The number of promising crypto projects is dwindling, with capital increasingly focusing on blockchain solutions for traditional finance. This is the conclusion drawn by analysts at NYDIG.

Investor Priorities and the Decline of Web3

Greg Chipolaro, head of research at the company, highlighted several areas that still hold potential:

  • Bitcoin and stablecoins;
  • Tokenized assets;
  • Some parts of the DeFi infrastructure;
  • Base networks (L1) like Ethereum. 

Investors have noticeably cooled towards crypto games, metaverses, and decentralized social networks. It has become clear that centralized alternatives are faster, cheaper, and more efficient.

According to Chipolaro, the characteristics of open networks are ideally suited for monetary transactions. Most everyday applications do not require a global immutable ledger. The concept of Web3 in its broad sense is gradually fading away.

Market behavior supports this thesis: Bitcoin's dominance has surged to record levels. In previous cycles, capital typically flowed into altcoins at the peak of growth, but this has not happened in the current phase.

Departure from Cypherpunk Ideology

The trend towards merging with traditional economics raises concerns among some in the community. Evgeny Gaevoy, founder of the market maker Wintermute, believes that the industry has traded its roots for the pursuit of rising valuations.

He argues that full integration with Wall Street contradicts the original goals of cryptocurrencies. Stablecoins, for instance, do not create an independent system but merely reinforce the dominance of the US dollar. Gaevoy is convinced that the industry needs to return to its foundational ideology.

He also emphasized the gap between financial metrics and actual utility: despite Ethereum's total value locked (TVL) exceeding $120 billion, the actual and widespread use of decentralized applications remains "extremely limited."

“Outdated Metric” of Coinbase Premium

Chipolaro believes that the price difference of Bitcoin on Coinbase (in dollars) versus Binance (in USDT) sends misleading signals. This metric reflects fluctuations in the stablecoin's value against the dollar rather than actual investor demand for cryptocurrency.

Adjusted data presents a different picture. Offshore investors are not just selling Bitcoin for stablecoins; they are offloading Tether and completely withdrawing capital from the industry. This explains the decline in USDT supply since the beginning of the year.

Corporate Crypto Strategy Crisis

DAT companies, originally created as simple tools for investors to purchase cryptocurrencies, are changing their strategies.

Now, these firms are concealing the volumes of shares issued and are acquiring non-core assets—from securities to leasing contracts for aircraft engines. Essentially, they are transforming into actively managed funds without having professional teams in place.

NYDIG analysts believe that treasuries need to decide: return to transparent Bitcoin accumulation or become open investment funds with strict reporting requirements.

As a reminder, according to a JPMorgan survey, the largest family offices in the world have placed their bets on artificial intelligence, leaving cryptocurrencies overlooked.