CEO of Blockchain.com Reveals 3 Epochs of Crypto Bear Markets: Where are we currently?

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For the first time in three long years, cryptocurrency has seen massive bear market conditions and is significantly down by 45% since the beginning of 2022. The effects of the crypto layoffs of 2018 and 2019 are now beginning to strike, and crypto exchanges like BitMEX and Gemini have vowed to downsize from April. 

The well-known crypto exchange, Coinbase, has also rescinded job offers to cut costs. Reacting to this the CEO of Blockchain.com, Peter Smith, at Amsterdam’s Money 20/20 conference, made a statement on crypto companies and said that many digital asset companies grew too quickly but none of them have focused on being profitable for a longer time. 

“We’re the smallest crypto company of its kind by headcount – others have thousands of employees pre-profitability.” 

Smith further added that multiple firms unsustainably spent up to $800 million on marketing costs through this cycle. 

He added: “A lot of that has to wash out of the space, not just in crypto but fintech more generally. We’re going to see a fundamental rotation from growth to free cash flow.”

Investors had pushed Blockchain.com, which was founded in 2011, to spend more on marketing and grow faster. As a result, Bitcoin has skyrocketed from $9,000 to almost around $62,000 in a short time frame. 

Smith added that:

“Every company that pursued that strategy has had a dramatic reading of their business – large growth rounds collapsing, companies are now raising at down-round prices – it’s going to be difficult for them to adapt.” 

Three epochs of bear markets: Smith

Smith, in an interview with Blockworks, outlined that he dubs the three epochs of a bear market as ‘the beginning’- which is difficult to sense; ‘the middle’- the point where despair kicks in; and ‘the new normal’. 

The middle stage is defined as the chapter where tides go out, adding to this Smith said: “We’re entering the second epoch [despair], which is my favorite. I’m a free-market capitalist, and I enjoy the cleansing power of the market.” 

This stage further defines the ability to differentiate quality projects, to benefit the customers, teams, and stakeholders as well. 

Smith added, “The last stage is when everybody looks around and says, ‘Oh, this is crypto now, and we’re all going to figure out how to make this thing work.” 

Smith, stressing out on the Terra UST stablecoin crash, says that he had always doubted the Terra ecosystem’s sustainability- hence he had exited before the crash took place. Thus, Smith also suggested not to choose stablecoins.

Smith, reacting to such implosions, says that “anything that goes too fast makes me worry”, as proof, Solana which had recorded the highest high of $260 initially has gone down by 85%. Despite these market conditions Smith had mocked the idea of considering Justin Sun’s new algorithmic stablecoin, Decentralized US Dollar (USDD) seriously. 

USDD had recently skyrocketed from zero to $700 million over the previous month.