CoinGecko: No Ceiling for $2T Digital Assets Market Cap

Institutional interest in digital assets and unbridled innovation by developers grew the cryptocurrency market during the last quarter as assets hit all time highs and pushed the market to over $2 trillion, according to CoinGecko’s Q1 report.

While CoinGecko notes that 57% of the market capitalization belongs to bitcoin, the exchange believes that the rise of non-fungible tokens (NFTs) is the key to widespread retail adoption.

“We believe that NFTs can capture the mindshare of a global audience because of its innate ability to create digital collectibles,” CoinGecko analysts wrote. “Even Mark Cuban has decided to embrace crypto, largely because of the NFT narrative. NFTs disrupt the power structure of the creative and content industry, giving back more control to the creators. With popular singers like The Weeknd and Linkin Park joining the NFT party, we foresee more creators joining the NFT hype train.”

According to the exchange’s data, NFTs have a nearly $28 billion market cap with sports-related NFTs — such as the NBA’s Top Shots trading cards — being the most popular. 

CoinGecko notes that Google searches for “NFT” have surpassed “DeFi” as of March 2021. 

The rise of ‘Ethereum Killers’

Ethereum’s stratospheric rise in gas prices, the method which nodes are compensated for their role in sending transactions through the network, has created a market for alternatives to the ‘world’s computer’. Some of these efforts have been less successful than others, CoinGecko analysts have noted an expansion of Ethereum-based projects onto other chains which in turn has caused adoption. 

Binance’s Ethereum alternative Binance Smart Chain has posted significant growth in users as DeFi traders look for cheaper alternatives to Ethereum. Despite a lack of a functional mainnet, analysts note that Polkadot is onboarding some significant projects. 

“Many projects are preparing to launch on Polkadot although the mainnet is still not functioning. This could be linked to strong mindshare; Polkadot is led by ex-CTO of Ethereum – Gavin Wood,” wrote CoinGecko analysts. They also noted Solana, which FTX founder and CEO Sam Bankman-Fried has backed, is also getting strong support thanks to the positive image FTX has within the industry.

DEX vs. CEX

Decentralized exchanges, a fairly recent invention in the crypto industry, have been growing at an incredible pace. There’s a fair question as to if nimble DEXs, with decentralized teams in the dozens, can take on centralized exchanges, or CEXs, that have teams in the hundreds if not over one thousand. 

CoinGecko doesn’t address this question in the report, but it does provide some numbers about the volume of their growth. 

According to CoinGecko’s data, DEXs saw an increase in its spot trading volume by 250% (adding $75 billion) to $104 billion. PanCake Swap and Uniswap, analysts say, added 70% to their volume each or roughly $52 billion as they have an effective duopoly on the market. 

The Fed and the future

CoinGecko declines to forecast where the market is going over the next three quarters, only stating that they remain “cautious” with the economic climate and macro market. 

“Although the Fed maintains a dovish stance, US treasury yields have been soaring – sparking inflation fears for some investors,” they wrote. 

As the price of bitcoin continues to be turbulent, shying away from $60,000 and moving closer to $50,000, the question remains just how the price of the world’s largest digital asset will fare with a perpetually dovish Fed.