How do crypto startups plan to limit the so-called crisis in the crypto space?
The multi-year bull run that we had in crypto in recent years has now slowly stopped. Ever since the Honorable Supreme Court of India lifted the ban on crypto trading in March 2020, we have witnessed an increase in the number of investors as well as crypto startups building for the world straight from India. When Bitcoin reached an all-time high last year, it was estimated that around 20 million crypto investors in India reaped the benefits of the bull run.
Fast forward to today, the abundance in the market has been replaced by fear and caution. In many ways, this can also be considered good as it could lead to increased maturity in the room. It is time not only for investors but also crypto companies to focus on the basics. Just as investors have understood that crypto is not a get-rich-quick scheme, so companies need to understand that they need to adopt a long-term mindset. Only innovative companies with robust business models can thrive in crypto.
While the sentiments surrounding crypto are negative at the moment, the basics are still as strong as ever. This means that there is a long-term potential in this space for builders. As the popular saying goes that every crisis is a blessing in disguise, the current correction offers great opportunities for crypto companies willing to double down and take it.
Here is what crypto startups need to do to survive this correction phase:
Continue to build and innovate
There is no better time to build than bear markets.
Companies in crypto have the opportunity to double down and build strong products such as earn innovative offers in the crypto sector – whether it is for investments, payment systems, banking services, metaverse, NFTs or others.
However, they must innovate if they are to survive in these difficult times. The regulatory ambiguities regarding the taxation and legality of crypto in the country should disappear within a couple of years, and when this happens, crypto startups will have to adapt to these changes.
This innovation should ideally promote adoption and lead to even better times for the crypto industry in the future. This prediction is not based on hope, but on what has happened in the past. Every time Bitcoin and crypto markets have had to undergo significant corrections, every crisis has driven innovation for the industry as a whole.
In fact, it was during the previous crypto winter that Layer 2 scaling solutions became prominent.
Manage cash flow and optimize for resilient business models
Instead of blindly throwing away cash, it’s time for companies to be more careful with their money. They would have to manage current financial reserves well, and ensure sufficient runway to survive the bear market and continue to build.
We have seen cases of poorly managed companies that have already fallen victim to the price crash, due to mismanagement and lack of adequate risk mechanisms. Cryptocompanies must invest in sustainable growth, while being ready for different scenarios.
Build a strong team
While we have seen layoffs across crypto and even in India, bear markets are an ideal team for good companies to take a step back and nurture their talent for the way forward. During the correction, employees could be given adequate training and development programs.
Instead of over-hiring, companies can provide sufficient time to hire efficiently, build team capabilities and plan for the next beef market.
Spread awareness about crypto to facilitate adoption
During the last bull run, the awareness and use of Bitcoin and crypto has improved considerably. However, there is still a long way to go.
There are still many people who are aware of crypto, but who do not really understand the risk and potential in this area. As awareness and education increase, this will lead to a better ecosystem and a market for a range of products and services within the sector, other than just investing.
Disclaimer
The views above are the author’s own.
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