOL), and XRP (XRP) are already wiring themselves into the mainstream financial sector. I predict that this will continue until the blockchains associated with these assets are so widely used for financial work that they’ll cease having any special cryptocurrency mystique and be considered just as boring as any other financial software system.

Two areas, payments and asset tokenization, are already leading the charge on this front. For example, in 2023, Visa expanded its stablecoin settlement program to Solana to speed cross-border money movement. You probably never heard of this, because it’s a piece of the financial backend that simply doesn’t matter for most users of Visa’s card products.

Similarly, on Ethereum, as well as Solana and to a lesser extent XRP, asset tokenization has moved from concept to practical scale. Now major asset managers like BlackRock are experimenting with doing some of their asset management on the blockchain. As a result, the value of tokenized real-world assets (RWAs) across public chains is more than $29 billion.

Assuming the adoption of blockchains for asset management and payment processing continues, the upside for holders may look less like the speculative spikes of crypto’s past, and more like steady growth.

2. Bitcoin will grow toward parity with legacy stores of value

Bitcoin (BTC) is already an asset worth $2.3 trillion. Its market value keeps rising as more holders treat it less like a short-term trade and more a like long-term savings vehicle, which it is.

I predict that Bitcoin’s market cap will eventually be in the same ballpark as legacy stores of value, like gold. For reference, the market cap of gold is about $24.8 trillion. So for Bitcoin to become roughly equivalent, it would need to grow by more than 10-fold.

In the coin’s history, moves of that size are in fact very common. It actually grew by a little bit more than that amount during the past five years, and by 50-fold during the past 10 years.

The main driver of Bitcoin repeating its past performance is its scarcity, and its adoption by financial institutions and governments as a reserve asset. That process is still in its infancy, which suggests there’s plenty of upside to come.

Therefore, investors do not need heroic timing. If Bitcoin keeps adding to its share of global store-of-value demand while its new issuance stays structurally constrained, the investment thesis will play out over the years, and I’m betting on it.

3. Altcoins and meme coins will endure, and institutions will reach for them

The third prediction is the messy one. I predict that altcoins and meme coins will continue to exist, and that meme coins in particular will become more prevalent. I also predict that financial institutions will be buying both of them, even if they lack any real utility.

Today, the meme coin category has a total market cap of about $85.9 billion. The next big catalyst for the sector could be leaders like Dogecoin (DOGE) getting their own spot exchange-traded funds (ETFs) approved. A non-spot Dogecoin fund is already approved, and will start trading in late September. Altcoins, including those that haven’t been relevant for years, are also potentially getting their own spot ETFs.

But why would banks and asset managers want to own these assets? Principally to offer funds and other products to their clients and to capture the fees. Clients may want to own them to get exposure to upside stemming from hype.

Of course, you don’t need to buy these ETFs or the coins directly. But as long as there are stories of meme coins going to the moon, hope will spring eternal. That’s what will encourage demand, and that’s what my prediction hinges on.