CRYPTOCURRENCY MARKET ANALYSIS

Cryptocurrency Market Size and Trends

The global cryptocurrency market is estimated to be valued at US$ 46.14 Bn in 2024 and is expected to reach US$ 68.25 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 5.7% from 2024 to 2031.

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The cryptocurrency market has been witnessing strong growth over the past few years. With rising adoption of cryptocurrency among both individual and institutional investors, the market is expected to grow multi-fold in the coming years. Various factors like global pandemic, geopolitical tensions, inflation, etc. have accelerated the growth of cryptocurrency as an alternative asset and store of value. Also, growing interest of young population in emerging technologies and ease of access through smartphone apps is supporting the market growth. Established companies are also entering the market and launching their own cryptos which is providing necessary legitimacy to the asset class. However, volatility remains a major concern along with regulatory ambiguity in many countries. Overall, increasing cryptocurrency acceptance and its potential to disrupt existing financial infrastructure is expected to dominate the market trend in the long run.

Rising acceptance of cryptocurrency as a payment method

With the continuous rise in the value of popular cryptocurrencies like Bitcoin and Ethereum in the past few years, there has been a gradual acceptance of cryptocurrency as a viable payment method across the globe. A growing number of companies are now accepting cryptocurrency payments for goods and services. Large retail chains, travel companies, tech firms, and other businesses have started tapping into this new revenue stream of cryptocurrency users. This acceptance has given confidence to both investors and regular users about the longevity and practical use of digital currencies.

Cryptocurrency payments settle in minutes compared to traditional banking payments. It removes friction from payments by avoiding cross-border transaction barriers and high fees. Young consumers who are technology-savvy have also warmed up to the idea of paying through cryptocurrency apps on their smartphones. Several payment companies are further helping mainstream adoption by introducing services that let customers pay for items at online and physical stores using their crypto balances. With more consumers embracing cryptocurrency for transactions, businesses are realizing the commercial potential that this new payment rail provides. If this trend of acceptance continues to rise across different sectors and geographies, it will surely drive greater interest and demand in the cryptocurrency market.

Market Concentration and Competitive Landscape

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Institutional investments flowing into the crypto space

In the past few years, cryptocurrency was considered a fringe asset class dominated by retail investors and technology enthusiasts. Established cryptocurrency exchanges are raising millions from prominent venture capital funds which erstwhile stayed away from this space.

These large institutional investors have brought more sophistication, compliance practices, and additional routes for investors to gain crypto exposure. Activities like bitcoin futures trading, crypto trusts, and funds give easier access for wealth managers to place clients' money. Many traditional finance houses are experimenting with blockchain use cases for trading, clearing, and settlement of assets. With their deep pockets and widespread influence, institutional involvement has added legitimacy to the perception of cryptocurrency as a serious investment asset deserving attention.

Key Takeaways from Analyst:

The global cryptocurrency market continues to show strong potential for growth driven by increasing adoption among both institutional and retail investors. The market has benefited from growing acceptance of digital currencies as a viable investment asset class seeking returns amid current low interest rate environment. Further, more companies are open to explore cryptocurrencies for cross-border payments and settlements which can reduce transaction costs and processing times.

However, volatility remains a major concern restraining larger institutional money from participation. Regulatory uncertainty across key markets also poses challenges as different jurisdictions take varying stances on digital currencies. There are also open questions around the long-term durability and scalability of underlying blockchain technologies as they have yet to be extensively tested.

In summary, while risks and uncertainties persist, the cryptocurrency marketplace has substantial potential rewards for early adopters able to navigate the evolving regulatory and technological changes over the coming years.

Market Challenges: Volatility in Bitcoin and other cryptocurrencies prices

The volatile nature of cryptocurrency prices is significantly hampering the growth of the global cryptocurrency market. Bitcoin and other cryptocurrencies have experienced wild swings in their valuations over short timeframes, often rising or falling 30-50% within the span of a week or two. This type of instability introduces substantial uncertainty and risk for both retail and institutional investors. When prices become highly inflated or crash precipitously without warning, it damages confidence in the cryptocurrency asset class and discourages mainstream adoption.

This volatility stems from the fact that cryptocurrency remains a speculative and emerging market. Compared to more established assets, cryptocurrencies have low liquidity and lack proven stores of value. Their prices are still significantly influenced by media hype, comments from public figures, and movements of wealth among a relatively small pool of "whale" investors. This makes cryptocurrency vulnerable to price bubbles and crashes fueled by herd behavior without the stabilizing fundamental analysis that underpins traditional markets. As a result, most large corporations and institutional money have yet to participate in a major way out of concern over protecting shareholder value and balancing risk.

Market Opportunities: Emerging blockchain technology

Blockchain technology has the potential to greatly shape the future of the global cryptocurrency market. As a decentralized and distributed digital ledger, blockchain allows for the secure verification and recording of transactions without the need for a centralized authority. This core feature of blockchain fosters trust, transparency, and independence.

Cryptocurrencies that utilize blockchain, like Bitcoin, have seen widespread adoption in recent years. More people and businesses are accepting cryptocurrency as a means of payment and store of value. The ability to securely and instantly transfer digital assets across borders with little to no transaction fees has significant implications for global finance. Blockchain use cases are also expanding beyond cryptocurrency into areas like supply chain management, digital identity and voting. As blockchain networks become more scalable and user-friendly, its uses will continue proliferating into new sectors.

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Insights By Component- Increasing acceptance drives hardware demand

In terms of component, hardware is expected to contribute 68.3% share of the market in 2024 owing to its increasing acceptance and adoption among merchants and consumers. As cryptocurrency gains wider traction worldwide for payments and investments, there is a growing need for hardware components that enable mining, storing, and transacting cryptocurrencies. Miners require specialized computer hardware with high-performance graphics processing units to validate transactions and earn new coins through mining. Meanwhile, investors look for secure hardware wallets and cold storage solutions to protect their crypto holdings from cyber threats. Exchanges and payment processors to invest in robust server infrastructure to handle the workload of crypto transactions. Hardware manufacturers have responded to this demand by introducing ASIC (Application-Specific Integrated Circuit) Miners, GPU (Graphics Processing Unit) Mining Rigs, ledger nano and trezor wallets tailored for cryptocurrencies. With more businesses and consumers embracing cryptocurrencies, the need for enabling hardware infrastructure is set to accelerate, driving greater share of the hardware segment in the coming years. 

Insights By Type- Bitcoin's Enduring Market Leadership Attributed to First-Mover Advantage

In terms of type, Bitcoin is expected to contribute 40.1% share of the market in 2024 primarily due to being the first mover with a strong brand recognition as 'digital gold.' As the pioneer cryptocurrency launched in 2009, Bitcoin established itself as a store of value and medium of exchange. It continues to attract most investor interest and trading activity on crypto exchanges owing to its first mover advantage, brand familiarity and network effects with the largest user base, partnerships and acceptance among merchants. Being the largest and most popular cryptocurrency, Bitcoin benefits from a 'virtuous cycle' where more users and partnerships feed on each other to reinforce its leadership. While newer cryptocurrencies offer alternative features, overcoming Bitcoin's strong network effects established over a decade remains a challenge. Barring any critical security breaches or technical glitches, Bitcoin is likely to retain the foremost position in the crypto landscape, sustaining its share as the dominant type.

Insights By Vertical- Cross border transfers spur trading volume

In terms of vertical, trading is expected to contribute 36.2% share of the market in 2024 driven by the growing usage of cryptocurrencies for cross border transactions. Cryptocurrencies allow for seamless peer-to-peer value transfer across borders at minimal cost compared to alternatives like bank wire transfers. This makes them an attractive option for international trade, business payments to suppliers/clients overseas, foreign workers sending remittances home and online purchases from international merchants. Globalization and increasing digitalization of trade are catalyzing cryptocurrency adoption to facilitate borderless commerce. Traders, importers/exporters, and online marketplaces leverage cryptocurrencies to transact globally with ease. Cryptocurrency trading volumes are concentrated on exchanges that cater to cross border peer-to-peer transfers between international buyers and sellers. With global trade and investment flows surging in tandem with broader macroeconomic trends, international use cases will continue stimulating higher trading volumes for cryptocurrencies, bolstering the vertical's market share.

Regional Insights

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North America has emerged as the dominant region in the global cryptocurrency market. The region is expected to account for 36.5% of the market share in 2024. The U.S., being home to technology giants and financial hubs such as New York and Silicon Valley, has provided a fertile ground for cryptocurrency innovation and growth. Several cryptocurrency exchanges, trading platforms, wallet providers, and blockchain tech startups are headquartered in the U.S. The presence of supportive regulations and high-tech infrastructure has boosted the development of new cryptocurrencies, smart contracts, payment solutions, and blockchain applications in the region.

Asia Pacific, on the other hand, is witnessing the fastest growth in the adoption of cryptocurrencies. Countries like China, Japan, and South Korea are at the forefront of this growth. Even though China has recently clamped down on cryptocurrency trading and ICOs, the region still contributes over half of the global bitcoin trading volumes. This can be attributed to growing internet and smartphone usage which has increased individual participation in the cryptocurrency market. Moreover, lack of stringent regulations initially provided flexibility to the cryptocurrency market to experiment and attract huge investments from local funds and institutional players.

Going forward, specific areas like Southeast Asia, India, and Australia are projecting strong growth potential. The young demography, rising affluence levels, surge in retail investments, and FinTech innovations are fueling interest in alternative payment and investment assets. Cryptocurrency companies have also started recognizing Asia Pacific as a launch pad for their global expansion plans. Meanwhile, import and export dynamics are also driving the cryptocurrency usage for international trade settlements and payments across borders. Overall, Asia Pacific's evolving regulatory environment coupled with increasing acceptance of blockchain and cryptocurrencies will play a key role in propelling the region to the forefront of the global crypto economy.

Market Report Scope

Key Developments

• In February 2022, Intel Corporation, a leading semiconductor company, announced plans to launch an energy-efficient blockchain accelerator chip later in the year to support the growing demand for cryptocurrency mining. The chip will be optimized to run the SHA-256 algorithm used in Bitcoin mining and will offer over 1000x better performance per watt compared to GPUs. Early customers include Argo Blockchain, Block Inc. (formerly Square), and Griid Infrastructure, demonstrating Intel Corporation's commitment to providing sustainable blockchain solutions to the market.
• In January 2022, Robinhood, a leading financial services and trading platform, announced the launch of the beta version of its highly anticipated cryptocurrency wallet feature. The new wallet functionality will allow Robinhood's customers to securely deposit, withdraw, and transact with cryptocurrencies like Bitcoin, Ethereum, and Dogecoin directly through the Robinhood mobile app, expanding the platform's capabilities beyond just trading digital assets.
• In August 2021, researchers at Los Alamos National Laboratory, a leading U.S. Department of Energy research facility, developed an artificial intelligence-powered system to detect unauthorized cryptocurrency mining activities on the lab's research computing infrastructure. This system helps the lab protect the integrity and availability of its high-performance computing resources, which are critical for advancing scientific research across fields like national security, energy, and climate.
• In November 2021, Mastercard, a leading global payments technology company, announced that it would allow its network of banks and merchants to enable their customers to buy, sell, and hold select cryptocurrencies directly through digital wallets. Mastercard also revealed plans to integrate cryptocurrency rewards and cashback into its loyalty programs, further expanding the use of digital assets within its payment’s ecosystem.
• In March 2021, Open ware Inc., a leading financial technology software company, launched its OpenDAX3 cryptocurrency exchange platform featuring an Exchange Liquidity Network (ELN) to provide enhanced trading services for cryptocurrencies, digital assets, and security tokens. OpenDAX3 is designed to offer improved exchange capabilities and liquidity to facilitate seamless trading of digital financial instruments.
• In October 2020, the Central Bank of The Bahamas, the nation's monetary authority, launched the Sand Dollar, becoming the first central bank to issue a CBDC nationwide. The Sand Dollar aims to promote financial inclusion by providing all Bahamians with access to digital payments and financial services, while also enhancing the security and resilience of the country's payments system.

*Definition: The global cryptocurrency market involves the trading and exchange of digital currencies that use cryptography to secure transactions and to control the creation of new units of a particular currency. Some of the major cryptocurrencies being traded globally include Bitcoin, Ethereum, Litecoin, Ripple, and others. This rapidly growing market allows for fast and secure peer-to-peer transactions across borders without any intermediaries. With more businesses, retailers and individuals adopting cryptocurrencies, the global cryptocurrency market has huge potential for further expansion in the coming years.

Market Segmentation

• Component Insights (Revenue, US$ Bn, 2019 - 2031)
  • Hardware
  • Software
•  Type Insights (Revenue, US$ Bn, 2019 - 2031)
  • Bitcoin
  • Bitcoin Cash
  • Ethereum
  • Litecoin
  • Ripple
  • Others
•  Vertical Insights (Revenue, US$ Bn, 2019 - 2031)
  • Banking
  • Gaming
  • Government
  • Healthcare
  • Retail & E-commerce
  • Trading
  • Others
• Regional Insights (Revenue, US$ Bn, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC Countries
    • Israel
    • South Africa
    • Rest of Middle East & Africa
• Key Players Insights
  • Argo Blockchain
  • Bit Digital, Inc.
  • BITMAIN Technologies Holding Company
  • Braiins Systems s.r.o.
  • Canaan Inc.
  • Core Scientific
  • F2Pool
  • Genesis Mining Ltd.
  • HIVE Blockchain Technologies Ltd.
  • Hut 8 Mining Corp.
  • iMining Technologies Inc.
  • MinerGate
  • Miningstore
  • Riot Blockchain, Inc.
  • ASICminer Company