The world is experiencing an economic slowdown and inflation is rising, but emerging technologies, such as blockchain-based cryptocurrencies, are showing the way forward.
By 2030, there will be over one billion cryptocurrency users, based on a report by Boston Consulting Group (BCG), Bitget, and Foresight Ventures, ‘What Does the Future Hold for Crypto Exchanges?’
Crypto adoption is rising among individuals and institutions. However, adoption is still low compared to traditional investment assets such as equities, payment technologies, and private equity allocations by institutions.
BCG estimates that just 0.3% of individual wealth is currently held in crypto assets, in contrast to the 25% that is held in equities.
For retail or individual crypto holders, there are significant disparities across geographies. North America is the most invested region with an average holding of around $18,000 among crypto holders, accounting for just 0.4% of total individual wealth, whereas Africa is the least invested with an estimated average crypto holding of around $190.
While it is difficult to predict, if the trend of crypto adoption continues, the total number of crypto users is likely to reach 1 billion users by 2030.
As individual investors are the biggest holders of crypto, institutional interest is growing too. Among institutional investors, hedge funds and venture capital firms are most interested in investing in crypto.
According to crypto research, these players had almost doubled their exposure to $70 billion from the fourth quarter of 2020 to the end of 2021.
Crypto markets becoming mature after institutional participation
The report also said that global trading volumes have increased significantly over the past two years, as quarterly spot trading volumes grew to $3.2 trillion in the two years to the first quarter of 2022, while crypto derivatives trading expanded by many folds to $6.3 trillion.
Crypto derivatives trading which is historically dominated by perpetual swaps for Bitcoin (BTC) and Ethereum (ETH) accounts for over two-thirds of open interest among the top 100 derivatives, the report said.
Emerging markets leading in crypto adoption
While the average individual holding among cryptocurrency holders is lower in emerging countries, crypto penetration is already higher than in developed countries.
For emerging markets with less mature financial infrastructure, crypto brings unique opportunities to provide traditional financial services.
Four use cases in emerging markets
Crypto-backed wealth management, crypto cross-border remittance, crypto-backed payment gateways, and play-to-earn are the four use cases that are becoming very popular in these emerging markets.
Global crypto growth
Emerging markets and advanced economies are particularly attractive for global exchange players due to strong crypto trading growth fuelled by crypto adoption, high future crypto trading potential compared to traditional finances, and opportunities for crypto exchanges to expand services beyond trading to provide day-to-day use cases to local customers.
Emerging markets and advanced APAC countries accounted for one-third of global spot trading and around 40% of global derivatives trading volumes in 2021.
Global CEX trading touch $54 trillion in 2021
The increase in crypto adoption and macro trends contribute to the growth of the global crypto trading volume.
The global centralized crypto trading volume was $54 trillion in 2021, while the spot trading volume was $20.6 trillion, more than 2000 times when compared to trading volumes of 2016.
Historically, spot trading volume strongly correlates with overall crypto market capitalization and volatility.
In derivatives, the annual trading volume was about $33.2 trillion, mostly perpetual swaps offered on crypto-native trading platforms.
“We expect that both CEX and DEX will continue to see robust growth in the future. We expect CEX to drive significant volume in spot for major coins and for DEX to see strong volume growth in spot segment by providing access to DeFi innovations through long-tail tokens and better integration with decentralized applications,” the report revealed.
“We also see a convergence between DeFi and CEX exchanges. This will lower barriers to entry in DEX and contribute to DeFi innovations through CeFi ecosystems and funds,” the report adds.
According to Verified Market Research, a market consultancy firm report, the non-fungible token (NFT) market might grow to $231 billion in value within ten years. The report also adds that the NFT market will grow at an estimated 33.7% CAGR, with music, movies, and sports being the main contributors.
Another report by McKinsey & Company, suggests that by 2030, the value of the Metaverse alone may reach $5 trillion. Its estimates suggest that by 2030, e-commerce will generate up to $2.6 trillion in sales, fueling the cash flow within the Metaverse.