Surviving the Crypto Dip: An Asset Class Demonstrating Unyielding Strength… not memecoins 😏!
Much of the market is currently experiencing a downturn. There are many opinions on why this is happening, but I believe it generally relates to liquidity. Many in the market expected rate cuts to start by now, but Chairman Powell has dampened that expectation, leading to uncertainty. This uncertainty is contributing to the declining prices of Bitcoin and altcoins.
However, there is a lot of positive information that is quite bullish for the season. When Ethereum ETFs finally launch, I believe we will see a spark and a rise in the broader crypto markets. Considering all this, I want to highlight a category of crypto that remains strong despite the current market correction: the tokenization of real-world assets (RWAs). This is a real and inevitable development.
Tokenization of RWAs has seen significant growth and is poised to revolutionize various sectors. The market for tokenized assets is projected to reach $16 trillion by 2030, unlocking liquidity for previously illiquid assets such as real estate, commodities, and fine art. Tokenized assets are expected to account for 10% of global GDP by 2030, illustrating their growing importance and adoption across industries.
The cost savings associated with tokenization are substantial. Companies can save up to $20 billion annually in global clearing and settlement costs by utilizing blockchain technology and tokenized assets. Additionally, asset managers could save approximately $2.7 billion per year just in the process of buying and selling funds due to the efficiencies introduced by distributed ledger technologies.
As of 2023, the market for tokenized assets was valued at $18.1 billion, with the most common types being real estate and equities. Platforms like Polymesh and OriginTrail are leveraging blockchain to enhance trust and transparency in sectors such as supply chains, healthcare, and construction. For instance, OriginTrail uses its Decentralized Knowledge Graph (DKG) to facilitate secure and verifiable data exchange, making it a key player in RWA tokenization.
Another promising project is Pendle, which allows users to tokenize yield-bearing assets, separating them into Principal Tokens and Yield Tokens. This approach enables advanced yield management strategies and has recently expanded to include RWAs like U.S. Treasury Bonds, bridging the gap between decentralized finance (DeFi) and traditional financial instruments.
With the tokenization of RWAs gaining traction, it’s essential to get involved early. The infrastructure supporting RWA tokenization includes robust legal frameworks, secure identity verification processes, and innovative blockchain standards such as ERC-3643, which ensures compliant transactions for security tokens.
The good news is that I’ve been covering the tokenization of RWAs since before Larry Fink brought the notion to the mainstream financial world. Most of the projects I’ve mentioned have done quite well already. If you want to find out which projects I’ve already covered, just browse through my past articles. There are a couple of other real-world asset projects with low market caps that I think are going to do well, which I will detail in a following update market [Alpha Alert] in the title.
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*My blah blah blah disclaimer: I am not a financial advisor and cannot provide investment advice. Cryptocurrencies and investing, in general, involve risk, and individuals should conduct their own research and consider their personal financial situation before making any investment decisions.
