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We talked about layoffs last week. We look at a new layer of doom and gloom.
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We have talked about crashes in the short life of this newsletter, but the sell off this week has scared some people. Even seasoned investors seem to be uneasy about this one, because things are happening so fast.
They have never aligned with warnings of a longer recession. Things have already plunged so quickly at the signal of a recession that insiders fear a lengthy bear market could hit the token to lows far below the highs of last year's bull run.
Bitcoin looks like Chamath took it public via a SPAC
— Alex Cohen (@anothercohen) June 18, 2022
It means rough things for token, but also more brutal realities for the whole system.
This week, we saw the interconnectedness of major institutions as Celsius stuttered and brought down the price of ether as investors feared a price collapse brought on by over-leveraged players. The potential for cascading failures is the same as it is for traditional finance markets.
If things fail harder and faster than before, the question is how quickly the startup community can adapt. Many companies don't have to deal with the stress of both public and private markets, but a lot of them did raise mega-rounds in 2021. Many protocols with treasuries sitting in ETH have seen their budgets stretched and their survival threatened.
Where will consumer demand go if there isn't a promise of wealth or a reduction in interest in exclusives? When governance groups go from being filled with millionaires to seeing their profits disappear into thin air, will they grow more self-motivated and more concerned about short-term goals? Things will get worse.
Someone calls the emergency number. The cooling off of all customer withdrawals this past weekend was due to concerns about its own solvency. Since then, the firm, which claimed to have 1.7 million users before the pause, has seen its own token plummet and send the already-struggling market into a tailspin. We talked about what went wrong on the Celsius network and how it is connected to the rest of the coin.
While web3 is looking shady and investors are angry about losing money, regulators are seizing the moment and cracking down on firms in the space. Some of the biggest names in cryptocurrencies are facing lawsuits and fines.
For better or for worse, the tech billionaire bros are okay. Jack Dorsey, the CEO of Block, said this week that he was going to cancel web3 and move on to his vision of the internet. In this week's episode, we talked about a creative proposal from Musk.
We had a guest who built a successful business in Box, and now he is on a mission to beef with web3stans all over the internet. Levie told us how he was able to walk the fine line of being a critic without getting in trouble.
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Last week was a bad one for the markets. In Austin, Texas, 20,000 people came together to discuss how to navigate their industry, which looked like it could go up in flames. She returned from the conference with some thoughts.
The downturn in the digital asset markets has elicited many questions from friends and acquaintances about whether it is the end of web3 or not. The party is over now that the music has stopped.
I shared my two cents/ two Satoshis on the matter on Los Angeles public radio this week, but I want to use this space to highlight some thoughts I have after hearing from people in the industry at Consensus It is going to be a difficult time for the space, but I don't think this is the end of the coin.
On a panel about how to invest in web3 in a turbulent market, the Chief Investment Officer of Arca made an interesting point about what makes web3 so different from most other sectors.
Digital assets are not an asset class according to me. I think it's a technology that wraps all asset classes. It is possible for investors to specialize based on products or sectors. In web 3, the categories haven't been clearly defined because of the variety of uses of the technology.
That is part of the reason we can't group all of them in the same bucket. The vibe at Consensus was positive even though the market was in turmoil. Each project has a different use case, and each builder has a conviction in why their own use case makes sense. Reporters and analysts can look at this industry with a lot of care at a time of uncertainty. I believe at least some parts of web3 are here to stay, and I see it as my job to shed light on what applications of this technology are working and not working, but also to try and understand why.
Some of this week's analysis can be found on our subscription service.
Who pays the price when the market is selling off?
The global market value of cryptocurrencies fell below $1 trillion for the first time since January 2021. The driver behind its freeze isn't completely clear, but it resulted in another bank run scenario similar to what we saw last month with the UST and LUNA situation
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