Bernstein expects crypto market liquidity to move away from 'useless' memecoins and back to DeFi, gaming and NFTs

With regulatory conditions easing on major crypto marketplaces, analysts at research and brokerage firm Bernstein expect market liquidity to move away from memecoins and back to more utility-driven tokens in segments such as DeFi, gaming and NFTs.

The rise in memecoin activity in recent years was driven by a pushback against the regulatory crackdown on utility token and NFT projects under the previous Securities and Exchange Commission Chair Gary Gensler, "forcing the market toward 'useless' memecoins to escape regulatory action," Bernstein analysts led by Gautam Chhugani said in a Monday report.

However, the regulatory environment is starting to change with the pro-crypto former regulator Paul Atkins tapped by President Trump to lead the SEC, pending Senate confirmation, and the launch of a new crypto task force at the agency under crypto-friendly Republican Commissioner Hester Peirce. The altering stance was demonstrated by the SEC's agreement in principle to dismiss its securities law violations case against crypto exchange giant Coinbase and the agency ending its probe of NFT marketplace OpenSea last week, the analysts noted.

"A lot of blockchain action was being driven by extractive memecoin launches by politicians and celebrities," Chhugani wrote. "The recent fiasco being the Libra coin launch by Javier Milei, causing political repercussions as the token deals with allegations of insider trading." This has led to a much-needed "cool off" in the wave of memecoin launches on Solana, the analysts said.

What's next for crypto as memecoin activity cools?

A strategic bitcoin reserve or stockpile is one of the key crypto priorities for the Trump administration. Combined with strong inflows into exchange-traded funds and Strategy continuing to lead corporate treasury acquisition, the analysts believe the price of the foremost cryptocurrency will be driven higher in the coming months, with a target of $200,000 by year-end.

Another focus for the crypto space is stablecoins and real-world asset tokenization, the analysts said, particularly with anticipated regulations on stablecoins and digital asset securities. They expect stablecoins to have the most immediate impact on cross-border B2B payments, global inter-bank settlements and remittances. However, as clarity on digital asset securities emerges, innovation around tokenized equities and debt will provide new avenues for corporate fundraising, with stablecoin growth also driven by demand as a settlement currency for such tokenization.

Additionally, the analysts expect stablecoins to expand the total addressable market for crypto exchanges and broker/dealers, with trading volume growth led by new tokenized equity listings and demand for stablecoins also driving float income for platforms. They expect Robinhood to be a major beneficiary of this trend over the next 24 months, as it integrates with crypto exchange Bitstamp and launches new offerings like staking, stablecoins and derivatives.

Gautam Chhugani maintains long positions in various cryptocurrencies. Bernstein and its affiliates may receive compensation for investment banking services from Strategy. Affiliates of Bernstein act as market makers or liquidity providers in Robinhood's stock.