Exposure to the crypto megatrend

Sygnum’s Future Finance Report uncovers a key insight: Exposure to the crypto megatrend is the principal driver for investing in crypto assets. But what does this term mean exactly?

Source: Sygnum Future Finance Report 2023

Investors are increasingly acknowledging the long-term investment case for crypto, driven by a broader acceptance of crypto assets and blockchain technology as key components of an emerging megatrend. The recent market rally this quarter, along with the anticipated approval of BlackRock’s Bitcoin spot ETF, may suggest an optimistic market outlook as we approach 2024.

But the crypto megatrend is more than just an optimistic market forecast.

The essence of the megatrend lies in crypto’s multifaceted nature. Crypto assets are appealing not only as potential investment opportunities but also for their versatility as a means of payment and Bitcoin’s growing reputation as a safe haven asset. Moreover, the underlying blockchain protocols serve as decentralised financial market infrastructures (dFMI) and are fundamental to the development of Web3.

These catalysts are driving the expansion of crypto into various sectors, spawning innovative ecosystems of their own or merging with other markets like Artificial Intelligence (AI) and traditional finance (TradFi). These infrastructures have unlocked new opportunities to engage in the crypto market, leading to the emergence of institutional DeFi, real-world asset (RWA) tokenization, crypto-based lending and staking products, to name a few. Its cross-border functionality also introduces new forms of money and addresses challenges like high exchange fees and intermediary inefficiencies, while its inflation-hedging properties may also make it suitable to combat inflation.

That being said, Bitcoin as a hedge against traditional markets is gaining prominence, supported by its declining correlation with traditional stocks, its continued outperformance versus major traditional asset classes, and its role as a maturing asset that can serve as a store of value in the current macro and geopolitical landscape.

As a unique asset class, crypto assets offer traditional investors a gateway to diversify their portfolios and access innovative on-chain asset management solutions and other crypto investment products.

It’s a long list of utilities, which is what makes the crypto megatrend narrative all the more appealing. It’s more than just Bitcoin and Ether’s upward price trajectory; it’s a rapidly evolving diverse global market full of innovative and collaborative ecosystems, drawing a spectrum of participants from crypto enthusiast to government entities and leading financial institutions to its doors.

Learn more about our Future Finance Report here:  Future Finance 2023 – Reports | Sygnum Bank

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