For a few days now, I have been thinking about how long the rapid growth in the crypto market can last. In the past few weeks, the total market cap of cryptocurrencies has reached 3 trillion dollars. At the time of writing this article, the total market cap is $2.35 trillion.

The total value of the crypto market is increasing by an average of 2.4 times per year. It is unbelievable that such a growth rate has been sustained over the past 10 years. The flow of funds into the crypto market continues and is unlikely to slow in the foreseeable future.

I made my first crypto investment in 2018. At that time, some people argued that Bitcoin was the biggest Ponzi in history. On July 8, 2018, I published an analysis called Bitcoin Price Analysis From a Long-Term Perspective on Steemit. In the analysis, I examined historical Bitcoin prices within the scope of 4 different models and presented Bitcoin price predictions for the following year.

At the end of the article, I stated that according to Occam's Razor principle, one of the first two models, which were simpler, should be valid. Today, we know that the second model, in which prices increase exponentially, is valid. The model, in which prices increased exponentially, predicted that the price of Bitcoin would double every year. Today, I made a Bitcoin price prediction for December 2021 using that model I produced in July 2018 and I reached the figure of $ 53,264. (Bitcoin price projection models didn't exist at that time, or at least they didn't become popular. I didn't invest according to the model I produced either, I wish I believed in the model.)

Exponential increases are mostly seen in the middle of an S-shaped curve. First, they spawn and gain speed, then continue for a while, and eventually, the line becomes horizontal again. It is not possible for the exponential increase to continue for very long because at some stage there is a shortage of resources to support the increase.

The flow of funds is needed to support the exponential growth in the cryptocurrency market. In this context, it may be appropriate to review the total monetary value in the world. According to World Bank data, the world's total GDP in 2020 was $84.6 trillion. This figure represents the total income generated in the world in a year.

According to the McKinsey report released last month, the total assets in the world were $440 trillion in 2000. In 2020, total assets reached 1540 trillion dollars.

The report examines $1540 trillion in assets in three sections:

• Financial assets held by the financial sector: 510 trillion dollars
• Financial assets held by households, assets, and nonfinancial: 510 trillion dollars
• Nonfinancial assets: 520 trillion dollars

It has been a long-debated issue in which asset class to categorize cryptocurrencies. Considering the Defi applications, we can say that crypto is a candidate to get a share from the first two categories of financial assets. According to the report, land and buildings constitute 68% of nonfinancial assets. The rest are assets such as mines, machines, items. Considering the metaverse craze experienced these days, we can predict that the crypto market will take a share from here as well.

As a result, cryptocurrencies seem to have the potential to take a share of a large portion of the world's $1.540 trillion assets. At this stage, I would like to reiterate that the current size of cryptocurrencies is $ 2.35 trillion and the crypto market is growing by an average of 2.4 times every year. This picture shows us that cryptocurrencies can sustain their exponential growth for at least 7 more years. This account shows us that by 2028, the total size of the crypto market could reach $1,076 trillion.

History never follows a straight line and events do not happen automatically. The realization of the above scenario will depend on the continuation of innovations in the crypto world. In addition, as the flow of funds to crypto continues, it seems inevitable that prices will get out of control and rise towards the moon. And it is not difficult to predict how devastating the subsequent price collapse will be. Because at some point, people will realize that in the first half of the 21st century, the way to accumulate wealth is crypto.

In 2017, the crypto market had grown 34 times. Since institutional investors will be involved in the next bull rally, it is not difficult to predict that the wavelength will not be that high.

Is it appropriate to make such precise judgments about future events? Does the fact that prices have increased within a certain trend in the past indicate that they will increase in the future?

In order to create a balanced view, I would also like to touch on the risks faced by the crypto market. When it comes to crypto, the first risk that comes to mind is regulations. The concern that other countries will comply with the bans imposed by China on crypto has been cited as the reason for the recent price declines. It seems unreasonable to me for any democratic state to block a value-creating system. It seems more appropriate to make partial regulations rather than a ban. Thus, the states also get tax revenue on the resulting value.

The use-value created by cryptocurrencies is intertwined with the effect of the pyramid scheme. When prices begin to decline, rapid price declines are experienced especially in cryptocurrencies with low use-value. Such setbacks can hinder the development of new technologies and concepts. However, it should be noted that this is not an existential risk for crypto.

The rapid development of information technologies stands out as the main source that feeds the crypto world. Progress in this field is largely achieved by downsizing technological devices. The size of the processors, for example, has approached the physical lower limits. The slowdown in the development of information technologies may also negatively affect the crypto world.

Although proof-of-stake cryptocurrencies are more energy-efficient, crypto's impact on the environment through energy consumption is also a risk factor.

Conclusion

Despite all the risks I have listed above, I cannot envision a scenario where the crypto industry has lost its importance. It would be like envisioning a future without the internet.

While I am not 100 percent sure that an average 2.4x annual increase in crypto total market cap will continue, I have no doubt that the crypto industry will play a central role in the future.

Thank you for reading.