Capturing the multitrillion-dollar Digital Asset market (2024)

May 30, 2024

By 2030 the majority of value will be transacted in the form of Digital Assets, and the race to capture the upcoming demand is on full speed.

Native Digital Assets companies, FinTechs, and traditional financial services institutions are in a rush to establish themselves as the go-to interface that can capture this growing demand. Consumer interest in Digital Assets is on the rise, driven by the promise of higher risk-adjusted returns, the ability to diversify away from traditional financial markets, and novel opportunities to earn passive income (e.g., through staking).

Several key trends are poised to significantly accelerate Digital Asset adoption:

1. Macroeconomic Shifts: Anticipated Federal Reserve rate cuts and inflation in certain fiat currencies could increase Digital Assets' market capitalization as safe havens.
2. Retail Trading Growth: Retail interest in Digital Assets has increased significantly, as evidenced by a significant jump in potential investors from 3% in 2021 to 23% in 2024.
3. Regulatory Clarity: About 70% of key countries now have clear Digital Asset legislation, reducing investment uncertainties and fostering global adoption.
4. Institutional Adoption: The success of Bitcoin ETFs and new offerings from traditional banks evidence increasing institutional involvement.
5. Tokenization: The potential market for tokenized real-world assets could reach approximately $10.9 trillion by 2030, enhancing liquidity and accessibility.

The six customer archetypes for Digital Assets

Given the variety of Digital Asset customers, it is important for companies to fully understand their needs to formulate a winning strategy. These archetypes differ across the experience level, each having unique characteristics in terms of product needs, preferred assets, price sensitivity, custody preference, transaction frequency, and risk appetite. In the full report, a detailed overview of the main customer archetypes and their needs it provided.

The race to capture this demand is on

Who will capture this market and serve which archetype? Already today we look at a broad range of players, each with their own natural USP and customer focus group. We classified the main incumbents in seven categories:

1. Centralized Exchanges (CEXs): Dominating the market with advanced trading options and ecosystem expansions, CEXs cater to sophisticated traders and handle most daily transactions.
2. Brokers and Neobrokers: These platforms blend traditional and digital trading, making Digital Assets accessible to conventional and new retail investors through user-friendly services.
3. Decentralized Exchanges (DEXs): DEXs offer wallet-to-wallet trading, with innovations improving liquidity and transaction efficiency. They attract traders who value privacy and financial sovereignty.
4. Banks and Neobanks: Incorporating Digital Assets into traditional banking, focusing on regulatory compliance and seamless service integration, particularly for institutional clients.
5. Wallet Providers: Transitioning from simple storage to platforms supporting direct DeFi interactions, targeting advanced users.
6. Payment Service Providers (PSPs): Facilitating Digital Asset adoption in commerce, enhancing transaction efficiency with modern blockchain solutions .
7. Infrastructure Providers: They provide the technical foundations for businesses in the Digital Asset space, offering customizable solutions to reduce complexity and time-to-market.

Conclusion: The Digital Asset market is rapidly evolving, requiring entities to adapt quickly and develop effective strategies to maintain a competitive edge.

Dedicated strategies are needed

In the competitive world of Digital Assets, having a clear, well-thought-out strategy is key to carving out a significant market share. The cornerstone of devising such a strategy can be done by defining four critical components:

• Defining the product offering (What?)
• Identifying the target customer segments (Who?)
• Selecting the appropriate markets or geographies for deployment (Where?)
• Crafting a sustainable competitive edge (How?)

Each of these elements serves as a fundamental building block in constructing a comprehensive strategy that not only addresses the current market landscape but is also agile enough to adapt to its evolving dynamics.

Our dedicated Digital Asset Team spans across many geographies and has in-depth market and value chain experience to ensure the best support for your Digital Asset strategy and implementation. Reach out to us to discuss the opportunity for your company. We look forward to engaging with you.