The LATokens research team, formed by alumni of Deutsche Bank and McKinsey, have prepared the first LAT Crypto Research report, outlining how the total market capitalization of cryptocurrencies could reach US$5 trillion by 2025, with asset-backed tokens driving the growth. To read the full report, follow the link. We’ll also share the highlights with you in this post.

Total Market Cap to Reach US$5 trillion by 2025

The market capitalization of all cryptocurrencies has surged by 830% from last August, reaching US$165 billion. The adoption rate of cryptocurrencies may eventually be as high as that of cell phones and broadband Internet, thanks to the advantages of blockchain technology including low transaction costs, security, transparency, ease of cross-border transactions, and the like.

The adoption rates of new technologies significantly accelerated at the beginning of the 21st century. To illustrate, the number of crypto wallets has doubled every year since 2013. By 2025, crypto wallet penetration could exceed 5% of the world’s population.

The average wallet size today is US$9,835. We expect that by 2025 the average wallet size could exceed US$12,000, bringing the total cryptocurrency market cap to US$5 trillion. Demand for crypto will be driven by the emergence of less volatile asset cryptocurrencies.

Asset Cryptocurrencies Will Drive the Growth

According to LAT Crypto Research, the market capitalization of asset cryptocurrencies, also known as asset-backed tokens, could account for at least 80% of the total market by 2025. As their values are linked to prices of assets, ranging from equities and commodities to real estate and works of art, they combine the benefits of blockchain with advantages of investing in hard assets, like greater stability.

Today, volatility in crypto markets often makes investors reallocate funds from their crypto portfolios back into fiat and hard assets. Asset cryptocurrencies provide them with an attractive alternative, providing the same exposure while saving costs of conversion from crypto to fiat. They may become indispensable for crypto portfolio diversification.

Notable examples of tokens linked to fiat currencies are Tether (linked to USD), Digix (linked to precious metals) and tokenized shares of blue chips, along with oil and gold (find these and more listed on the LAT Platform). LAToken analysts expect the value of asset cryptocurrencies to exceed US$4 trillion by 2025, driving the growth of the crypto markets.

Trading Volume of Asset Cryptocurrencies to Reach US$40 trillion by 2025

According to LAT Crypto Research, trading volume of asset cryptocurrencies could exceed US$40 trillion by 2025, while in the longer term, it could exceed the capitalization of the corresponding traded assets by 10+ times. The current overall value of the major asset classes today is US$600 trillion, and thus the trading volume potential of asset cryptocurrencies could be as much as US$6 quadrillion.

Meanwhile, tokenization of previously illiquid assets increases their market values by 10–40% as illiquidity costs vanish. High illiquidity costs make asset tokenization a very attractive opportunity for asset owners.

LAToken is the first multi-asset tokenization platform.

We already launched trades of Real Estate LAT backed by ETF at the LAT Platform. You can buy it in your Wallet along with shares of Apple, Tesla, Google and other blue chips, as well as gold and oil, to diversify your crypto portfolio with real assets without converting to fiat.

Disclosure: This is a sponsored article.