Cryptocurrencies now have a history spanning over 15 years, having evolved from the early days of Bitcoin in 2009 to an ecosystem comprised of thousands of digital assets and blockchain-based applications.
At the end of November 2024, the market capitalization of cryptocurrencies reached an impressive figure of $3.4 trillion, placing them among the largest asset classes in the world. This figure exceeds the market capitalization of listed real estate ($1.9 trillion) and diversified commodities ($1 trillion), and rivals other well-established categories, such as emerging market small-cap stocks ( 2.8 trillion dollars), high yield bonds ($2.8 trillion) and inflation-linked bonds ($2.6 trillion).
Cryptocurrencies now have a history spanning over 15 years, having evolved from the early days of Bitcoin in 2009 to an ecosystem comprised of thousands of digital assets and blockchain-based applications. This longevity and growth underlines their resilience and their ability to endure.
Investor sentiment
Despite these accomplishments, skepticism persists. In our survey conducted in 2024 among professional investors, around 15% of respondents mentioned a lack of demand for cryptocurrencies, and just over 13% still consider cryptocurrencies today to be a passing fad.
This skepticism overlooks several major accomplishments in cryptocurrencies’ journey toward mainstream finance and institutionalization that we saw in 2024. As an example:
- Exchange Traded Products (ETPs) Launched in the US Recorded Over $24 Billion[4] of net incoming flows during the first ten months of 2024.
- Several major institutions, including the Wisconsin State Investment Council and Emory University Endowment, have allocated funds to Bitcoin ETPs, promoting their inflation-hedging properties as well as their portfolio diversification potential.
As shown in Exhibit 1, although most 2024 flows have been towards US-domiciled spot Bitcoin ETPs, Europe remains a leader in this area, thanks to the diversity as well as the maturity of its offers. Investors can invest here in a wide range of single-token or basket-of-cryptocurrency ETPs, many of which have relatively strong track records.
Illustration 1: Flows relating to crypto ETPs and ASG
A Europe
In the United States
In the rest of the world
Source: Bloomberg, WisdomTree. October 31, 2024. Actively managed crypto ETPs are excluded. ASG = assets under management. 1M = one month. YTD = year to date. Historical performance is no guarantee of future performance, and any investment may lose value.
Europe’s foresight has fostered a sophisticated market that spans multiple strategies and responds to diverse investor preferences. For its part, although it is gaining momentum thanks to recent launches, the American market remains behind.
Perspectives
The evolution of the crypto ETP market is expected to accelerate as the US and European markets mature.
In the United States, the recent launch of Bitcoin and Ethereum spot ETPs could pave the way for regulatory approval of other crypto products, expanding the scope of investment opportunities for institutional and retail investors. This increasing accessibility could attract even greater inflows, thus further anchoring cryptocurrencies in the traditional financial ecosystem.
At the same time, with its established leadership and diversified product offerings, Europe is expected to remain a hub of innovation in the crypto ETP space.
Figure 2: Overview
Source: WisdomTree. Novembre 2024.
As shown in Exhibit 2, Bitcoin ETPs are now listed in most developed markets, providing institutional investors around the world with simplified access to cryptocurrencies. This expanded availability not only improves portfolio diversification opportunities, but also promotes greater adoption by institutional players who were previously deterred by the complexities of direct investment in cryptocurrencies.
Conclusion
The data indicates a disconnect between the reality of the cryptocurrency market and investor perceptions. Their market capitalization rivaling traditional asset classes and their history now demonstrated, cryptocurrencies are no longer a niche investment, but a formidable player in the global financial ecosystem.
Investors who prefer to ignore this sector as a passing trend would do well to review their position in light of the available evidence.
