Crypto winter has no end in sight

It’s been two weeks since the last cryptocurrency/blockchain conference in New York, where the mood was “business as usual” for crypto – the future is ours. Just keep calm and “hold on”. But roughly seven business days after the Messari Mainnet conference in Manhattan, cryptocurrency investing still stinks. EthereumETH
, if investors had hoped the “merger” would help their investment turn the corner, is down over 65% year to date. Perhaps the good news is that since the New York conference, both ETH and bitcoin have beaten the Dow. Given the gloomy market, it’s nothing to write home about.

David Morris, who attended the conference last month as both a guest and moderator, called this the “most important crypto bear market in history.”

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“The trap for many crypto projects is that while the big, easy returns come from whales and (day traders), these users are also hyper-agile ‘rotator capital’, willing and able to pull up stakes and move their entire net worth to a new system for some additional basis points for the APR, says Morris.

Some industry leaders were excited about “regulation” – something that seems ominous about crypto. Admittedly, the serious cryptocurrency/blockchain developers want regulation to the extent that it gives their part of the tech world some credibility. Regulation means “you can trust us, we don’t run scam coin projects.”

So when Binance CEO Changpeng Zhao, known as “CZ” in the crypto world, told Mainnet collectors that governments are making “positive progress” toward regulation, it is understood that investors can trust Binance – they welcome the scrutiny.

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Thing is, CZ and the like have so much money in early 2020s bitcoin (remember BTC was under $10k before the Covid panic set it) that they can cash out some of those losses and throw lavish parties for hobnobs with A-list blockchain bloggers, egghead coders and a few venture capitalists for whom yacht rock music really plays in the Hudson River. They are optimistic because they are still loaded. Most of the crypto day traders and “hodlers” (a typo that has become a real word in the crypto universe – it means hold) have been crushed. I know I have. I’ve lost the equivalent of a middle class salary (although I haven’t sold, so I hope hold).

There are people like that and there are people like CZ.

What is in this market for the retailer at this time? BitcoinsBTC
down. Should we be buyers? Or, as they say on Wall Street, never try to catch a falling knife.

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Úrsula O’Kuinghttons, Director of Communications and Partnerships at the Web3 Foundation and PolkadotDOT
, is not afraid. She was present.

“The crypto market has fallen, but it will survive,” she says. “We are definitely at a turning point, where new players in the ecosystem come with greater knowledge of the market. At Messari, I saw that many relevant players in the industry are increasingly aware that if we want to grow, we must reach the masses. While developers will continue to develop blockchain technology, regardless of the history of the market.”

As in the initial coin offerings of old, there was a lot of talk about new projects coming up, even more than there was in the last down cycle – which was the death of the ICO cycle. And in happy hour talk there is enthusiasm and hope, because what else do you have? Either cryptocurrency is going to be a thing for the masses to maintain a decentralized, uncensored, transactional existence in cyberspace, or it’s going to be a thing for the Sheldon Coopers (Big Bang Theory character) and The Gamblers of the world – either from Seoul or San Francisco; a story about sci-fi tech nerds playing with math and algorithms, and new casino wizards betting on tokens like $5 chips at a Bally’s casino.

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“A favorite saying among cryptorati is that bear markets are for builders, and the mood at Messari reflected that,” said Jeremy Epstein, CMO at Radix, a smart-contract platform tool for developers of decentralized finance applications.

“They know crypto will win. Companies and people are investing in this generational opportunity,” Epstein says.

Some notable takeaways at Messari include uncertainty around regulatory frameworks and an amicable agreement that the current Ethereum Virtual Machine-based paradigm for DeFi will not scale to anywhere near the levels required to make it work anytime soon. All in all, people who attended believe that cryptocurrency is not dead and DeFi is the play (sorry, NFT Ape Yacht Club guys).

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Also, from the technical side, the current crop of Layer 1 smart contract platforms are losing followers and faith.

“The sentiment on the Mainnet was positive,” says Greg Hemmer, Head of Ecosystem at Shardeum, a new smart contract platform launching in 2022. Shardeum is based in Zug, Switzerland. “You still have a lot of entrepreneurs, managers and investors who believe that decentralization is good for society. The Web3 developers … their vision to make this a reality is clear,” he says, adding that the conference motivated to build real use cases for decentralization.

This is what cryptocurrency investing is still missing. So many investors own coins and only use them as investment tokens they bought on Coinbase.

The Messari Mainnet conference takes place once a year. It was first launched in 2018. Messari is the name of the company founded by Ryan Selkis in New York City. Selkis co-founded Digital Currency Group, where he managed the firm’s seed investment activity, and CoinDesk, where he chaired the company’s popular Consensus Conference. Messari has investments from venture capital firms linked to cryptocurrency exchange giants Coinbase, Gemini and Kraken, as well as well-known blockchain investors such as SparkLabs Global Ventures and Blockchain Capital.

“Everyone is looking for the catalyst for the next bull run,” says Epstein, weeks after leaving the conference. “Everybody believes that a bull run will come back … eventually,” Epstein says.

For now, the crypto winter has no end in sight. Doom and gloom in markets will not help. But crypto investors have been here before. If the Messari participants are right, the patient investor will be rewarded. Next year? When traditional securities investment sentiment returns, it will also return for banked cryptocurrency.

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*The author owns Bitcoin, Polkadot and many other cryptocurrencies not mentioned in this article.