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Eye-Popping Projection for $3T Crypto Market Underpins Bakkt Deal

Bakkt says cryptocurrencies could be a $3 trillion market by 2025, a fivefold increase.

Updated Mar 6, 2023, 2:54 p.m. Published Jan 11, 2021, 11:06 p.m.

Bakkt projections released in connection with Victory Park Capital deal.

Cryptocurrencies could grow fivefold by 2025 into a $3 trillion market, under new projections from Bakkt Holdings, the digital-asset financial firm.

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Bakkt published the estimate as part of an investor presentation released Monday in connection with its new plan to go public via a merger with Victory Park Capital, a special-purpose acquisition company. Bakkt is majority-owned by Intercontinental Exchange Inc., which also owns the New York Stock Exchange. The deal would give Bakkt an enterprise value of about $2.1 billion, according to a press release.

The underlying assumptions behind the transaction show just how bullish investors, entrepreneurs and financial executives have become over the past year on the fast-paced digital-asset industry, especially after prices for bitcoin, the largest cryptocurrency, quadrupled in 2020.

Just last week, the industry's total market capitalization surpassed $1 trillion for the first time, though a swoon over the past few days in prices for bitcoin and other digital assets has since trimmed the total value to about $931 billion, according to the website CoinGecko.

Bakkt currently runs a market for cryptocurrency derivatives including bitcoin futures, but in March the company plans to release a new consumer application that could allow users to manage digital assets and use them for spending and peer-to-peer payments alongside cash and rewards miles.

"It’s these shifts that we are leveraging for the benefit of both customer and merchants, truly unlocking a massive market by empowering the monetization of digital assets," Gavin Michael, former head of technology for Citigroup's global consumer bank, told investors Monday on a conference call, according to a transcript.

In the investor presentation, Bakkt estimated its revenue, net of transaction-related expenses, could grow by an average 75% per year to $515 million by 2025. The company is expected to turn cash-flow positive by 2023.

According to one slide in the investor presentation, Bakkt operates in a "massive serviceable addressable market" that was worth about $1.6 trillion in 2020, including $564 billion for the "notional value" of cryptocurrency.

By 2025, the presentation estimates, the company's overall target market would increase to $5.1 trillion, including $3 trillion of cryptocurrency.

Here's the diagram from the presentation:

Bitcoin Markets cryptocurrencies

Bradley Keoun

Bradley Keoun is CoinDesk's managing editor of tech & protocols, where he oversees a team of reporters covering blockchain technology, and previously ran the global crypto markets team. A two-time Loeb Awards finalist, he previously was chief global finance and economic correspondent for TheStreet and before that worked as an editor and reporter for Bloomberg News in New York and Mexico City, reporting on Wall Street, emerging markets and the energy industry. He started out as a police-beat reporter for the Gainesville Sun in Florida and later worked as a general-assignment reporter for the Chicago Tribune. Originally from Fort Wayne, Indiana, he double-majored in electrical engineering and classical studies as an undergraduate at Duke University and later obtained a master's in journalism from the University of Florida. He is currently based in Austin, Texas, and in his spare time plays guitar, sings in a choir and hikes in the Texas Hill Country. He owns less than $1,000 each of several cryptocurrencies.