Where is the next wave of crypto demand coming from? Expert shares 3 sources

Key Takeaways:

• Bitcoin will retain its investor demand.
• Stablecoins are an important part of the crypto ecosystem.
• Blockspace is an asset, says Ryan Selkis.

YEREVAN (CoinChapter.com) – Crypto adoption continues despite market uncertainty. And while meme coins like PEPE can generate wealth for a few lucky early investors, they are short-lived and can hardly provide fruitful soil for long-term adoption.

Ryan Selkis, the co-founder and CEO of crypto analytical platform Messari, provided his vision of where crypto demand could be coming from.

#1. Bitcoin is non-sovereign commodity money, propelling crypto adoption

According to the expert’s prognosis, Bitcoin will remain a powerful source of cryptocurrency demand. Selkis called protecting Bitcoin mining, self-custody, development, and surrounding infrastructure paramount, as they allow investors to acquire a non-sovereign or non-governmental store of value.

This is not a bad thing. Bitcoin is hardened and resilient. Bitcoin’s ethos is the solid rock around which the rest of the industry has been built. It remains a “what if things go sideways” hedge. But Bitcoin will never *not* be volatile in terms of purchasing power.

said Selkis, pinpointing the importance of owning “gold and digital gold”

A 2021 study out of the University of Pennsylvania reiterated his stance, calling both Bitcoin and gold “non-sovereign stores of value” despite the “absence of yield.” Moreover, the study concluded the following:

Rational investors can invest in store-of-value assets that do not have a yield despite the demand for these assets from users who enjoy some utility or service from the asset.

read the study.

Selkis also called Bitcoin an extremely narrow technology that addresses money, the largest market known to man. “BTC does one thing extremely well – exist as secure non-state money – and if demand for that explodes, the price of bitcoin is infinite bc it eats all of the fiat,” he asserted.

2. Stablecoins (digitized USD-denominated cash)

Selkis called the success of stablecoins the main condition behind crypto’s success as a sector and attributed the 2021 crypto breakout to stablecoins as well.

They have held up remarkably well actually, and are truly the backbone of the non-bitcoin crypto financial system. They power all DeFi apps (payments, lending, exchange, etc.)

commented the expert.

Incidentally, the largest stablecoin, Tether’s record high market cap, proves the point. As seen in the chart below, the USDT market capitalization reached $82.8 billion, surpassing the previous record high of April 2022 by $400 million.

3. Blockspace (for builders and developers) important for crypto adoption

The Messari CEO called blockspace one of the most important resources the crypto community has. That’s why he underscored the significance of layer-2 solutions such as Arbitrum, Optimism, etc. Moreover, Selkis commented on the necessity to lower the dApp fees and increase transaction speed.

The supply of blockspace is critical to drive down fees and create pre-conditions for developers to build usable, scalable consumer applications. Blockspace is the kindling for “the next big thing.” It’s taking a frustrating amount of time, but we see glimmers of potential.

said Selkis.

He also pointed out that the Securities and Exchange Commission could play an essential role in making the integration of crypto easier. Instead, they focus on the shortcomings.

Policymakers could create common sense stablecoin, banking, exchange, and custody legislation for all centralized digital asset infrastructure providers and solve 90% of the industry’s problems overnight. Instead, we get beaten up over shitcoins.

commented the expert.

Also read: Will Binance win the stablecoin battle if USDC collapses? Let’s see.