Analysts at JPMorgan Chase (JPM) say that the growth of decentralized finance (DeFi) and asset tokenization continues to disappoint.
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JPMorgan’s lead crypto analyst, Nikolaos Panigirtzoglou, wrote in a research report that DeFi and tokenization have stagnated since the 2022 crypto winter. He noted that Total Value Locked (TVL) in DeFi remains below its 2021 highs, with most activity still driven by retail investors.
Institutional adoption in both DeFi and tokenization continues to lag as major barriers remain, such as regulatory fragmentation, legal uncertainty, and concerns about smart contract security. As a result, most institutional crypto activity is still concentrated in digital assets such as Bitcoin (BTC) and Ethereum (ETH), says Panigirtzoglou.
Tokenization
At the same time, tokenization has also failed to deliver on its promise. While the sector has seen some traction, with $25 billion in tokenized assets, $8 billion in tokenized bonds, and growing adoption in money market funds, most initiatives remain small, illiquid, and experimental, wrote the analyst.
Panigirtzoglou added that in private markets, tokenization is heavily concentrated among a few players and lacks meaningful secondary market activity. The analyst concludes that rule changes alone won’t overcome a deeper issue: traditional finance doesn’t see a clear need for blockchain technologies.
Tokenization is a data security process that replaces sensitive information with unique, non-sensitive identifiers called “tokens.” Some companies are trying to develop tokenized versions of stocks.
Is BTC a Buy?
Most Wall Street firms don’t offer ratings or price targets on cryptocurrencies such as Bitcoin, so we’ll look instead at its three-month performance. As one can see in the chart below, the price of BTC has risen 10.04% in the last 12 weeks.
