Crypto still has the wind of retail in its sails as transactions soar
INSTITUTIONAL interest in cryptocurrency – spearheaded this year by US spot Bitcoin exchange traded funds – has witnessed the biggest cryptocurrency hit a new all-time high of $73,750.07.
Rather than being a quasi-Ponzi scheme or a hinterland for nefarious actors and criminals, Bitcoin is increasingly being viewed as a nascent emerging asset class by the citadels of institutional finance.
This year has also witnessed a resurgence in interest in the underlying decentralised ledger technology amid signs that more institutions are exploring the tokenisation of digital and non digital assets on blockchain.
As an army of suits seemingly invade a space that was previously the preserve of cypher- punks and tech geeks it is easy to lose sight of the fact that the accessibility of cryptocurrency means it remains a hive of activity for so-called retail investors.
Data shows a 145 per cent increase in transactions in Q1 2024, compared to Q1 2023, suggesting that the recent cryptocurrency rally is not purely institutional-led.
It also may suggest that while Web3 interfaces all too often remain clunky and techy, inroads continue to be made in opening up the space to users from Web2.
So what trends are we seeing in retail transactions? Tether tokens (USDt) remain in pole position, in terms of transaction volume, over the period from Q4 2023 to Q1 2024, according to Mercuryo data.
The popularity of USDt underlines the pivotal role that it plays in the digital token economy as it consolidates its position as the biggest and most liquid stablecoin.
Meanwhile, Solana leap-frogged above Ripple’s XRP in Q1 2024 to claim fifth spot among the cryptocurrencies most used for transactions.
Solana’s price has been bolstered this year amid a meme coin frenzy on the protocol. This has seen increasing numbers of users migrate to the protocol via platforms such as Jupiter, which connects users to multiple DEX's and bridges on the Solana blockchain.
Ethereum (ETH) surpassed Bitcoin in transaction usage in the period from Q4 2023 to Q1 2024, amid buoyant ETH activity. While the ETH price has underperformed the Bitcoin price over the past year, the Ethereum network remains the gold standard for NFTs and also the preeminent hub for decentralised finance (DeFi).
When speaking at ETH Global’s Pragma London event in March, Ethereum co-founder Vitalik Buterin set his sights on mass adoption. While the past decade has been characterised by “tech geeks… trying to satisfy tech geeks and create beautiful technology,” the second decade “needs to see Ethereum breaking out and having a big impact on the world,” said Vitalik.
If this is to be achieved, non-custodial wallets such as MetaMask must develop interfaces as seamless as neo-banking apps such as Revolut. Here the linkages between the fiat world and cryptocurrency must be secure with a user interface (UX) that does not alienate those who are uninformed about cryptocurrency.
Overall, the cryptocurrency market in 2024 continues to evolve. While the recent Bitcoin rally has been driven by increased interest from institutional funds against a backdrop of an evolving regulatory landscape, the space itself is becoming more accessible to the mass market.
This is born out by the increasing transaction activity that we see in digital tokens. While Bitcoin has been the focus of institutional investors, the universe of applications available to users of Ethereum and Solana via non-custodial wallets continues to gain traction.
Increasing transaction activity shows that the space continues to grow as more people are drawn to the huge potential latent in cryptocurrency.
Andrey Ilinsky is CPO at Mercuryo
