From Existential Threats to the Risk of Being Overlooked

In the early stages of cryptocurrency, the primary concern was its very survival. Daily worries included the possibility of government bans, the collapse of major stablecoins like Tether, or significant hacks that could wipe out entire networks. However, as cryptocurrency adoption grew and became more integrated into traditional finance, these existential fears have largely subsided, especially with the U.S. approval of ETFs, making a total collapse seem highly unlikely. The cryptocurrency market is not disappearing. Yet, it is now confronted with the next significant risk on its path to maturity: the risk of irrelevance. This concept might be the most pressing issue for the crypto market today. A comparison can be drawn between crypto and emerging markets. In the early 2000s, there was considerable enthusiasm for countries like Brazil, Turkey, India, China, and Poland, with their potential for growth. Emerging market assets were seen as the next big sector for growth, reminiscent of the BRICs acronym coined by Goldman's Jim O'Neill. One could easily engage in discussions about local markets in Indonesia or the monetary policy of the Turkish central bank with senior global portfolio managers. Emerging markets had promise, growth potential, and inefficiencies, similar to what is seen in crypto. Over time, however, interest in emerging markets began to wane. Now, the sector is often relegated to smaller, specialized teams, making up a smaller portion of macro funds' asset allocation. Portfolio managers now focus on larger areas like semiconductors, AI, U.S.-European rates, and commodity cycles. The reason for this shift is simple: emerging market assets failed to deliver returns. Similarly, despite significant activity in the crypto space, such as bitcoin ETFs receiving inflows, Ethereum's scaling solutions gaining traction, and Solana's promise of a faster network, there's a risk that none of these developments will lead to sustained growth. Just as emerging markets had moments of brilliance but failed to capture long-term interest, crypto faces a similar challenge. The good news is that the industry's success is more dependent on its internal efforts and less on external factors like regulation. Moreover, there are several potential catalysts that could revitalize crypto's future. These include a series of incremental successes across decentralized finance, stablecoins, and innovative blockchain applications, rather than a single breakthrough 'killer app.' Having multiple protocols with recognition similar to Polymarket could make a significant difference. The future is uncertain, but the possibilities for avoiding irrelevance are within reach.