StanChart projects the total crypto market cap to increase fivefold to $10 trillion by the end of 2026.
Standard Chartered recently stated that the Republican victory in the US elections could potentially have a significant impact on digital assets. They foresee the combined market cap of these assets increasing from $2.5 trillion to $10 trillion by the end of 2026.
In their latest report, the bank highlighted how upcoming regulatory changes under the new administration could lead to wider adoption of digital assets. They believe that policy shifts and regulatory rollbacks will create a more favorable environment for these assets.
Geoffrey Kendrick, StanChart’s head of global digital assets, outlined several factors that could drive this growth.
Eliminating Restrictive Regulations
One key move anticipated by Standard Chartered is the repeal of SEC guidance SAB 121. This guidance has limited the ability of crypto custodians to offer custodial services by requiring them to list digital assets as balance sheet liabilities.
Kendrick suggested that removing SAB 121 could unlock opportunities for US banks and institutional investors to participate more freely in the digital asset market.
Additionally, stablecoins, which play a crucial role in the digital asset ecosystem, may see significant advantages. The report pointed out legislative efforts to regulate stablecoin issuance and predicted that a Republican-led administration could push these initiatives forward.
Standard Chartered views this as a vital step towards legitimizing stablecoins in traditional finance applications, potentially growing the stablecoin market cap to $1 trillion by 2026.
Bitcoin’s Projected Growth
Bitcoin is expected to maintain its central position in the digital asset space, with its price forecasted to reach around $200,000 by 2025. This growth is anticipated to be fueled by regulatory clarity and continued inflow of institutional investments.
Since the approval of US spot Bitcoin ETFs, around 400,000 BTC (approximately $25 billion) have been invested. Standard Chartered believes that as the ETF market matures, these inflows could increase, leading to a more balanced allocation between Bitcoin and gold in investment portfolios.
Looking beyond Bitcoin, the report predicts that smart contract platforms and layer 2 blockchains will experience faster growth than Bitcoin in the coming years. These platforms, facilitating decentralized applications and DeFi protocols, could grow the total digital assets market cap to $2.5 trillion by 2025.
The report also identifies Ethereum and Solana as well-positioned to capture this growth, with Ethereum possibly reaching $10,000 by 2025.
Expanding Sectors and Market Opportunities
Standard Chartered’s report highlights growth opportunities in emerging sectors such as DeFi and decentralized physical infrastructure networks (DePin). They predict that DeFi could increase its market share to $700 billion by 2026 as regulatory hurdles are removed.
Other categories like gaming, tokenization, and consumer-focused decentralized social networks are expected to expand, contributing to a category that could achieve a market cap of $1.5 trillion by 2026.
Overall, the bank’s outlook suggests a potential “crypto summer” period characterized by increased valuations of existing assets and the emergence of new sub-sectors. They attribute this growth to favorable policy changes, rising institutional interest, and evolving blockchain use cases.
If the anticipated regulatory environment materializes, Standard Chartered predicts a significant increase in mainstream adoption and market capitalization of digital assets in the next few years.
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