- Kathleen Breitman told CNBC's Karen Toso that "easy money" and low interest rates from for-profit venture capitalists have artificially inflated the valuations of many crypto companies.
- Even if the Fed imposes a moratorium on rate hikes next year, only a “small minority” of crypto applications are actually useful and can grow organically, he said.
© Contributed by CNBC There is something about the recent crypto crash that sets it apart from previous crashes.According to Tejos, co-founder of the blockchain platform, the ongoing crypto winter is “only going to get worse” as the industry adjusts to a world of higher interest rates.
When asked about the price falls of many crypto assets this year, Kathleen Brightman said:
"Money was coming into the system very easily, and I think that artificially fueled a lot of things, most notably the valuations of these companies," he told CNBC's Karen To on Wednesday at the Web Summit conference in Lisbon, Portugal.
Brightman cited NFT trading platform OpenC, which saw trading volume from $2.9 billion in September 2021 to $349 million in September 2022, according to Dune Analytics.
"Obviously a lot of these markets have had a peak and fade phenomenon, but right now they're stuck at a $13 billion valuation," Britman said.
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"So I think a lot of cheap money has been invested, valuations have gone up, people in general are struggling to justify those valuations one way or another, like cheap gimmicks like crops, and now that the easy money isn't anymore ie hope that's all. our community is deserted," he continued.
While the pause in Federal Reserve rate hikes that economists expect next year could lead to a rally in the crypto market, Brittman said there will always be shifts in crypto valuations and technologies based on the expected benefits of real user growth based; And without the ability to proceed with "cheap tactics" to attract "easy-to-reach, easy-to-use" users.
"Cryptocurrency wasn't valued at that price and technology wasn't valued for the last 10 years when we had low interest rates," Britman told CNBC. "It remains to be seen, but in principle I think some useful things will develop."
"But that's a small minority of crypto applications, whether people want to admit it or not."
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Tezos, co-founded by Breitman, is a smart contract platform similar to the popular Ethereum, but allows token holders to vote on changes to the platform before they are accepted each month.
In 2021, usage of the network is fueling demand in the art world, where digital artists create and share art on the blockchain, Brittman said. According to him, this use is the only source of organic growth for the entire industry.
The idea of the end of the cryptocurrency easy money age is something that analysts have been debating for the past few months amid the economic downturn.
Some industry insiders believe the recent relative stability in the price of assets like Bitcoin, which has traded between $18,000 and $25,000 after high volatility over the past four months, is positive for the industry.
Anthony Trenchev, co-founder of crypto lender Nexo, previously told CNBC that Bitcoin's performance is "a clear sign that the digital asset market is maturing and becoming less fragmented."
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Correction: Updated the text and headline of this story to correctly describe the whereabouts of Kathleen Breitman.