Reporting by Bloomberg suggests the crypto sector’s peak market cap of $3T may have been misleading. Crypto’s value now hovers around $1T.

Why should we care?
Crypto’s market cap includes not just the supposed value of crypto tokens, but also the rampant speculation defining the sector. In what’s called “wash trading,” some users sell crypto assets to themselves in order to inflate the value of their holdings; that practice, in addition to manipulation, dormant coins, and coins that didn’t make it into circulation, make up a significant chunk of the market cap. According to James Check, Lead Analyst at Glassnode, looking at the ratio between crypto’s market value and realized value, or MVRV—at 3.2—demonstrates how much of the sector is driven by speculation rather than the value of assets. With a realized value of $875B, crypto is a sizable economy but has a long way to go before it poses a real threat to fiat currencies and other stores of value. “To an individual, $875 billion is enormous, to a company it’s enormous,” Check said. “To an asset that has all the potential to usurp gold and probably overtake it by some orders of magnitude, it’s peanuts.” That wide gap between market cap and realized cap demonstrates that crypto’s real growth hinges upon consumers using it as a store of value rather than an investment vehicle. Only that sort of measured engagement can create stable growth in the sector, and help its boosters realize their blockchain-driven vision of a currency overhaul.