NYDIG Research Director Warns: The "Investable Scope" of Crypto Is Narrowing, Where Is the Market Heading?

As we enter the deep water phase in Q1 2026, the crypto market is experiencing an unprecedented “cognitive reshuffle.” Although the approval of Bitcoin spot ETFs once sparked endless speculation, reality seems more sobering than expected. Recently, Greg Cipolaro, Head of Research at well-known institution NYDIG, released a thought-provoking report: the “Investable Universe” of cryptocurrencies is shrinking significantly.

Against the backdrop of waning speculation and tightening macro liquidity, which sectors can still meet capital expectations? Is the market maturing, or facing a contraction in Total Addressable Market (TAM)? As of February 24, when Bitcoin (BTC) struggled around $63,000 and Ethereum (ETH) hovered near $1,840, we combined the latest data from the Gate platform with market dynamics to analyze this “survival” discussion.

Only Five Major Use Cases Remain Valid

Cipolaro bluntly states in the report that currently, only five areas have long-term investment value and can attract large-scale capital: Bitcoin, tokenized assets (RWA), stablecoins, select DeFi infrastructure, and a few general-purpose blockchains like Ethereum.

This view undoubtedly dampens the once fervent “all chains can be played” narrative. Cipolaro believes the likelihood of large-scale blockchain application deployment is actually much lower than early industry expectations. For most enterprises and consumers, centralized systems are “always faster, cheaper, and more efficient.” The core advantages of blockchain—trustlessness and censorship resistance—are inherently more suited for “currency and quasi-currency (financial)” applications, rather than replacing traditional internet databases with immutable ledgers.

The “Mass Extinction” of Gaming and Metaverse Narratives

A harsh reality highlighted in the report is that blockchain gaming, social networks, and metaverse projects once favored by capital have fallen far behind centralized alternatives in actual performance.

Cipolaro explains that most real-world use cases do not require permissionless global ledgers. This directly points to valuation bubbles in past cycles. As speculative capital recedes, those “grand narratives” lacking real demand are experiencing a reversion of value. On the Gate trading platform’s watchlist, many former “star metaverse tokens” see declining trading volumes and prices down over 80% from their all-time highs, confirming that capital is decisively retreating from these areas lacking lasting new narratives.

Accelerating Capital Concentration: From “Blooming” to “Only BTC Matters”

The market is voting with its actions in line with NYDIG’s view. As the speculative frenzy in altcoins cools, capital is rapidly consolidating into a few winners, making Bitcoin’s “winner-takes-all” effect more apparent.

According to Gate data as of February 24, Bitcoin’s market dominance remains high at around 58%. Despite macro pressures—such as trade policy uncertainties and ETF outflows—BTC continues to outperform most altcoins.

As of this report, based on Gate prices:

• Bitcoin (BTC), affected by macro trade tensions, continues its decline toward around $63,000, dropping over 2% in 24 hours.
• Ethereum (ETH) performs weaker, fluctuating near $1,840. While its total locked value (TVL) is high, most of it is “dormant capital,” with very little actively integrated into the real economy.
• Mainstream assets like Solana (SOL) and XRP also follow the market downturn, with SOL at about $77.6 and XRP around $1.35.

This “ice and fire” scenario indicates that the market no longer believes in the broad “rising tide lifts all boats” logic. Even institutional funds prefer to focus on the most certain asset—Bitcoin—or DeFi infrastructure with strong cash flow generation, rather than speculative concepts.

Where Is the Market Heading? Growing Pains of Maturity

The shrinking “Investable Universe” is a double-edged sword for the industry.

On the positive side, it signals market maturation. The bursting of bubbles helps clarify who the true industry leaders are. Bitcoin’s role as “digital gold” and core asset is further reinforced. The entry of traditional giants like BlackRock accelerates the dominance of key DeFi infrastructure, pushing the industry from geek experiments toward a foundational global financial ledger.

However, the downside is concerning. NYDIG warns that a reduced scope means the “speculative breadth” of the crypto industry will narrow, and the total accessible market could be far smaller than early grand expectations. For projects that are neither part of financial infrastructure nor have strong practical applications, they may no longer benefit from liquidity surges during bull markets.

Current market sentiment also reflects this. On February 24, the Crypto Fear & Greed Index rose slightly from the previous “5” (extreme fear) to 8, but remains in the “extreme fear” zone. This indicates that, amid expectations of a shrinking “Investable Universe,” risk appetite has plummeted.

How to Strategize in a Shrinking Landscape?

For investors, facing NYDIG’s “contraction” trend, strategies on the Gate platform should shift from broad diversification to focused core holdings.

1. Focus on core assets: Bitcoin remains the most certain choice. Despite dropping below $63,000, its long-term value accumulation remains attractive to institutions.
2. Pay attention to RWA and stablecoins: As the only surviving use cases, RWA (Real World Assets) are attracting significant capital. Gate is continuously improving related ecosystems to help users seek refuge in assets anchored to reality amid turbulence.
3. Be cautious with “old narratives”: For gaming (GameFi) and metaverse sectors, unless breakthrough applications with viral potential emerge, short-term capital outflows are unlikely to reverse.

Conclusion

Greg Cipolaro’s warning essentially rings a bell for the crypto industry to “return to common sense.” When the tide recedes, only a few islands of long-term viability remain. The market may no longer have the breadth of the past “chicken and dog” boom, but for rational builders and investors on Gate, a market rooted in monetary and financial practicality—more rational and less bubble-driven—may be healthier. During this reshuffle, safeguarding core assets and avoiding disconnected narratives are key to navigating the cycle.