Bratislava-based developer Miroslav has been a crypto enthusiast for a few years, following different projects such as Cardano, while also investing in some of them. As he explains, getting rich through crypto is not a priority for him, but finding a project offering the best utilities and uses of blockchain is.
However, when he tries to communicate this to his local community in Slovakia, he more often than not hits a wall. Some of his friends have even stopped talking to him because of the topic, while others are quick to dismiss the scam as soon as the conversation begins.
“People now generally see crypto as speculation and don’t know or care about the different uses or utilities, such as those of different blockchains, their use cases, etc. Most of their opinions are negative, they only talk about price cuts, scams and of course some of the arrests that took place last year,” Miroslav tells The Recursive, recalling his personal experience.
The factual situation in the sector has unfortunately provided strong support for such claims. Several major scandals have marked the past period for crypto, with the fall of giant cryptocurrency exchange FTX being the biggest to date. Last month, the company’s former CEO, Sam Bankman-Fried, was found guilty of all seven counts for fraud and money laundering, and now faces a maximum sentence of 110 years in prison.
Another fallen crypto stalwart, Terraform Labs co-founder and former CEO Do Kwon, now sits in a Montenegrin prison, awaiting extradition to the United States or South Korea. Kwon was responsible for the crash of the Luna crypto network, which wiped out over $60 billion and deeply damaged the market.
These developments, associated with crash other small but important projects such as BlockFi and Celsius, all contributed to the crypto market reaching a cap of $1.35 trillion last month. A sharp drop from where the market peaked in November 2021, when it hit $3 trillion.
Optimistic, but still very realistic
Where does the crypto industry go from here? For large players in the industry such as Bitrue, the Singapore-based cryptocurrency exchange, it is more than evident that the market is indeed in a difficult situation.
“It’s been a tough year and there are obviously several reasons for that: FTX, Tera/Luna, etc. On a personal level, you have to be quite optimistic and optimistic, but at the same time realistic, and there are still some headwinds to overcome. Not just at the individual project level, but obviously also at the macro level. People are talking about a good year next year. But will it return to what it was with a valuation of over 3 trillion? Maybe not,” Robert Quartly-Janeiro, Bitrue’s head of strategy, told The Recursive.
In April this year, Bitrue also experienced its share of problems when it was hit by a To hack it cost the company more than $23 million. For Quartly-Janeiro, this is the kind of situation in which companies in the sector simply need to get out of it and come back stronger. However, the same is true for the crypto industry as a whole and there are positive indicators that could affect the future of crypto.
“There is a natural economic environment that is deteriorating, which will likely push people to turn to digital assets to protect their money, which is true. And then, at the same time, the U.S. institutional ETF market for Bitcoin is likely headed for another significant gap. So if that happens, if BlackRock gets an ETF license and others do the same, then people think that okay, that means it will then become a completely mainstream market,” Quartly-Janeiro points out.
Therefore, being cautiously optimistic is what might be the best strategy at the moment, he says. Additionally, the current bear market is also making the situation increasingly complex.
“You just don’t know what’s in store for you.” And it’s a very complex period. But I guess another thing is, at what point do you say we’re no longer in a bear market? Because things appreciated from the bottom,” he tells The Recursive.
Additionally, one of the biggest changes Quartly-Janeiro expects to see is in the number of existing crypto exchanges, which he says is too many.
“I expect you’ll see a lot of trade attrition. This should be a positive thing as people move to bigger companies. But at the same time, you could see a lot of media coverage around people saying, “Hey, I lost my money on this trade and I lost some more money on this trade,” which would be a bad thing. But I think there are too many exchanges and I think that will change – you will clearly have players who will be very good at national level, and others who will be good at regional level, and international level, etc. he adds.
Hope for the best, prepare for the worst
The bear market and numerous crypto crashes have also affected the way investors view crypto projects. For example, in the United States, cryptocurrency investments in the third quarter of 2022 were around $700 million, compared to more than $6 billion in the first quarter of the year.
Nikolay Denisenko is the co-founder and CTO of Brighty App, a Swiss bank that combines crypto and fiat banking. According to him, recent developments have also changed the way crypto investors think about regulation, for example.
“We are already under very strong regulatory pressure in Europe. So some of our partners have had their work cut out for them because of this. For example, we are relaunching the partnership, we onboarded and at some point they say okay, our bank came to us and told us not to use cryptocurrency anymore – because of that we still have hard, we are a little slower than we should be,” Denisenko said. The recursive.
The solution to deal with such problems? Get together, build and try to survive in this market, and find product-market fit, he adds.
“I think everyone should start focusing on profit and not on increasing capitalization. When I spoke to most investors and venture funds, it seems that no one is currently interested in large cap, but rather in how you earn and how you can increase your risk. Denisenko emphasizes.
Moving Forward – A Bull Market and Continuing Education
For Vlad Svitanko, founder of Dubai-based consultancy Cryptorsy, the sector is currently between two cycles and it is reasonable to expect such a situation to have an impact on market capitalization.
“I think we are now living somewhere sitting between cycles. Because the bear market has not yet been overcome and the bull market has not yet started. What that actually means is that we’re in a situation where there’s a lot of energy to fuel the market, there’s a lot of anticipation in the space, and it just can’t have any effect on the price of assets,” says Svitanko.
Furthermore, apart from regulation, there is also the slightly forgotten aspect of education, which in its own way also harms the market.
“The education layer is very important, because without education, people won’t really get into crypto and Web3, because they don’t understand what’s going on here,” he told The Recursive.
Education also remains one of the missions of people like Miroslav.
“It’s a massive bear market, it’s a tough market cycle. However, adoption is increasing and the technology is much more ready for mass adoption. And now it’s time to educate people to believe and trust this technology. So I will not give up, I will continue to share content in the Slovak language and explain to people what is happening, what is being developed and what can be achieved with technology. he concludes.