We discussed the potential market cap of stablecoins a great deal over the last year. The gear up to the eventual passage of the GENIUS Act in the United States took speculation into reality. Many are forecasting the stablecoin market, including myself.
For over a year, I put the target at $2 trillion. Scott Bessent, the US Treasury Secretary, has put this number at over $3 trillion. Since the signing of the act into law, we saw the market cap of stablecoins jump by over $60 billion.
The process is underway. When the larger institutions, i.e. major commercial banks get involved, this will explode.
Stablecoins are not the only facet of crypto that is expected to explode over the next few years. Complimentary to this are real world assets (RWA). They are also starting to awaken people to the potential.
RWA To $2 Trillion By 2028
The pace in growth of RWAs is exceeding that of stablecoins. Naturally, this could slow as the numbers get larger but we are seeing a massive run throughout 2022.
According to RWA.XYZ, the RWA market is now at $35 billion. As we can see from the chart, it is likely there will be a a near tripling in market cap during 2025.
The year started at just over $15 billion. We could end 2025 with this exceeding $40 billion.
There are two reasons for the run. To start, some asset classes saw a nice increase in price. This has expanded the market cap. At the same time, more assets were tokenized, also feeding into the total.
Over the next couple years, the second factor is going to skyrocket.
This led one of the more astute institutions that monitors crypto to come out with this proclamation:
Standard Chartered predicted that tokenized RWAs will reach a $2 trillion market capitalization by 2028, matching the projected growth of the stablecoin supply.
We are looking at massive growth over the next 2.5 years if this forecast is correct. Actually, there is no reason why it should not unfold exactly as this institution is predicting.
Going deeper, the breakdown, according to it, is as follows:
Of the $2 trillion, $750 billion is projected to flow into money-market funds, another $750 billion into tokenized US stocks, $250 billion into tokenized US funds, and another $250 billion into “less liquid” segments of private equity, including commodities, corporate debt and tokenized real estate.
All of this seems reasonable. The benefits of tokenization are becoming known. Infrastructure is being built in a manner that will allow for larger players to enter the market. This will eventually bring liquidity, a crucial element for major institutions.
The result is a 57x increase over the next few years.
Reaching a $2 trillion market capitalization implies an over 57-fold growth for RWAs in the next three years from their current $35 billion cumulative value, according to data from RWA.xyz.
All of this is tying in together.
Stablecoins At The Forefront
It is actually the growth in stablecoins that are allowing for the potential of real world asset growth. The fact that decentralized finance (DeFi) is becoming a force should bode well for all facets of the industry.
Kendrick said the stablecoin expansion is reinforcing the broader DeFi ecosystem. “In DeFi, liquidity begets new products, and new products beget new liquidity,” he wrote. “We believe a self-sustaining cycle of DeFi growth has started.”
Many do not realize the cyclical nature of this set up. Wall Street is well aware of what happens. That is why they keep building products on top of others. While their first goal is profits, they understand the need to pull more money into asset classes, to attain liquidity levels that can satisfy the largest of players.
For RWA, since much of this is going to come from the major institutions, liquidity will soon follow. One of the challenges something that Bitcoin had was the fact that, for much of its existence, it appealing only to individuals. These tend to not be big money player. Liquidity was a problem for more than a decade.
Today, especially with the creation of ETFs, liquidity with BTC is not an issue. At the same time, the ability to swap the largest crypto for a host of stablecoins can be done.
What happens when these coins are tied to bank accounts? That means an individual can simply swap money in a bank account for BTC (or a host of other crypto tokens).
Networks such as Ethereum and Solana are likely to be big winners. They are already getting a large percentage of the stablecoin activity. With the rollout of rwa, we could see the compliment to this.
After all, this is what Tom Lee is predicting for Ethereum and why he is making such a massive bet.