Michael Saylor was wrecked, but Bitcoin investors need not panic

As cryptocurrency investors know, the market moves in cycles. We had the up cycle when Bitcoin (BTC) and Ether (ETH) hit their all-time highs, and now the bears are back in town.

One of them crushed MicroStrategy founder and executive chairman Michael Saylor this week. In this case, it was a very powerful bear – Washington, DC Attorney General Karl Racine – who sued the Bitcoin evangelist for allegedly owing $25 million in unpaid taxes. MicroStrategy’s stock price has fallen more than 13% on the news, from $251 on August 29 to less than $220 on September 1.

Still, now is not the time for investors to panic. It’s been about three months since the now-infamous crash of the Terraform ecosystem—which ended the biggest bullfest known to man—and the sky still isn’t falling. The world is not ending and blockchain is as immutable as ever.

Does that mean industry leaders should stop seeing market downturns as existential threats to cryptocurrency as a business? Maybe not, considering $2 trillion in value was wiped from the cryptocurrency’s market cap after Terraform’s collapse. Such extreme market events cannot be dismissed as volatile fluctuations that we should expect going forward. Not all the factors involved are healthy.

Related: Crypto developers should work with the SEC to find common ground

If the previous downturns bore the mark of things like the Initial Coin Offering (ICO) scam of 2017-18 or the Decentralized Autonomous Organization (DAO) hack of 2016, this one also has a story to tell. This time it’s that overreliance on influence is not good for you. Companies that tried to move too fast ended up overshooting and now face a momentary reckoning.

Many cryptocurrency projects are inclined to rebuke traditional finance in favor of a new way forward. That mentality should be applauded. Platforms, including Celsius, introduced the possibility for lenders to earn high returns on loans without going through a bank as an intermediary. That idea will not, and should not, disappear.

Still, reversing the old ways doesn’t mean crypto companies can defy the laws of gravity. Failing to assess the risk of default and have a strategy in place for when it happens – because it will happen at some point – does not count as innovation.

That principle far beyond decentralized finance (DeFi) applies across the crypto industry. When hundreds of crypto projects added “metaverse” and related words to their messages after Facebook was renamed Meta, serious business people understood that it was often another marketing ploy by rogue nonfungible token (NFT) projects looking to capitalize on the hype. In fact, in January OpenSea, the largest NFT marketplace in the industry, claimed that a whopping 80% of NFTs struck for free on their platform were scams or spam.

Related: Bored Ape prices are down, but the NFT market is headed for new highs

In the early days of the ICO Wild West, we could accept some degree of this kind of mania as a normal, early phase of new technology. But it cannot be the status quo going forward.

Exchanges like OpenSea don’t need to become like Robinhood to thrive, but they do need to use the same mechanisms that legitimate trading platforms use to prevent fraud from taking over. Again, the laws of gravity still apply to the Metaverse, NFT projects and platforms that offer their tokens for trading.

It does not place the sole burden on exchange or minimize what I and others have written about regarding projects that themselves carry the burden of acting responsibly. Having an actual product is necessary before you launch yet another token sale with no purpose and a marketing campaign to go along with it.

In fact, memecoins may yet play an important role in the industry. But projects that are not intended to be the next Dogecoin should not use the marketing strategy of the Shiba Inus of the world. Some projects do this right, and they are the ones that have a serious chance of succeeding in the next bull run.

Another hurdle the industry must overcome is crypto platforms that launch solely to allow investors to trade for other digital currencies. We have enough of them as it is. Projects that can find other ways to use crypto will move the industry beyond speculation.

Of course, even these projects must build their innovative driving forces into realistic business plans. As we start to see more of that, perhaps the great crypto experiment can finally outgrow the fear of extinction every time a crash occurs.

The allegations against Saylor, one of Bitcoin’s biggest backers and an icon among crypto enthusiasts, in the middle of a bear market is a public relations nightmare. But crypto investors aren’t going anywhere. It’s time for the projects that are better at product building than marketing to take advantage.

Ariel Shapira is a father, entrepreneur, speaker and cyclist and serves as the founder and CEO of Social-Wisdom, a consulting agency that works with Israeli startups and helps them establish connections with international markets.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.