REGRESSION-SCENARIO MODELING OF THE LONG-TERM DYNAMICS OF GLOBAL CRYPTOCURRENCY MARKET CAPITALIZATION: METHODOLOGICAL LIMITATIONS OF EXTRAPOLATION APPROACHES

Abstract

The article investigates the methodological potential and limitations of the regression-extrapolation approach to forecasting the long-term dynamics of global cryptocurrency market capitalization. The relevance of the topic stems from the rapid yet extremely uneven growth of the crypto market during 2011-2025, which complicates the application of traditional trend models to substantiate forecast and scenario estimates required by foreign economic actors and policy-making authorities. Based on the statistical series of crypto market capitalization for 2011–2025, drawn from leading international analytical platforms, a log-linear regression model was constructed using ordinary least squares, yielding a statistically significant equation with a coefficient of determination of 0.866 and a slope coefficient significant at the 1 percent level. It is empirically demonstrated that mechanical extrapolation of a model built on a long series featuring an explosive low-base growth phase generates extremely wide forecast confidence intervals, which in practice render point estimates several years ahead statistically unfounded and, in some cases, economically implausible. A comparative analysis of the regression on the full sample (2011–2025) versus the reduced mature-market sample (2016–2025) confirmed the hypothesis of decelerating capitalization growth as the market matures, consistent with the logic of an S-shaped diffusion trajectory of financial innovation and growing user trust accumulated through practical experience with crypto assets. The expediency of complementing regression tools with a scenario-based approach, accounting for alternative combinations of macroeconomic, regulatory, and technological uncertainty factors and grounded in a systematization of current forecasts by leading global financial institutions, is substantiated. The findings are of practical value for shaping adaptive rather than point-based strategies for foreign economic actors and regulatory policy amid the high volatility of the cryptocurrency market.