The investable universe of cryptocurrency is narrowing as the industry matures, according to analysis from NYDIG. The firm’s research lead Greg Cipolaro stated that capital is concentrating on core financial applications like Bitcoin and tokenized assets, while many once-hyped non-financial use cases have failed to gain significant traction against centralized competitors.
The number of cryptocurrency applications attracting investor capital is shrinking as the sector matures. NYDIG suggests this consolidation could help identify the industry’s long-term winners.
In a recent note, research lead Greg Cipolaro said the “investable universe” is narrowing to services extending traditional finance onto blockchain. He specifically named Bitcoin, tokenized assets, stablecoins, some decentralized finance infrastructure, and a limited number of “general-purpose” blockchains like Ethereum.
Cipolaro argued that beyond these use cases, the probability of large-scale blockchain applications appears lower than previously assumed. Many once-hyped crypto use cases, such as gaming and social networking, have fizzled compared to their centralized competition.
“Centralized systems will always be faster, cheaper, and operationally more efficient for the vast majority of enterprise and consumer applications,” Cipolaro stated. He said the space for economically viable blockchain applications is narrower than early narratives hoped.
Only use cases where blockchain’s benefits outweigh its costs will survive, according to the analysis. “The core attributes of open blockchains… are uniquely suited to money and money-like (financial) applications,” Cipolaro added.
The current market reflects this, with Bitcoin growing in dominance due to little money bet on altcoins. Cipolaro said the failure of non-financial verticals suggests a consolidation of capital toward a smaller set of use cases.
“Rather than an explosion of applications, we are observing capital concentrate in a few core categories,” he noted. This narrowing could improve clarity around long-term winners, especially for Bitcoin and financial infrastructure projects.
However, it could also reduce the speculative breadth of the crypto market. Cipolaro concluded that a market anchored in monetary utility may strengthen core assets but implies a smaller total addressable scope.
