The word “REVIVAL” written in vintage metal letterpress on a partitioned wooden drawer.
Institutional Spot Bitcoin ETPs have been a strong catalyst for BTC market trends over the past few months, pushing BTC prices to multiple ATHs in quick succession.
The world's largest asset management company, BlackRock, whose Spot Bitcoin ETF became the fastest-growing ETF in history, embarks on a $10 trillion tokenization journey in addition to announcing an ETH ETF in March 2024. It is reported that.
These developments triggered the next crypto bull cycle, creating a new craze for BTC, ETH, and other top cryptocurrencies, but much of the crypto industry is still struggling.
Alpha Quest and Storible surveyed over 12,000 projects for their 2024 Deadcoin Report and found that by the end of 2023, 65 percent of the crypto market will be made up of “deadcoins.”
Moreover, 75 percent of projects launched during the 2020-2021 bull cycle did not survive, let alone succeed. Major blockchains such as Terra and Cardano were featured among the most deadcoin ecosystems, highlighting the universal nature of the deadcoin phenomenon.
In addition to the average project lifespan of less than three years and less than a market cycle, the crypto industry faces the potential for excessive capital consolidation into ETPs owned, issued, and managed by large corporations like BlackRock and Fidelity. facing a threat.
Industry pioneers like HM Rawat, co-founder and chief executive officer of Lingo, advocate further down-up growth by saying: Because they are efficient, they are more likely to withstand volatile markets and external pressures. ”
Cryptocurrency Grassroots Upgrade
Enabling broader financial access across industries and socio-economic demographics is one of the greatest promises of cryptocurrencies. This entails decentralization, scope for rapid demand-driven innovation, and healthy competition between builders and service providers. This rich diversity and participation is key to the long-term success of cryptocurrencies.
Emmanuel Quezada, co-founder and CEO of U-topia, said: Engage and empower grassroots communities at scale while leveraging the power of on-chain provenance, immutable ownership metadata, and sustainable incentive mechanisms. ”
Diversity is one of cryptocurrencies' greatest strengths, and a scenario in which capital and user engagement is consolidated around a small number of assets, products, and platforms, while others fail, is one in which many believe the market is It will be seen depending on the maturity and size of the most popular products. And the brands that are most beneficial to consumers often win.
said Tushar Aggarwal, Founder and CEO of Persistence. Imagine if they all had everything they needed to succeed: mobility, community involvement, etc. Then the industry will grow 10x, 100x, 1000x and become more influential. It’s not far-fetched or fanciful, especially now that a robust cross-chain value distribution framework is in place and functioning. ”
Concerns and Adversarial Cases
While it's great to experience the excitement of a market up cycle again, the macro concerns and negative remnants of the previous bear cycle are still very evident. Cryptocurrency layoffs and downsizing that have continued since 2023 remain a threat, as do the number of crypto funds and exchanges that have recently ceased operations or gone bankrupt on a national or global basis.
Exchange closures are particularly notable given their association with enforcement actions and other regulatory developments.
The Financial Action Task Force (FATF) Travel Rule, which came into effect in September 2021, has brought a variety of practical issues to crypto businesses, especially exchanges. Different jurisdictions had different implementation requirements, leading to the so-called sunrise problem, while a lack of regulatory clarity increased operational costs.
High compliance risks and cost implications have not only driven small exchanges and VASPs out of business, but also led many countries to ban cryptocurrencies completely.
While emerging institutional ETPs are bringing mainstream attention and capital to cryptocurrencies, long-term vested interests of issuers are still emerging. BlackRock's plan to acquire its own spot Bitcoin ETP for its Global Allocation Fund signals a trend toward strengthening capital management and maximizing returns.
As Mark Goodwin and Whitney Webb point out in an extensive article on BlackRock's history and possible intentions, excessive concentration of crypto assets in the hands of institutional investors can lead to unwarranted regulatory enforcement and This could make it easier to exercise and undermine the resilience and autonomy of blockchain networks.
Can virtual currencies rebound and survive?
By building on its strengths and doubling down on its original innovative proposition, the power of community-driven growth and innovation will be the foundation for crypto projects to thrive.
Elena Sinelkova, founder of CryptoChicks and decentralization coordinator at the Metis Foundation, said: “Low community engagement is the main reason why many projects fail, especially during bear markets. Cryptocurrency volatility and bearishness It is clear that we need strong community support to withstand the pressures of the cycle.”
Cryptocurrency ecosystems need strong incentives and reward-sharing models to bootstrap and maintain community engagement.
said Rein Y. Wu, founder of PredX. “Projects can build a community through things like social media marketing, but they need a fair economic model and revenue stream to maintain long-term support. For me, the answer to that question has to be compelling. But otherwise, there is nothing.”
While advances in institutional products and regulations have had a positive impact on mainstream adoption of cryptocurrencies, the ultimate goal of the cryptocurrency industry is to increase inclusivity, transparency, and It has to be about building on core values: privacy, decentralization.
Ensuring a healthy competitive and cooperative environment will help revive the sluggish crypto market, increase its success rate, and allow native projects to benefit from the attention brought by large mainstream players.
It's either you play or you don't play.
