‘Crypto winter’ could be an opportunity for growth
It’s a “crypto winter” – the sector’s Game of Thrones-inspired term for a sustained price decline – but optimists feel that Ice age Squirrel: They see a very promising acorn under the ice.
This optimism comes from the hope that the technology underlying cryptocurrency (the blockchain) and the companies that build cool applications on top of it have a bright future. Futures that can transform the Internet (Web3!) and usher in innovations ranging from scientific discoveries to co-ownership of golf courses.
One of the biggest blockchain bulls, venture capitalist (VC) firm Andreessen Horowitz (“a16z” for short), put it this way: “We believe we are now entering the golden era of Web3.” And yes, a16z means now, in the depths of crypto winter. In late May, after the price of bitcoin had halved from its November 2021 peak, the VC firm announced it was launching a $4.5 billion crypto fund — a record sum that piles on top of its previous multibillion-dollar investments in the space .
The trend extends beyond a16z and its laser-eyed C-suite: This year’s VC investments in blockchain companies reached $18.3 billion in mid-July — an amount on pace to beat 2021’s year-end record of $32.4 billion, per Fortune . So while many crypto companies have been forced to cut operating costs, some are scoring huge funding rounds to keep building through the crypto winter — like Bored Apes creator Yuga Labs, which raised $450 million in Series A funding in May.
“Down markets are actually where the biggest opportunities arise, if we can zoom out and think long term,” Coinbase CEO Brian Armstrong tweeted last month. Although the company, along with several others, laid off some of its workforce this summer, Armstrong has framed the move as a necessary belt-tightener to make it more efficient and focused in the long run.
The crypto companies that couldn’t raise funds or scale back to survive the rough year — some of which flew too close to the sun and burned up investor cash in the process — may have accidentally ushered in an era of consumer protection. President Biden issued the first outline for crypto regulation last month and urged Congress to fast-track it on Monday.
Zoom out: Comparing this time last year to now, the crypto conversation has moved from “yet your savings on shiba inu coin” to “how to safely get involved in a technology that could change the internet as we know it.” And we at Incrypto believe that it does now a pretty good time to launch a crypto newsletter.—JW
