Crypto Is Going After Really Big Markets

Crypto is tackling some of the largest addressable markets in the world. Understanding this changes how you invest.

One of the biggest mistakes crypto skeptics make is underestimating the size of the markets crypto aims to disrupt. It causes them to dismiss things they should take very seriously.

For instance: Bitcoin is a $2.3 trillion asset. When people hear that, they’re often surprised. There are very few things worth $2.3 trillion, and most of them are household names. Amazon is worth $2.3 trillion, for example. But Amazon is a service many people use every day, while bitcoin is not.

So why is bitcoin worth $2.3 trillion? Because it’s going after a very large market. Gold is a $25 trillion asset, and bitcoin is (among other things) competing with gold.

This is critical to its investment thesis.

Imagine you had two startups: One trying to disrupt Amazon and the other trying to disrupt gold. To be worth $2.3 trillion, the Amazon disruptor would need to take 100% of the market, forcing the Seattle-based giant into bankruptcy. Good luck with that. But if that startup were instead seeking to disrupt gold, it’s a vastly different story: To hit $2.3 trillion it would need to capture less than 10% of that market.

Bitcoin is not the only example of this.

Blockchains like Ethereum and Solana are competing for the issuance, trading, and settlement of stablecoins and tokenized assets, among other things. These are enormous markets. According to McKinsey, the global payments industry processes 3.4 trillion transactions worth $1.8 quadrillion each year. Estimates from SIFMA and Savills peg the combined value of stocks, bonds, and real estate at $665 trillion.

Trillions? Quadrillions? These are among the largest addressable markets in the world.

The markets are so large, in fact, that no single, centralized company could dream of capturing more than a small fraction of them. But Ethereum and Solana are different. As decentralized supercomputers with global scale, they have a real shot at taking major share. That’s why they are worth ~$500 billion and ~$100 billion, respectively.

Tether’s Valuation

I was reminded of this phenomenon recently when news broke that stablecoin issuer Tether was trying to raise money at a $500 billion valuation. This would make Tether one of the most valuable startups in the world, in line with OpenAI and SpaceX.

On one hand, this is absurd. OpenAI is working to create artificial general intelligence and SpaceX wants to put people on Mars. Tether basically runs a digital money market fund.

But Tether is targeting a very large market. It has a nearly 100% share of the stablecoin market in non-Western countries. There’s a chance that many emerging market countries will convert from primarily using their own currencies to using USDT. If that happens, Tether could end up managing trillions of dollars and capturing all of the interest.

For context: In 2024, Saudi Aramco turned in the most profitable year in corporate history, earning $120 billion. At current interest rates, if Tether got to $3 trillion in assets—about 3% of the global money supply—it would top that, becoming the most profitable company in history.

This Should Change How You Invest

Knowing that crypto is targeting very large markets changes a few things.

First, it opens investors’ eyes to crypto’s upside. These are some of the largest and most important markets in the world. There’s a big difference between going after Amazon and going after the entire market for global payments.

The second impact: It makes many investors want to diversify.

Investing in crypto is like investing in early-stage startups: You’re hunting for black swans. If you find one, the return potential is massive. But you have to expect many of your investments will fail. Even the large ones. Ethereum, Solana, Ripple, Aave, Hyperliquid, Chainlink: Nearly every crypto project in existence could fail. In fact, my guess is there will be more billion-dollar-plus failures in crypto than in any other industry in history.

But I expect those will come alongside enormous successes. (This is one of the reasons I love Bitwise’s crypto index fund.) Diversification changes the question from “Which crypto asset will succeed?” to “Will crypto matter more in five years, or less?”

If you have five minutes today, I encourage you to read the essay Black Swan Farming by Y Combinator founder Paul Graham. It talks about the economics and strategy of investing in projects with enormous potential. If you’re investing in crypto, this is what you’re doing.

Act accordingly.

Risks and Important Information

No Advice on Investment; Risk of Loss: Prior to making any investment decision, each investor must undertake its own independent examination and investigation, including the merits and risks involved in an investment, and must base its investment decision—including a determination whether the investment would be a suitable investment for the investor—on such examination and investigation.

Crypto assets are digital representations of value that function as a medium of exchange, a unit of account, or a store of value, but they do not have legal tender status. Crypto assets are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not currently backed nor supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional currencies, stocks, or bonds.

Trading in crypto assets comes with significant risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks and risk of losing principal or all of your investment. In addition, crypto asset markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing.

Crypto asset trading requires knowledge of crypto asset markets. In attempting to profit through crypto asset trading, you must compete with traders worldwide. You should have appropriate knowledge and experience before engaging in substantial crypto asset trading. Crypto asset trading can lead to large and immediate financial losses. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price.

The opinions expressed represent an assessment of the market environment at a specific time and are not intended to be a forecast of future events, or a guarantee of future results, and are subject to further discussion, completion and amendment. The information herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice, or investment recommendations. You should consult your accounting, legal, tax or other advisors about the matters discussed herein.