Crypto is entering adolescence… expect more mood swings but an increasingly mature market

As CEO of eToro, I’ve had the privilege of witnessing the incredible evolution of the crypto market firsthand. It’s been a rollercoaster ride from the birth of bitcoin to the vibrant landscape we see today, and I firmly believe that this market, so often described as ‘in its infancy’, is now entering adolescence.

So what can we expect from this new era? Well, a few more adolescent mood swings no doubt, but also a growing air of maturity and stability, and possibly a clearer sense of what adulthood will look like.

Just a decade ago, eToro took what was considered a bold and potentially risky step by introducing bitcoin to our platform, enabling our users to buy bitcoin directly. As an early adopter who had the privilege of co-writing a whitepaper on crypto with Ethereum co-founder Vitalik Buterin in 2012, I understood the huge potential offered by this new market and recognized how bitcoin could become a digital form of gold.

Fast forward 10 years and my belief and enthusiasm for this asset class has not waned. Over the course of this period, it has also become one of the most popular instruments on the eToro platform. Its limited supply and resistance to inflation initially made it appealing in a world where traditional currencies seemed to lose their value by the day. Today, more people are recognizing the need to diversify their investments, and cryptoassets offer a promising, albeit volatile, addition to a portfolio.

If there was any doubt left about crypto’s place within a diversified portfolio, this has surely been eradicated by the launch of a bitcoin ETF earlier this year, and the recent SEC approval of an Ethereum ETF, both watershed moments which will support long-term and more stable growth in these assets.

Yet, the cryptoassets themselves are just the beginning. The underlying technology – blockchain – holds immense potential beyond just digital currencies. Smart contracts powered by blockchain are poised to revolutionize industries, from finance to real estate. We envision a future where traditional financial systems seamlessly transition to blockchain-based platforms, making transactions faster, cheaper, and more transparent. Just as the internet transformed communication, blockchain will reshape finance, ushering in a new era of innovation.

Consider the story of the internet’s adoption. Initially, services like VoIP faced resistance, but eventually became integral parts of our daily lives. Similarly, while blockchain adoption may seem gradual now, it’s only a matter of time before it becomes the norm. Stock markets operating 24/7 and real estate being tokenized may seem futuristic, but they’re closer than we think – just look at the NYSE, which is already considering 24/7 trading in response to crypto market trends. And if you want a glimpse into the future potential of Web3, take Roblox for example. The immersive virtual world that the company has created, powered by user-generated content and transactions, is already showing us how Web3 can redefine how we interact, create, and transact online.

In this journey towards adulthood, we must also consider how crypto could impact traditional financial infrastructure. The distinction between tier 1 and tier 2 data center systems will blur as cryptoassets gain prominence. Research suggests that crypto could streamline processes, enhance transparency, and reduce costs associated with cross-border transactions. However, the road to integration won’t be without its challenges, and it’s essential that we continue to make regulatory progress to allow a smooth transition.

When it comes to regulation, crypto has long operated in a gray area. While innovation thrived, consumer protection remained a concern. Fortunately, we are now seeing significant leaps forward, with the EU’s Markets in Crypto-Assets Regulation (MiCA) set to come into force next year, whilst in the UK, the FCA is making headway in ensuring crypto players act responsibly.  By establishing clear guidelines, regulators can foster innovation while safeguarding investors’ interests.

If we think about the long and checkered history of the traditional stock market, crypto’s journey since inception and since we first offered it to eToro users a little over a decade ago has been rapid and phenomenal. It has moved at a pace never before witnessed for a new financial asset class. Yet over the next decade, I anticipate more transformative developments as the sector progresses towards full maturity.

Adulthood for crypto entails widespread adoption, seamless integration with traditional finance, and robust regulatory frameworks. In the next decade, I believe the value of global crypto projects will exceed $100 trillion as more physical assets shift over to blockchain and cryptoassets begin to coexist harmoniously with fiat currencies. Our goal at eToro is to foster this evolution by continuing to provide a safe and transparent crypto offering, empowering individuals to navigate the crypto landscape with confidence.