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Crypto Winter Fashion
With even Coinbase freezing all hiring and even canceling job offers, it’s pretty evident that the temperatures have dropped across the entire crypto world. Companies are either downsizing or shutting down, with both trading volume and user numbers substantially diminished as the global markets swing back towards fiat. It’s important to recall though that this is not a new phenomenon of Crypto Winter 2022. Back in 2018, the biggest Ethereum developer Consensys Labs reportedly laid off up to half of its staff, which at the time was over 1,200 employees. ShapeShift, one of the early vanguard crypto brands, had to fire 30% of its team.
The question on everyone’s mind though: are we at the bottom now? There are disagreements across the community, but my personal guesstimate is Bitcoin will sink to $25,000, and it’ll bring the global crypto marketcap down with it to about $700B. So my answer is “no, we’re not at the bottom yet, but we’re close.” I don’t have a ton of science behind this estimate, but whatever the bottom number eventually is, I believe it’ll be quite close to the 2017 all-time-high of $20,000. This isn’t a call to jump overboard, however. It’s just a reminder that crypto will do nasty things to anyone who isn’t a true believer. Once we hit the bottom, the industry will shrink even further as investors stop spending, service providers lose clients, and family dinners will become battlegrounds on why you ever thought those JPEGs would be worth anything. I think McDonald’s caps will remain in fashion until the end of 2023, but for a more informed dive into the economics of this season, see BitMEX founder Arthur Hayes’ entertaining take here.)
There are a handful of companies though that, either by fortuituous circumstance or god-like timing, managed to set themselves up nicely right before the ice began to form. Locally, I’m thinking of PDAX with their mammoth $50M Series B investment round in February. I’m thinking of Coins.ph with their $30M Series C (and new CEO), and BreederDAO with their $20M IDO, both announced in the last month. Given how brutal the winter season tends to be in the crypto world, these companies will have significant advantages over their competitors and will be able to win a disproportionate share of the shrinking market with little to no opposition.
In the greater tech landscape, Facebook has taken another massive step in their metaverse strategy by officially changing its NASDAQ ticker symbol to META. Why do crypto people make a big deal about FB changing its business name to Meta in the first place? Well, imagine IBM in the 1990’s deciding to rename its company to “Internet, Inc.” Or McDonald’s staking its claim on the food industry by calling itself “Food Company.” Government rules prevent such generic words from being registered as business names because it makes it appear as if this company represents an entire business segment. Unfortunately, those rules don’t extend to new industry terms like “meta.” Another worry: unlike many crypto companies, Zuckerberg’s little startup is well-insulated during this winter, and can take this opportunity to cheaply acquire the companies necessary to build whatever version of the metaverse they want.
And then, of course, there’s Luna, its embattled Terra Foundation, and an all-new Luna 2.0 blockchain that is somehow already up and running as I write this. Exchanges both centralized and decentralized alike have already started accepting the new $LUNA (the old one has been renamed to $LUNC), and if you were holding either $LUNA or $UST before the meltdown, you should be eligible for new $LUNA tokens according to a specific ratio. The new $LUNA debuted at a market price of around $17, and quickly found an intra-day floor of $3.60. It’s recovered somewhat over the last week and is now sitting at $6.40. Although that’s still over 90% below its ATH, it’s actually trading higher than I thought it would.
With our winter coats and McDonald’s caps, the community has some trying times ahead of it. What should we do during this period? My best advice is to dollar-cost-average your way into a small crypto investment over the next 18 months. (Say, 2-5% of your income each month, no matter what the price is.) Stick with either BTC and ETH, and keep your altcoin exposure low. Even better, try to look for a side job that pays you in crypto. Whatever you do, don’t try to be a smart guy and call the bottom. If there’s anything I’ve learned over the last 8 years, it’s that the market eventually humbles everyone.
See you all next week, crypto fam ❤️