WHAT did the encryption do after the failure? “ HODL and BUIDL ,” said Scott Spiegel, organizer of BitBasel, Miami’s annual crypto arts event. hodl , a common term in crypto circles, urges users to “wait for life” during a downturn, and the community has repurposed the word “build” to accommodate this. In short: keep the faith.
“Crypto winter,” a widely used term for cryptocurrency price crashes, has long been the idea that it’s time to give up. Each fall tends to eliminate what was consumed by the hype and leave only a dedicated core: application building and blockchain technology. Ethereum, currently the second most valuable blockchain, launched its first “crypto winter” after the price spike in 2014. The following winter of 2017, many decentralized finance applications were also discovered.
The industry faces regulatory pressure
Well, cryptocurrencies are ready like never before thanks to the latest recovery time for BUIDL . Billions of dollars of venture capital in cryptocurrencies have been raised and deployed, giving many crypto creators a cash cushion they can rely on when asset prices are low. The market capitalization of all cryptocurrencies remains higher than at the end of 2020. FTX 's spectacular collapse in November after finding an $8 billion hole in its balance sheet was a major blow. But other exchanges like Binance and Coinbase seem to be staying.
In addition to the transition to HODL and BUIDL , the industry has faced regulatory pressure. There are three large bills circulating in Washington: two global and one for stablecoins, a type of cryptocurrency pegged to an asset or commodity. U.S. regulators such as the Securities and Exchange Commission are cracking down on platforms that have facilitated cryptocurrency tokens masquerading as securities.
What does all this mean for the price of crypto tokens like bitcoin or ether? If inflation comes down and the Federal Reserve cuts interest rates, that could help cryptocurrency prices given how closely they correlate with their stocks in 2022. But the more cryptocurrencies grow, the more difficult it is to imagine another explosion in the markets. cryptocurrency prices. one
“It's all about providing use cases,” said one developer in Miami. If BUIDL's activities do not lead to real use of the cryptocurrency during the recession, other than speculation and scams, this recovery period may be extended. ■
Alice Fullwood: Wall Street Correspondent, The Economist, New York
This article was originally published in the Finance section of The World Ahead 2023 under the title In the Heart of Winter.