TBW - Market analysis: the crypto industry in 2003
The moment the crypto ecosystem is going through today does not look like a lasting crash or a fundamental rethink of the sector.
Eliézer Ndinga, director of research at index fund issuer 21Shares, sees it instead as a transitional stage, comparable to the situation of the web in the early 2000s, when irrational exuberance gave way to a more demanding phase focused on concrete utility. "We are not experiencing an existential collapse", he explains in a note published on 26 November. "We are in the equivalent of 2003 for the internet: the bubble is behind us, and the real construction is beginning."
According to him, one of the current pitfalls is to compare the evolution of Bitcoin or the crypto markets to the years 2020-2021, a period he describes as "a macroeconomic anomaly". The massive support measures deployed during the pandemic had created an exceptional environment: central banks injecting trillions, populations confined with time, liquidity and few investment alternatives.
In this context, both equities and crypto had benefited from speculation taken to the extreme, as had NFTs and memecoins. The purge that followed, marked by rate hikes, liquidity squeezes and scandals such as FTX, "an echo of the Enron affair in 2001", he slips in, is hardly surprising and, in his view, marks the normalisation of a market that has come of age.
Adoption reaches 700 million people worldwide
This return to equilibrium is accompanied by a clear improvement in fundamentals, often ignored because of the recent volatility. Eliézer Ndinga points out that global adoption now exceeds 700 million users (according to a recent study by Cryptocom), or around 10% of the population connected to the Internet. A level comparable to that of the web in 2003, with particularly strong momentum in emerging countries.
At the same time, the gradual entry of institutions confirms the changing nature of the market. "Several major US universities, including Harvard, now hold public positions in crypto", he points out. The wave of spot ETFs and the rise of listed companies specialising in building crypto treasuries (DATs) are also helping to structure a sector that is rapidly becoming institutionalised.
>> Digital Assets Treasuries (DATs): a good bet, really?
The underlying technology is following the same trajectory. For the head of research at 21Shares, blockchains "are nothing like they were in 2017 or 2021". He points to a spectacular rise in power, with capacity now exceeding 3,400 transactions per second in production, more than Stripe or even the Nasdaq at their historical peaks.
This shift from dial-up to broadband is paving the way for a new type of application, less dependent on storytelling and more rooted in the real economy. The line between fintech and DeFi is fading fast: Stripe is already using stablecoins as a payment rail, Klarna is launching its own digital dollar, and many banks are now exploring on-chain infrastructure as a natural extension of their services.
In this reshaping landscape, consumer applications represent the most vastly underestimated trend, in his view. Projects such as Polymarket, which is establishing itself as a global benchmark for forecasting, show that blockchain can fade behind usage, just as the web did in the early 2000s. "These are not promises. These are products that work, used on a large scale, sometimes without users knowing that they are based on blockchain," insists Eliézer Ndinga.
>> Polymarket : The champion of crypto prediction markets
"In the short term, the market is a voting machine; in the long term, it is a weighing machine"
To explain why the market still struggles to value these signals, he invokes one of the best-known phrases of American investor Benjamin Graham, known as one of Warren Buffett's greatest influences: "In the short term, the market is a voting machine; in the long term, it is a weighing machine."
The parallel with Amazon in the aftermath of the bursting of the internet bubble is, in his view, illuminating: the company posted a spectacular fall on the stock market even though its fundamentals had never been so solid. The famous letter from Jeff Bezos in 2000 is, in his view, "a key document for understanding crypto today". It was a reminder that a market can vote on emotion, but over time, only substance ends up mattering.
This is exactly what lies ahead for the sector. In the next phase of the cycle, Eliézer Ndinga believes that the survival and value of projects will depend on just one thing: their ability to generate real economic activity. Tokens, he says, rarely disappear; what does disappear is value when it is based solely on a narrative. Bitcoin, for its part, is benefiting from a more structural dynamic, supported by its monetary discipline, its growing role in the geopolitical environment and the gradual arrival of institutional investors.
In this reading, 2025 is not the end of a cycle but the entry into a period of maturity, similar to that experienced by the Internet twenty years earlier. The market votes less. It carries more weight. And for the time being, concludes Eliézer Ndinga, the balance is clearly tipping in favour of fundamentals rather than fads.
