Which Low-Cap Altcoins Stand to Gain the Most from the Growing Neobank Trend?

The concept of Neobanks in the Web3 space has been a hot topic in the crypto community lately. Investors are increasingly focused on projects that offer real-world applications, making this sector particularly appealing.

Key Takeaways

Neobanks in Web3 are fully digital banks operating on blockchain with no physical branches.
The neobanking sector is projected for significant growth, reaching over $4 trillion by 2034.
Low-cap altcoins related to neobanks may be undervalued and offer fresh investment opportunities.
Avici, Cypher, and Machines-cash are notable low-cap projects with strong potential for returns.
Market sentiment affects low-cap projects, making it harder to distinguish quality opportunities.

Low-cap altcoins linked to the Neobank narrative might currently be undervalued, creating fresh investment opportunities.

Understanding the Potential of Neobanks

A Neobank in the Web3 ecosystem is defined as a fully digital banking solution that operates exclusively on the blockchain, with no physical branches. These neobanks integrate decentralized finance (DeFi) features, such as self-custody, yield-earning accounts, and cryptocurrencies spending cards linked to Visa or MasterCard.

Unlike traditional neobanks, Web3 Neobanks prioritize transparency, eliminating middlemen and enabling cross-chain interoperability.

Precedence Research reported that the global neobanking market reached $148.93 billion in 2024. It is anticipated to grow at a compound annual growth rate (CAGR) of 40.29%, potentially reaching $4,396.58 billion by 2034.

This incredible growth potential could favor Web3 Neobanks for two main reasons. Firstly, the increasing acceptance of stablecoin use cases is pivotal. Secondly, investors are moving towards crypto projects that focus on real-world utility rather than speculative valuations. Investor Mike S noted, “If stablecoin is to power Neobanks on-chain, then the current Web2 identity infrastructure won’t be able to keep up.”

According to Coingecko, the Neobank sector currently has a total market cap of $4.19 billion, comprising 13 notable projects. Mantle leads the chart with a market cap of $3.31 billion, followed by Ether.fi at $412 million.

Moreover, data from Dune Analytics shows that the transaction volume of physical cards from Web3 neobank projects soared to a record high of over $379 million last month.

Though this transaction volume is still modest, analysts believe its potential for growth is significant. Additionally, the connection between Web3 projects and traditional payment companies is becoming increasingly robust.

Crypto investors are optimistic that Neobanks will flourish due to advancements with AI agents and enhanced privacy features through blockchain technology. Some experts even foresee Neobanks influencing the major trends in the crypto space by 2026.

Can Low-Cap Altcoins in the Neobank Sector Yield High Returns for Early Investors?

Despite these optimistic forecasts, the top three Neobank projects—Mantle (MNT), ether.fi (ETHFI), and Plasma (XPL)—saw prolonged price declines in November, according to Coingecko.

However, some low-cap altcoins, with market capitalizations under $100 million, have particularly attracted new investments and demonstrated strong performance lately.

One such example is Avici (AVICI), a self-custodial crypto banking project on Solana, which focuses on spending cards and on-chain swaps. Over the last two months, its market cap has skyrocketed tenfold to $77 million, with prices exceeding $6.

Stalkchain reported a remarkable increase in AVICI purchases lately, with one wallet acquiring approximately $35,000 worth of AVICI at a rate of $266 per minute.

Recently, the project announced that the Avici Card reached 100,000 transactions in November, establishing itself as a routine tool for users. Some investors anticipate AVICI could reach values between $50 and $100.

Next is Cypher, a protocol built on Base Chain, where users earn CYPR tokens as rewards for transactions made with cards. Cypher aims to develop an open economic model designed to foster growth among brands, service providers, online influencers, AI agents, and crypto card users. The current market cap for Cypher is below $10 million, leading analysts to believe it is undervalued.

Despite strong metrics, such as consistently processing double its market cap in payment value, Cypher remains largely under the radar due to low liquidity and limited listings on major exchanges.

Another emerging player is Machines-cash (MACHINES), a newly launched crypto payment platform focused on privacy, with a market cap of under $5 million. Analysts believe this project could attract a similar influx of capital as Avici, potentially leading to a tenfold increase in market cap. The development team boasts experience from notable platforms such as MetaMask, Trust Wallet, and Polygon, offering a strong foundation for success.

Machines-cash allows anonymous and secure Visa card payments, enabling users to transact via alias accounts that conceal wallet addresses, transaction histories, and personal identities. This feature becomes increasingly appealing as privacy concerns continue to grow.

Despite the generally pessimistic market sentiment that may hinder the potential of low-cap projects, the raising interest in crypto neobanks makes identifying truly high-quality projects more challenging. Jay Yu, a researcher at Pantera Capital, emphasized that retention, transaction volume, and user count will be the critical determinants for success in this emerging market.