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Crypto, like the early days of the internet boom, is still in a “1996” phase with more room to grow, Jefferies analysts told large institutional investors in a client Q&A report.

The investment bank, which launched full coverage of the digital assets sector in September, said it is getting strong and diverse interest from its clients. One of the main questions that analysts are fielding is, “Am I too late to invest?” to which the analysts, led by Andrew Moss, have answered, “Relative to the internet, it’s 1996 for the digital asset ecosystem, and the next leg of growth has just begun.”

By drawing parallels to “1996,” Jefferies paints a powerful and specific picture of Wall Street during the early days of the Internet — one that implies that crypto’s next leg of growth has only just begun.

The bank is referring to an era when the Internet was just hitting the mainstream. Netscape Navigator was battling Internet Explorer for dominance, Amazon was a fledgling online bookstore a year away from its IPO, and Google’s search engine wouldn’t even exist for another two years.

Jefferies’ rationale for this “still early” thesis is that only a handful of traditional funds currently have exposure to the crypto industry, but that’s changing — and that’s a good sign.

“Many are actively developing investment strategies and determining how to allocate funds across tokens, ETFs, digital asset treasury companies (DATs) and public companies with exposure,” Moss wrote in a research note last week.

Not just BTC

So, where do Jefferies analysts see this opportunity for institutional investors? Spoiler alert: It’s not just bitcoin and blockchain’s original payments use case. Rather, analysts said, investors should look beyond that.

“Our view is that too much focus on bitcoin and BTC’s price will distract from blockchain technology’s disruption potential across industries,” the analysts wrote.

Jefferies noted that clients are considering exchange-traded funds and digital asset treasury (DATs) companies to gain exposure to the sector, and the bank’s analysts see this as a potential short-term bull case. ETFs might remove the final barrier for institutional investments, while DATs could also drive demand for tokens, as these treasury companies are actively and continuously buying up tokens for which they have raised capital.

The $1 trillion public market

ETFs and DATs aside, Jefferies sees more long-term bull cases in the digital asset sector: tokenization and initial public offerings (IPOs).

With more financial institutions tokenizing assets to enable 24/7 trading and real-time settlement, the Jefferies analysts see “a paradigm shift” in blockchain network activity, higher transaction volume and greater value for tokenholders, which could accelerate the next leg of digital asset growth.

And then there are initial public offerings (IPOs), a trend that has picked up steam this cycle, which has seen several companies, including Circle, Bullish (CoinDesk’s parent company), and Gemini, going public.

Jefferies expects this trend to only pick up in the next 18-24 months and balloon to a massive market in the next five years.

While exchanges were first to go public, the bank sees a go-public opportunity for distributed ledger developers, tokenization platforms, custodians, token on-off ramps, stablecoin issuers, analytics companies, institutional trading and staking platforms, fund managers and prime brokers.

“We reiterate our expectation for 10-15 IPOs over the next 18-24 months and a $1 [trillion] public market sector over the next 5 years,” the analysts wrote.

Playbook as old as dot-com era

Driving home the parallel of the 1996 internet era, the firm’s advice to clients asking how to invest echoes the lessons of the early Internet: be selective and focus on lasting utility.

The analysts pointed out that only six of the top 20 tokens from January 2018 remain in the top 20 today — a dynamic similar to the dot-com era, when early leaders like AltaVista and Lycos were eventually displaced.

A great divergence is expected to continue as capital shifts from speculative assets to tokens that power real applications. The playbook, Jefferies suggests, is to analyze tokens like early-stage tech startups, prioritizing “adoption, development, usage and use case” over fleeting revenue spikes of some blockchains.

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