NYDIG Claims Investable Crypto Universe Is Shrinking

NYDIG research lead Greg Cipolaro stated in the note that the “investable universe” of crypto is shrinking to applications that “extend traditional finance products onto blockchain infrastructure.” He identified the most viable categories as Bitcoin (BTC), tokenized assets, stablecoins, and certain decentralized finance (DeFi) infrastructure. Cipolaro noted that many previously hyped use cases, including blockchain-based gaming, social networking, and the metaverse, have largely fizzled out when compared to their centralized competition.

According to Cipolaro, the shift is happening because centralized systems “will always be faster, cheaper, and operationally more efficient for the vast majority of enterprise and consumer applications.” He argued that the core attributes of blockchains, such as trustlessness and censorship resistance, are uniquely suited for financial applications. Most real-world applications do not require global, permissionless state machines with immutable ledgers, he wrote. This reality is causing capital to concentrate in a few core categories where blockchain provides a distinct advantage.

This narrowing focus, Cipolaro suggested, could improve durability and clarity around long-term winners, especially for Bitcoin and projects building financial infrastructure. However, he also cautioned that it could reduce the “speculative breadth” of the crypto market and compress the capital that typically flows into alternative assets. The note concluded that while a more focused market may strengthen core assets, it also implies that crypto’s total addressable scope could be materially smaller than once projected.

The NYDIG analysis points toward a continuing trend of capital concentrating in a smaller set of financially-oriented blockchain applications. The market may evolve into a more “sober” state, anchored in monetary and financial utility rather than the broader, more ambitious “web3” vision that once attracted significant investment.