StanChart projects total cryptocurrency market capitalization to increase fivefold to $10 trillion by the end of 2026.

Standard Chartered indicated that the recent Republican victory in the US elections could act as a significant driver for digital assets, potentially increasing their total market capitalization from $2.5 trillion to $10 trillion by the conclusion of 2026.

The bank’s recent report details how expected regulatory changes under the new administration may facilitate the mainstream acceptance of digital assets, as policy adjustments and regulatory relaxations create a more conducive environment.

Geoffrey Kendrick, the head of global digital assets at StanChart, highlighted several crucial elements that could impact this growth path.

Revoking restrictive regulations

Standard Chartered predicts that initial actions by the administration may involve revoking SEC guidance referred to as SAB 121. This guidance has mandated that crypto custodians classify digital assets as liabilities on their balance sheets, restricting their capacity to provide custodial services.

Kendrick suggested that the removal of SAB 121 could enable U.S. banks and institutional investors to participate more freely in the digital asset market.

Stablecoins, which have become an increasingly vital component of the digital asset landscape, may also experience considerable advantages. The report emphasized recent legislative initiatives aimed at establishing regulations around stablecoin issuance, noting that a Republican-led administration could advance these efforts.

Standard Chartered views this as a pivotal move for legitimizing stablecoin usage in traditional financial applications, such as cross-border transactions and USD savings, with the potential to elevate the stablecoin market cap to $1 trillion by 2026.

Bitcoin’s $200,000 forecast

Bitcoin (BTC) is anticipated to remain a key asset in the digital realm, with its price projected to reach approximately $200,000 by 2025, fueled by a mix of regulatory clarity and ongoing institutional investments.

Following the approval of US spot Bitcoin ETFs earlier this year, net inflows have totaled around 400,000 BTC, equivalent to roughly $25 billion.

Standard Chartered believes these inflows could further accelerate as the ETF market develops, potentially enhancing investment portfolios with a more balanced distribution between Bitcoin and gold, as per the bank’s analysis.

In addition to Bitcoin, the report forecasts that smart contract platforms and layer 2 blockchains, which support decentralized applications and DeFi protocols, will appreciate at a quicker pace than Bitcoin in the coming years.

This sector currently constitutes about 25% of the overall digital assets market cap and has the potential to expand to $2.5 trillion by 2025 as these platforms benefit from a growing range of end-use applications.

The lender notes that Ethereum (ETH) and Solana (SOL) are particularly well-positioned to seize this growth, with Ethereum potentially reaching $10,000 within the same timeframe.

Prolonged ‘Crypto Summer’

The report further discussed growth prospects in emerging areas such as DeFi and decentralized physical infrastructure networks (DePin), forecasting that DeFi could increase its market share to approximately $700 billion by 2026 as regulatory obstacles are dismantled.

Moreover, sectors like gaming, tokenization, and consumer-oriented decentralized social networks are expected to grow, contributing to an “other” category that could attain a market cap of $1.5 trillion by 2026.

In summary, Standard Chartered’s outlook underscores the potential for a broad “crypto summer” phase, characterized by both rising valuations for existing assets and the development of new sub-sectors.

The bank attributes this expected growth to a combination of favorable policy shifts, increasing institutional interest, and the evolution of various blockchain applications.

If the anticipated regulatory landscape comes to fruition, Standard Chartered envisions digital assets poised for a substantial increase in mainstream acceptance and market capitalization over the next two years.

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