- Jefferies analysts describe the current stage of crypto adoption as similar to the internet in 1996, suggesting there is significant room for growth ahead.
- Diversified interest from institutional investors is increasing, but most traditional funds still have little exposure to digital assets.
- The firm highlights opportunities beyond Bitcoin, encouraging focus on multiple areas including tokenization, exchange-traded funds (ETFs), and digital asset treasury companies (DATs).
- Jefferies forecasts a rise in crypto-related public offerings, predicting 10–15 initial public offerings (IPOs) in the next 18–24 months and a potential $1 trillion market sector within five years.
- The analysts recommend investors focus on tokens with practical applications and long-term utility, comparing this approach to stock-picking in the early internet era.
Jefferies, a major investment bank, told institutional clients that the digital assets sector is still in an early stage, resembling the internet’s growth phase in 1996. The company emphasized that crypto has not yet reached widespread mainstream adoption and signaled that its next phase of expansion is just starting.
Analysts at Jefferies reported strong and growing interest in crypto from diverse clients since the firm began dedicated coverage of the sector in September. According to the research team led by Andrew Moss, a common question from institutional investors is whether it is “too late” to invest in digital assets. The analysts compared the current stage of crypto to the internet in its early years, stating: “Relative to the internet, it’s 1996 for the digital asset ecosystem, and the next leg of growth has just begun.”
The firm noted that only a select number of traditional funds have exposure to crypto investments, but this is likely to change soon. Jefferies analysts highlighted rising interest in different types of crypto exposure, such as exchange-traded funds (ETFs), digital asset treasury companies (DATs), and public companies involved with digital assets. They wrote that many clients are developing strategies to allocate funds across these avenues.
The analysts urged investors to look beyond bitcoin and its original payments use case. They said that focusing solely on bitcoin prices can distract from the broader potential of blockchain technology to change entire industries. According to Jefferies, investors are considering ETFs and DATs, which could lower barriers for institutions and create demand for tokens.
Jefferies identifies several long-term growth areas for the digital asset sector, including asset tokenization—which means converting real-world assets into digital tokens for 24/7 trading—and a wave of upcoming crypto IPOs. The analysts expect 10 to 15 crypto-focused companies to go public in the next 18–24 months, projecting that crypto-related sectors could reach a $1 trillion valuation in five years.
The firm compares the situation to the early days of the internet, noting that few of the top tokens from 2018 remain leaders today, just as many pioneering internet companies later lost their dominance. The report recommends investors analyze tokens based on adoption, development, and use cases, rather than short-term revenue, echoing the stock selection approaches from the dot-com era.
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