Cryptocurrency Market Analysis

Key Insights

In 2020, the size of the global cryptocurrency market was 826.6 million U.S. Dollars. The Covid-19 pandemic had an immense impact on the cryptocurrency market growth, with a massive demand being evident. A 10.0% in global growth occurred in 2020 compared to year-on-year growth in the three years prior. The market is expected to grow to 1,902.5 million U.S. Dollars by 2028.

This drastic rise in the compound annual growth rate is due to increased market demand and growth, which is expected to return to pre-pandemic levels as soon as the international crisis is over.

The rise in digital investments in venture capital and the growth of blockchain technology are the chief driving factors of the market's growth. Many countries have started utilizing digital currencies as payment methods. The fame of digital assets such as Bitcoin and Litecoin will likely increase market growth even further in the coming years.

As blockchain technology is increasingly developed and integrated to accomplish decentralization, digital currencies are utilized in the process. Blockchain technology offers advantages like security, fast and reliable transactions, and decentralization. The opportunities that the decentralized nature of the blockchain and cryptocurrencies pose are causing numerous companies to invest in crypto in order to provide quality and efficient services to their users.

The Impact Of Covid-19 On The Cryptocurrency Market

The spread of the Coronavirus resulted in the expansion of the relationship between the equity market and Bitcoin. After the U.S. S&P Index dropped severely in March 2020, Bitcoin prices dropped to under $4000. Because of the significant decrease in the Initial Coin Offering market, most blockchain enterprises seek investment funding.

Some of the largest blockchain firms, such as CipherTrace and Chainanalysis, reported cutting their budget and workforce. The economic catastrophe brought on by the pandemic caused a significant delay in the production of tokens as well as leaving various token sales without investment.

Despite these complications, Bitcoin and other cryptocurrencies have gained considerable attention in this time of uncertainty. Major centralized institutions, like banks, implemented blockchain technology into their systems and purchased crypto. The world is moving in the right direction.

It is hard to predict the long-term effects of the Coronavirus pandemic on the world's economy, but it is a justified assumption that the crypto market could sustain if Bitcoin continuously surpasses the performance of central banks and other traditional markets.

Driving Force

The Demand Of Digital Currency Is Driven By Regional Instability And Focus On Lessening The Severity Of The Financial Crisis

The financial sector and traditional banking institutions are majorly affected by the financial crisis. Financial uncertainly drops the values of currencies substantially, disturbing the economy in a very unsettling way. The value of Bitcoin and other digital currencies are barely affected by a financial crisis as their values remain balanced worldwide. Many regions with unstable financial structures may benefit greatly from cryptocurrencies as an alternative to highly-affected financial institutions.

The Demand In The Cryptocurrency Market Increases With Increasing Adoption Of Bitcoin

Bitcoin is one of the most widely known digital currencies across the world. The market increasingly grows as the interest of investors, visibility, and regulations rise. The value of the digital cash market is augmented as bitcoin cash and transaction rewards are maturing. A great number of developing countries, such as the U.S., Japan, and many European countries, are gradually becoming inclined towards decentralized digital currencies and the benefits they hold, further increasing the cryptocurrency market size.

Increasing Need For Financial Transparency

The cryptocurrency market shows great promise for growth as decentralized financial systems offer improved data transparency. Virtual currencies allow for rapid and efficient payments and secured storage of customer information readily available for future activity.

For example, in October 2020, PayPal entered the cryptocurrency market by announcing that all customers can now sell and buy bitcoin, among other digital currencies, with their PayPal accounts. The participation of such influential companies dramatically contributes to the growth of the crypto market.

The absolute transparency that blockchain technologies bring to the table boosts the adoption of crypto assets to a great extent, as it will soon replace the need for organizational solutions.

Limiting Factors

Shortcomings In Cybersecurity An The Misuse Of Digital Currency Limits The Cryptocurrency Market

Due to the decentralized nature of cryptocurrencies, activities on crypto platforms are relatively unauthorized and uncontrollable. This causes concern among regulators regarding the misuse of these digital currencies to elicit illegal activity.

Many occurrences of tax evasion, terrorist financing, and money laundering using digital money have arisen.

Investors have also become increasingly reluctant to the cryptocurrency market as cyber-attacks have resulted in the loss of huge amounts of investments.

Terrorists and criminals are naturally more inclined to make use of cash instead of utilizing the services of centralized financial institutions like banks, where they would be subjected to anti-money laundering and various compliance regulations. Therefore, it is a justified concern that criminals might conceal their financial activities by operating through decentralized applications.

Overall, the advantages of blockchain development far surpass the expenses involved in increased criminality. After all, law enforcement agencies have the right to restrict virtual currency exchanges to legislation associated with the control of criminal behavior.

Key Segments Of The Cryptocurrency Market

Segmentation By Type

The market is segmented into Bitcoin, Ether, Litecoin, and Ripple, among others. Bitcoin's popularity in the cryptocurrency market is noteworthy as it is one of the most widely used cryptocurrencies worldwide, and will likely retain its superiority status for the foreseeable future.

Ether is expanding at a sustainable rate and can be used for investing, establishing decentralized applications and smart contracts, and accounting.

Litecoin is rapidly becoming a strong competitor for Bitcoin as it serves all the same functions but operates at a much faster rate.

Ripple offers the unique feature of verifying debentures. This network creates account balances and a relationship between creditor and debtor for each Ripple user.

Other virtual currencies such as Dogecoin, Dash, and Monero also contribute considerably to the growth of the cryptocurrency market.

Segmentation By Component

The global cryptocurrency market is segmented by component into hardware and software.

Platforms such as Graphical Processing Unit and Application Specific Integrated Circuit, and Field Programmable Gate Array are further classifications of the hardware segment. These examples are the hardware implemented to make crypto mining and exchanges possible. ASIC mining hardware is currently the frontrunner in crypto mining hardware due to its high hash rate and performance when mining a given coin.

The software segment comprises exchange software, mining software, wallet, payment, etc. ECOS, BeMine, and Shamining are all examples of crypto software. Exchange software implements a trading engine to connect offers and exchanges on a single interface. As these platforms allow for the buying and selling of virtual currencies, it currently holds the largest share in the cryptocurrency market.

The expansion of exchange platforms will lead to exponential growth in the global cryptocurrency market size.

Wallets can be hardware or software wallets, but software wallets are more widely adopted because of their security advancements.

Segmentation By End-Use Analysis

The cryptocurrency market is segmented into retail, peer-to-peer payment, remittance, E-commerce, and trading, based on end-use.

The largest share of the market belongs to trading as it focuses on crypto solutions that can be applied to trading.

Many retail and E-commerce companies are starting to accept cryptocurrency as a valid payment method. For example, the German Burger King chain announced its acceptance of bitcoins as payment in 2019.

As digital currencies penetrate digital payment solutions, they will soon affect cross-border remittances. Many centralized financial institutions are migrating toward blockchain technology leading to the growth of the market.

Segmentation By Region

The cryptocurrency market is segmented across a few regions that dominate it. These regions include Europe, North America, Asia Pacific, Latin America, the Middle East, and Africa.

Most of North America utilizes bitcoins as a medium of exchange regarding tax instead of using it as a currency, attributing the largest share in the global market to this region.

Many developed countries are turning towards using digital currency for retail purposes. However, the vast amount of key bitcoin players and the popularity of Bitcoin mining present in North America put them in the lead in contributing to the growth of the crypto market.

The Asia Pacific is expected to become a close competitor due to the acceptance and development of cryptocurrency in Taiwan and Japan. Strategic collaborations in this region will make it a valuable contributor to the cryptocurrency market. This became evident by the confirmation of regulatory compliance in the Japanese market when Tao Tao Inc. and Z corporation Inc. collaborated with the financial service agency to expand the crypto market in 2020. In addition, japan accepted a new cryptocurrency exchange during the time of the pandemic.

The pandemic undoubtedly opened the door to many growth opportunities in the cryptocurrency market as people started to rethink fundamental aspects of their financial operations. Online money-generating opportunities became necessary for survival in a down-trodden economy.

In the Middle East, Dubai and the UAE are frontrunners in blockchain technology development, while countries like Saudi Arabia and Bahrain are working towards accepting digital cash in their economy by introducing digital open ledger solutions, among other measures. The central bank of the UAE announces its collaboration with the Saudi Arabian Monetary Authority in creating a digital currency that will be compatible with both institutions and work to produce secure and fast settlements.

Key Players In The Industry

Competition and market expansion have driven key players in the cryptocurrency market to implement innovative strategies to elevate their position in the market.

A List Of Major Contributing Companies Includes:

  • Bitmain Technologies
  • Intel Corporation
  • Ripple Labs
  • Xilinx
  • Nvidia Corporation
  • BitCo
  • Ledger SAS
  • Advanced Micro Devices
  • Xapo
  • Bitfury Group Limited


Which component segment will likely dominate the market?

The hardware segment is expected to lead the cryptocurrency market.

What is one of the major drivers in the market?

The increase in the adoption and acceptance of bitcoin is a significant driver in the growth of the crypto market.

Which segment holds the largest share based on end-use?

Trading currently holds the largest share in the market.

What is the expected value of the global cryptocurrency market in 2028?

The global market is expected to be worth 1,9025 U.S. Dollars by 2028.