Considering Bitcoin was launched in 2009, the broader crypto market is still an emerging sector. In this guide, we evaluate the future of crypto in the next 5 years.
Not just from a price perspective, but also technological, adoption, and regulatory developments. Read on to discover where the crypto sector is headed in the coming years.
The Future of Crypto in the Next 5 Years: Key Takeaways
- The broader crypto market is expected to rise exponentially in the coming years. By 2030, ARK Invest CEO Cathie Wood believes Bitcoin will be worth $1.48 million. This will help altcoins reach new heights.
- Broader adoption of Bitcoin is expected, as more people become aware of its benefits. Not just as a store of value and investment product, but also as a medium of exchange.
- From a regulatory standpoint, crypto will likely attract comprehensive legislation in major economies. This will help the crypto sector grow, especially in the institutional space.
- As adoption rates rise, there will be increased scrutiny of scalability and fees. Layer 2 solutions could be a lot more mainstream, ensuring blockchain networks offer a smooth user experience.
- Multiple crypto niches will become fully-fledged industries, including play-to-earn gaming, decentralized finance, and real-world tokenization. These narratives are already seeing major interest from retail and institutional investors.
What Could the Crypto Landscape Look Like in 5 Years Time?
Five years is a long time in the crypto sector. Consider that five years ago, Bitcoin hit lows of $3,000. It has since surpassed $70,000, translating to explosive growth of over 2,200%. The altcoin space has witnessed even larger gains. Five years prior, the total value of all altcoins was approximately $55 billion. Today, altcoins operate in a trillion-dollar market.
So that begs the question: What is the future of crypto in the next 5 years?
From a price perspective, most market commentators believe that crypto valuations will be worth considerably more. Bitcoin has every chance of surpassing gold’s market capitalization. What’s more, there will be continued investment from the institutional space — considering we already have fully-fledged Bitcoin ETFs. The will likely be ETF markets for other coins, too, such as Ethereum and Bitcoin Cash.
There will be another Bitcoin halving in 2028, too. This will reduce the Bitcoin mining reward to just 1.5625 BTC, meaning further supply constraints. All that being said, crypto will likely be a heavily regulated sector in the next five years. Expect to see crypto-specific legislation in most major economies, especially the US and the EU. Already, we have the MiCA regulation in the EU setting a global standard, and more countries will follow suit.
Another growth area will be adoption. According to a TripleA study, just 4.2% of the global population owned crypto in 2023. This reinforces just how nascent the crypto sector is. In terms of smart contract ecosystems, it will be interesting to see which network has the de-facto status. Some believe that Solana could eventually replace Ethereum as the dominant player. That said, interest in layer 2 networks continues to rise, so this could be Ethereum’s long-term solution.
Within the broader crypto sector, several trends are expected to play a major role. This includes decentralized finance, covering loans, savings accounts, trading, and tokenized assets. Gamification and artificial intelligence projects are also expected to do well. Ultimately, there will be a much greater push toward wider decentralization, so this is an area to keep an eye on.
Bitcoin Over the Next 5 Years
When exploring the future of crypto in the next 5 years, Bitcoin will remain the de-facto market leader. But how valuable will Bitcoin become? Some price predictions believe that Bitcoin will eventually replace gold as the global store of value. Based on current prices, Bitcoin has a market capitalization of $1.3 trillion.
Gold is estimated to be worth $13 trillion. This means Bitcoin would need to increase 10-fold, giving it a $700,000 value. This is more than feasible over a 5-year period, especially considering the 2024 and 2028 Bitcoin halving events are still to come.
We mentioned that Cathie Wood predicts a $1.48 million Bitcoin price in 2030. If this prediction is true, Bitcoin would more than double gold’s market capitalization. But this is just one opinion.
Another area to explore is the Bitcoin rainbow chart. This offers a visual interpretation of Bitcoin’s price movements over time. It uses color bands to determine broader sentiment and predict where Bitcoin will be in the coming years.
According to Coincodex’s rainbow chart, Bitcoin could have a maximum bubble territory of almost $940,000 in 5 years. The rainbow chart also shows there will be plenty of buying opportunities along the way. Based on today’s chart, Bitcoin is currently in the ‘HODL’ phase. However, these Bitcoin price predictions are subjective and should be taken with a grain of salt.
Bitcoin Halving & Its Effects on the Wider Market
Bitcoin halving events are very important, not only for Bitcoin itself but also for the broader crypto market. This is because Bitcoin becomes more scarce, reducing the supply of newly minted coins.
The Bitcoin halving event takes place every 210,000 blocks. The average time per block is 10 minutes, so the halving event happens approximately every 4 years. The next Bitcoin halving will happen in April 2024. If previous halving cycles are repeated, this will create new all-time highs for the broader industry.
- For example, Bitcoin was trading at $9,100 on the 2020 halving date. It peaked at about $69,000 the following year.
- Similarly, Bitcoin was worth $662 when it halved in 2016. By the end of 2017, Bitcoin was trading at just under $20,000.
The bull cycles that follow Bitcoin halvings have also resulted in altcoin prices exploding. For instance, the market capitalization of all altcoins was about $66 billion when Bitcoin halved in 2020. Toward the end of the bull cycle in 2021, altcoin valuations surpassed $1.6 trillion. That’s an increase of almost 24x.
Crypto Technology Innovations
Technological innovation will spearhead the future of crypto in the next 5 years. First, as Bitcoin adoption increases, there could be a much larger number of transactions going through the Lightning Network. This will create a much smoother marketplace. The Lightning Network aims to handle billions of transactions per second. What’s more, transactions take milliseconds to confirm, and fees cost a small fraction of a cent.
There will also be increased innovation in the decentralized finance space. This will make everyday financial services accessible on a global scale — especially in developing nations. Some of the core decentralized finance products include loans, micro-transactions, lending, savings accounts, and trading.
Web 3 could also be a major force in the next 5 years. This will include niches like the Internet of Things (IoT), metaverses, and gamification. These ecosystems will be backed by smart contracts and decentralized applications. However, with increased Web 3 adoption comes increased transactional requirements.
This means there will be even more scrutiny on scalability and fees. Ethereum could still be the dominant smart contract ecosystem. It will likely rely on layer 2 solutions to achieve efficiency, such as Base, Arbitrum, and Polygon. That said, there could also be increased market share for Solana and Avalanche.
Some other key technological innovations over the next 5 years include:
- Interoperability: The broader Web 3 sector will require interoperability solutions. This means different blockchains will be able to communicate and share data, fueling the IoT growth.
- Oracles: There will also be a much larger reliance on Oracles, which provide offline data to smart contracts. This will bridge the gap between blockchain ecosystems and the real world.
- Quantum Resistant: Quantum computing is growing at an alarming rate. In 5 years, we will likely see more blockchains that are resistant to quantum capabilities. This ensures that blockchains remain secure.
- Energy Efficiency: The world is becoming a greener and more sustainable place. The crypto sector must align with these societal goals. In particular, there will be a greater push to make blockchains more energy efficient.
Cryptocurrency Regulation Over the Next 5 Years
When exploring the future of crypto in the next 5 years, the regulatory framework will likely be a lot different than today. As mentioned, major economies will likely have crypto-specific legislation covering a variety of topics. This could include everything from securities laws and investor protection to taxation and financial crime.
Now, the key issue is that crypto is a global, borderless asset class. Unlike fiat money, it isn’t backed by any central bank or government. This makes regulatory enforcement challenging. As such, we could see harmonization on a global basis. This could mirror the way anti-money laundering (AML) regulations are installed.
For instance, the process starts with the Financial Action Task Force (FATF) — which is the global standard setter for AML legislation. The FATF’s recommendations are enacted into domestic legislation in most countries. We could see something similar in the crypto space, where a global body is created to ensure a smooth regulatory landscape.
While a controversial topic in the crypto sector, we could also see the development of central bank digital currencies (CBDCs). Both the US Federal Reserve and the European Central Bank are exploring CBDCs, so expect progress in the coming years.
How Could AI Affect Crypto in the Future?
Artificial intelligence (AI) and the future of cryptocurrency go hand in hand. This is why AI was one of the top-performing crypto niches in the prior year. This trend is expected to continue throughout the 2024/5 bull cycle.
Some of the best AI coins to watch include:
- NEAR Protocol
- Bittensor
- Render
- The Graph
- Fetch.ai
That said, AI will have a much broader role in the crypto space — especially in the next 5 years. It will likely fuel a range of products and services for the everyday investor:
- Security: AI will make the crypto sector a much safer place. For instance, it can help identify fraudulent projects in real time by analyzing smart contracts and other public data. AI can also enhance phishing prevention and improve biometric security, not to mention detect network vulnerabilities and attacks.
- Trading: AI can help novice investors make smart trading decisions. These decisions can be unique to the individual, tailoring to their investment goals and risk tolerance. AI can also help automate portfolio management, such as rebalancing. On a broader scale, AI will also offer robust predictive models. These will help investors predict the crypto markets with a lot more certainty.
- Financial Crime: AI will also assist financial intelligence units (FIUs) in detecting and preventing crypto-related crimes. This will include advanced blockchain forensics, helping FIUs track and recover stolen funds.
Other Crypto Trends to Watch
In addition to AI, other narratives will play a role in the future of cryptocurrency.
This includes real-world asset (RWA) tokens, which enable blockchain networks to tokenize physical assets. This will make the broader financial landscape more accessible.
- For example, consider a new hotel project with a $10 million capital requirement.
- The hotel could be tokenized into 100,000 units.
- This would value each unit at just $100.
- Meaning people could own a share of the hotel for just $100.
RWA tokens can be applied to any asset, such as fine art, rare whiskey, commodities, and luxury cars.
Another trend that could be huge in 5 years is gamification. According to Grand View Research, the global gaming market will be worth over $504 billion by 20230.
However, there’s a major shift toward play-to-earn gaming, where players own in-game assets. Players can also earn crypto tokens and NFTs, ensuring the entire ecosystem is transparent and fair. Gamification projects did very well during the prior bull market. However, much larger growth could be seen in the coming years.
Crypto Price Predictions Over the Next 5 Years
If you’re wondering how big crypto could get in the next 5 years, it’s worth exploring some price predictions.
- Cathie Wood (ARK Invest): We mentioned earlier that Cathie Wood’s Bitcoin price prediction for 2030 is $1.48 million. Wood also has a bold prediction for Ethereum. The 2030 forecast is a $20 trillion market capitalization, valuing Ethereum at approximately $170,000.
- VanEck: According to the investment management firm VanEck, Ethereum will be worth $11,800 in 2030. This is a much more modest outlook when compared to Wood. From current prices, $11,800 would highlight an increase of just over 3x.
- Mike McGlone (Bloomberg Intelligence): A modest forecast is also seen by Bloomberg Intelligence analyst Mike McGlone, who believes that Bitcoin will be worth just $100,000 in 2030.
Crypto price predictions are subjective, so shouldn’t be taken as investment advice.
Challenges & Risks Facing the Crypto Market
While the crypto market has a bright future ahead, the sector isn’t without its risks.
One of the biggest risks is another FTX bankruptcy, which saw billions of dollars of client-owned funds ‘disappear.’ FTX founder Sam Bankman-Fried has since been sentenced to 25 years in Federal prison. One positive to come from the FTX saga is an increased focus on proof of reserves. This verifies that crypto exchanges have enough crypto assets to cover client balances.
That said, crypto-related crimes continue to rise. This includes scams, market manipulation, phishing, wallet hacks, and Ponzi Schemes. Another risk is linked to stablecoins — especially from a regulatory standpoint. For example, algorithmic stablecoins are now banned in the EU. Stricter rules are also expected on asset-backed stablecoins.
Energy intensity is another huge challenge facing the crypto sector. Although Solana, Ethereum, and other networks are considered energy-efficient, this isn’t the case with Bitcoin. As reported by the U.S. Energy Information Administration, Bitcoin’s 2023 energy consumption amounted to 0.2-0.9% of global demand.
Conclusion
We’ve explored the future of crypto in the next 5 years. There’s lots to look forward to, including additional Bitcoin halvings, technological innovation, and increased global adoption. Some challenges are also present, such as Bitcoin’s energy inefficiency and more stringent regulations.
Nonetheless, if you’re yet to build a portfolio of top-rated coins, check out our guide on the best cryptocurrencies to buy. We cover a range of exciting projects that could blow up in the coming years.
References
- Cryptocurrency Ownership Data (TripleA)
- Markets in Crypto-Assets Regulation (MiCA) (ESMA)
- Can bitcoin really replace gold and its $13 trillion market cap? (The Street)
- Why Decentralised Finance (DeFi) Matters and the Policy Implications (OECD)
- The FATF Recommendations (FATF)
- Gaming Market Worth $504.29 Billion By 2030 (Grand View Research)
- Tracking electricity consumption from U.S. cryptocurrency mining operations (U.S Energy Information Administration)
