Is Blockchain Dead, or Is It Time to Buy? The embattled tech is still beloved by VCs and retail investors, but sentiment is volatile
If you haven’t noticed, the blockchain world has been quite volatile.
The volume of OpenSea non-fungible token (NFT) has decreased by more than 90% and almost everyone has heard about the multi-billion dollar scandals and the subsequent collapse of FTX, Celsius and more.
Anyone who has been in the investment world for more than a minute knows the business magnate Warren Buffett’s famous quote, “Be fearful when others are greedy and greedy when others are fearful.”
Why it matters: Recessions can be a great time to buy assets on the cheap and ride the boom. Given the sharp decline in the price of blockchain-based assets, it might be a good time to start buying dips.
This generally presents the question of whether or not blockchain technology is here to stay. If so, this could be a strong buying opportunity as the blockchain-based markets find their footing in a post-collapse world.
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If investors can accurately predict the future of this market, there could be significant upside for those who get it right. Even a return to highs for Bitcoin, for example, would be almost a 300% gain after the 73% decline.
Despite the concerns, retail investors are seemingly unfazed as they continue to invest millions in blockchain-based startups. Gameflip, for example, has already raised over $600,000 on StartEngine from regular investors and is open to anyone to invest. Gameflip is a gaming marketplace where people can buy and sell game items, including blockchain-based goods, with over $140 million in volume.
Retail investors are not the only ones who remain optimistic about the investment prospects of the blockchain industry. Venture Capitalists (VCs) are still investing billions in the space, and VC funding in blockchain was actually higher in 2022 than in 2021. This includes VCs investing $10 million in Gameflip alone.
So the sentiment in the space is still there, but if it’s not investable in the long term, it doesn’t necessarily mean anything. One of the biggest criticisms of the space is the lack of regulation. While states have already cracked down on certain types of blockchain-based investments, the federal government has been largely silent.
It may turn around, but it is not entirely clear. While firms across the US have called for regulation, the SEC’s (Security and Exchange Commission) intentions remain somewhat unclear. The SEC recently issued guidance to public companies to disclose risks associated with any connection to crypto, indicating that they are watching the scene. But this is hardly anywhere near enough.
If the regulatory framework continues to evolve positively, institutions and the wider private investor base may reopen the space as a means of investing. This will develop a more sustainable investment environment and ideally not allow losses due to fraud, scams and other financial crimes to deter investors.
If sentiment from the SEC and other regulatory authorities changes, blockchain-based assets could rise following positive regulatory news. For example, following the SEC’s updated guidance on disclosures, Bitcoin rose about 3% in the days that followed.
Startups like Gameflip are traditionally long-term investments. If you believe in the long-term prospects of an industry, startup investments can be a great way to capitalize on the upside despite the volatility.
Gameflip is one of the top marketplaces in the US for buying and selling in-game and blockchain-based assets with over $140 million in volume. Although the investment is speculative and illiquid, equity crowdfunding investments are highly regulated, so startups can be a good solution to invest in the blockchain space where a regulatory framework exists, with the same upside potential as a successful crypto project.
While the blockchain market has experienced significant volatility, there may still be significant upside for investors to find value.
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