Analyst Says $1.3T in Tokenized RWAs Valuation is More Realistic by 2030 Than Wall Street’s $30T Estimates

Real World Assets (RWAs) are rising in popularity across financial markets, and Wall Street experts expect massive capital inflows in the coming years.

Crypto analyst Jamie Coutts is skeptical about a bullish forecast that tokenized RWAs could hit $30 trillion by 2030. He says such estimates are unrealistic, adding that a 5% growth in the sector will be a more realistic target.

Coutts adopts a more conservation approach in his prediction, stating that the RWAs sector might be worth $1.3 trillion by 2030.

Analyst Adopts Modest Projection for RWAs

As asset tokenization gains popularity, Wall Street has projected a $10 to $30 trillion valuation for the RWA market over the next five to ten years. However, Jamie Coutts believes this figure is overestimated, noting that $1.3 million by 2030 is more realistic.

Tokenizing assets involves issuing security tokens on a blockchain representing tangible and tradable digital assets. This new asset class has recently become increasingly popular among traditional finance institutions.

Standard Chartered Bank and Synpulse recently predicted that real-world assets will reach $30.1 trillion by 2034.

In his August 27 X post, Jamie Coutts noted that his prediction can only be valid if the current two-year compound annual growth rate (CAGR) of 121% continues.

Tokenization, Blockchain Fee Income & #Ethereum

Wall Street projects that $10 to $30 trillion in traditional assets will be tokenized over the next 5 to 10 years. That seems overly optimistic, considering BlackRock, the second-largest asset manager, has $10 trillion in AUM.... pic.twitter.com/vnhw0StW6V

- Jamie Coutts CMT (@Jamie1Coutts) August 26, 2024

Coutts sees the $30 trillion target as overly optimistic, given that the world's second-largest asset manager, BlackRock, only boasts $10 trillion in AUM. He also noted that even the $1.3 trillion estimate will impact blockchain fee income.

Further, the analyst believes that if the on-chain value of RWAs grows to $1.3 trillion, it will influence other sectors, such as NFTs and gaming. He noted that this effect can be estimated based on the S&P 500.

Bitcoin's market performance often aligns with the S&P 500. The mutual coupling makes the popular stock index a yardstick for tracking crypto market performance.

In 2023, the S&P 500 hit $130 trillion in trading volume, with approximately $40 trillion in market cap, representing a 317% turnover for investors. Analysts have used this as a baseline for value traded on blockchain networks.

However, Coutts believes this estimate is overly conservative for tokenized assets in the crypto market due to the increased volatility. He believes tokenized assets can do better based on the higher volatility and growing popularity of DeFi ecosystems.

Tokenized real-world assets are like bridges, integrating DeFi legos with TradFi assets, Coutts says.

What Are the Implications for Ethereum?

Interestingly, Ethereum is the preferred choice for most TradFi asset issuers. However, Coutts believes that the impact of RWA growth on Ethereum is hard to predict since Layer-2 networks compete for market share.

He stated that L2s will have the upper hand and capture 95-99% of the revenue. Also, Coutts believes Ethereum will capture a larger RWA market share if it scales its L1 blockchain.

Meanwhile, consulting firm McKinsey & Company noted that tokenized financial assets did not get a good initial response from investors. The analysts believe real-world assets will rise to a market cap of approximately $2 trillion by 2030.

Also, McKinsey & Company analysts suggest that true tokenization must have use cases that offer advantages over traditional finance. Only then can tokenized assets attain the projected valuation.

They cited bond tokenization as a vital aspect where these RWAs are useful. The analysts noted that barely a week goes by without an announcement for new tokenized bond issuance.

Real-world assets are gaining relevance in various sectors, such as real estate, finance, and gaming. However, RWA value projections for 2030 and beyond remain speculative since market factors vary.

The post Analyst Says $1.3T in Tokenized RWAs Valuation is More Realistic by 2030 Than Wall Street's $30T Estimates appeared first on The Tech Report.