It’s beginning to look a lot like spring in the crypto market, as prices for leading coins such as Bitcoin (BTC) and Ethereum (ETH) have started to thaw following months of tumultuous trading conditions and lower-than-anticipated market confidence.
Q4 2022 hedge fund letters, conferences and more
Amid a flurry of difficulties against the backdrop of broader macroeconomic problems, the crypto market left traders and prospective business owners wary of the prospect of digital currencies.
It’s Without A Doubt Been A Bumpy Ride For Crypto Traders
Documents released by the Federal Bureau of Investigation (FBI) showed that more than 4,300 complaints relating to crypto scams and fraud were submitted to the bureau in 2021. Victims lost more than $429 million of crypto investments, as the rise of cybercrime and threats started plaguing the crypto world.
The following year gave an even harder blow to the market. On March 12, 2022, the crash of
Terra Luna (LUNA) and TerraUSD (UST) saw the digital currencies lose around 90% of their value over several hours.
Closer to the end of last year, the fall and bankruptcy filing of global crypto exchange platform, FTX only caused the foundations to crumble further after the platform saw a surge in customers withdrawing their funds, and then-CEO, Sam Bankman-Fried admitted the company had insufficient assets in reserve to meet customer demand.
Following the collapse of FTX, BlockFi, a crypto lender later filed for Chapter 11 bankruptcy, a company that was at its prime valued at more than $4.8 billion.
While this was playing off, crypto prices were treading deep waters in the background, as the market tried to recover from its earlier crash in May last year.
Not to mention the ongoing scrutiny market experts have been faced with following the FTX scandal, as lawmakers across the developed world are hurdling to impose increased regulations on crypto trading.
It's quite a mouthful, to say the least, and ongoing macroeconomic challenges have not made the recovery process any easier as stubbornly high inflation, slower consumer demand and aggressive interest rate hikes from the Federal Reserve keep traders and enthusiasts at bay.
Yet, it now seems as if the market has managed to scramble past most of these painstaking challenges, at least that’s what it’s looking as investors are now once again flocking to the crypto market as prices slowly trend upwards.
While these difficulties were anything but charming, it has presented startup entrepreneurs in the blockchain and crypto industry with new opportunities, with some catching on to the growing trend faster than others.
The Landscape Of Crypto Businesses Is Growing, Again
On the back of investors and traders regaining confidence in the market, blockchain and crypto businesses have seized the opportunity to introduce new tools that could potentially change the landscape going forward.
Given the growing positivity, Vulcan Blockchain, one of the world’s first blockchain platforms to effectively develop and deploy rebasing on a blockchain level is steadily becoming a household name among enthusiasts.
Exchanging some insights with Bryan Legend, founder of OOXY Labs and Vulcan Blockchain, a first of its kind blockchain platform utilizing Blockchain Automatic Revenue Sharing (BARS) technology. By enabling Decentralized Finance (DeFi) mechanics, the platform can provide passive income to native VUL coin holders through a set of core features.
While competition in this category is still somewhat inactive, Legend says that establishing a crypto-focused business amid an ongoing market downturn has come with its unique challenges.
“From paper to planning, to becoming a reality in just 12 months, Vulcan wouldn't have been possible without a strong, yet capable team,” says Legend. Following this, he tells that, “building and maintaining a thriving community whilst driving a positive cultural spirit is a feat most young startups face, and in the crypto and blockchain industry, a capable team with industry knowledge and strong leadership can take any project a long way.”
Starting a crypto or blockchain business, especially in the DeFi space, requires entrepreneurs and startup teams to constantly remain innovative, and avoid turning a blind eye to industry trends or trader demand.
The collapse of household names such as FTX and BlockFi, among others, has gradually set the tone for entrepreneurs and developers to keep ahead of the curve.
Last year was perhaps one of the most brutal years for crypto and blockchain-orientated businesses, as one after the other was smeared in controversy.
Poor management, lousy decision-making, and a slowdown in consumer spending were only among the list of reasons companies including Vauld, Zipmex, Hodlnaut, and Celsius Network, among others, were seen running to file for bankruptcy or freeze customer accounts.
“Third-party custodian risks remain among the reasons why so many customers, whether they are seasoned professionals or novice traders, have felt deceived. Newer and younger businesses, such as ours, should continuously be looking at new ways to empower not only one another but also every individual,” said Legend.
Digital Currency Companies Are Once Again Gaining Momentum
Across the board, several companies and startups that dabble in the digital currency industry have had a hard time making it through the winter bear market. As volatile conditions persisted, and the economic downturn eradicated years' worth of performance, things are starting to slowly look up again for some household names.
For starters, Coinbase (NASDAQ:COIN), one of the world’s leading cryptocurrency exchange platforms, has recently announced that it’s looking to bring two new innovations to the forefront. The first will be the practice of asset loans - which was previously only available to affluent members - to ordinary traders and crypto enthusiasts.
With crypto asset loans, users can pledge their Bitcoin or crypto as a form of collateral, which in return will give them access to low-interest loans to cover expenses.
Another channel that Coinbase is hoping to trail in the coming year is the adoption of its blockchain analytics by governments and banks. With its vast and near-endless access to data, the company will be able to monitor any illegal activities and illicit addresses.
As governments and lawmakers build up their cases to impose tighter regulations on the decentralized industry, radical changes could provide new startups in the ecosystem an opportunity to offer more legitimate solutions.
The digital wallet and peer-to-peer payment application, Venmo and PayPal (NASDAQ:PYPL) has also recently improved its transaction performance of cryptocurrencies. The app now allows a mix of different banking features, including crypto trading tools.
Although these features were launched back in 2021, Venmo has quickly grown to become one of the biggest peer-to-peer money transaction apps that supports cryptos such as BTC, ETH, Bitcoin Cash (BCH), and Litecoin (LTC). Venmo allows convenient access for traders and investors to different cryptos and several DeFi applications.
Canadian-based Hut 8 Mining (NASDAQ:HUT) has quickly become a well-known name in crypto and digital assets. The crypto mining firm has seen its BTC holdings jump by 28% in 2022 compared to the year before. As of December 2022, the company managed to mine 3,568 Bitcoin. On the other hand, revenue performance for 2022 was down 13% year-over-year (YoY), yet the company holds more than 9,000 BTC in custody worth over $200 million.
What’s more, Hut 8 Mining announced merger plans with US Bitcoin at the start of February 2023, looking to form Hut 8 Corp, or “New Hut.”
The merger would create a digital mining, hosting, and infrastructure management platform that performs as a computing organization for crypto mining.
Shopify (NYSE:SHOP) might not be directly dealing with crypto assets and mining, but the eCommerce company has in recent years opened more avenues for crypto users, allowing merchants to accept cryptocurrencies as payment through its platform.
As of 2023, the eCommerce giant has launched several new crypto and blockchain integrations, including Web 3-focused stores hosted on its platform and selling Avalanche NFTs through online stores.
While the progress of these projects has been ongoing for several years, Shopify is hoping to increase its digital asset capacity, integrating blockchain infrastructure along the way to help enhance and improve user experience.
Widespread developments, among others, are allowing users and customers to take more control of their assets, and helping to eliminate normal asset staking from the equation. This could further mitigate mistakes that have for too long repeated itself.
In a similar vein, it’s also possible to understand how misleading products and services are not only hurting the industry, and costing customers millions in lost assets each year, but it’s making it harder for newcomers to learn or improve their understanding of the industry.
Legend says that although the industry is still extremely young, there’s still gigantic room for growth through new and innovative ideas that aren’t yet conceptualized. As crypto and blockchain technologies become more mainstream, the wave effect could see a springboard for new users, including developers during the next crypto bull run.
Final Thoughts
Shrouded in controversy, and plastered with volatility, the crypto and blockchain landscape is left to the demise of newer and younger startups to piece it all together once again.
While household names and global contenders are still dusting themselves from a tumultuous crypto winter, budding startups are building newer and more innovative concepts that could transform, and perhaps revolutionize user experience and understanding of the crypto industry.
“Empowering users should be the first step, but it requires pioneering developers and industry professionals to forge a community-oriented understanding of how we can achieve all of this as the crypto industry expands,” said Legend].
