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Bear Market Opportunities 💰 + New State of Crypto Report 🔮

Ether Capital Newsletter
Ether Capital Newsletter
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No one said this would be easy.
The precipitous drop in cryptocurrency prices this week is another reminder that last year’s highs, including a US$3+ trillion global market cap, are very much in rear view. The industry has shed roughly US$1.5 trillion in market value over the past six months, sending many new investors (or tourists) running for the hills. 🏃 💨
So what does this mean for those of us who still have skin in the game? 🤷🏻‍♀️
We shared a few bear market survival tips in a recent newsletter. A slightly tweaked, tldr version is:
  1. Knowledge is power: Use this time to research and understand an asset’s value proposition. If you can’t make a case as to why an investment will serve a purpose in the next five to 10 years, then it’s probably best to steer clear.
  2. Sayonara meme tokens: Fortunately, bear markets have a tendency to clear out many projects and protocols that don’t have strong fundamentals — something that we recently spoke to the Financial Post about. With fewer distractions, you will be able to determine what is worth your time and money — and what isn’t. We’re hopeful this will lead to more consolidation in the space among companies and capital being reallocated to OG assets like Ethereum, which have been properly stress-tested.
  3. DCA crypto: Rather than going all-in during downward cycles, consider a dollar-cost averaging (DCA) approach, where you invest a total sum of money in small increments overtime. This will help you stomach the volatility and not bite off more than you can chew.
Business As Usual 👷
We recently spoke with The Canadian Press about how we’re not letting the latest downturn hold us back and remain focused on building out our operating business. There is a silver lining to all of this, and while we don’t know how long this period will last, it’s important not to stray from your conviction. At Ether Capital, we are very bullish on Ethereum and are committed to staking ahead of the upcoming Merge. 🚀
We aren’t the only ones hard at work during turbulent times. Many other companies are (or were) in the same boat, including FTX Founder & CEO Sam Bankman-Fried (SBF), who told us last week that his multi-billion-dollar crypto exchange was born in a bear market. 💸 👇
In Conversation with Sam Bankman-Fried, Founder & CEO of FTX
In Conversation with Sam Bankman-Fried, Founder & CEO of FTX
ICYMI here’s a link to our full discussion with SBF on May 18th (we broke it down into chapters so you can easily scrub through).
Democratizing the Internet
Chris Dixon, general partner at Andreessen Horowitz (a16z)
Chris Dixon, general partner at Andreessen Horowitz (a16z)
If you attended Permissionless in Palm Beach, FL, last week, there was no shortage of enthusiasm for the space. 🌴 In our next newsletter, we’ll share a video from a panel we participated in, so keep an eye out for that!
One of the highlights was Chris Dixon, general partner at a16z, who talked about the evolution of the internet and how Web3 will overhaul ownership and earning capabilities. Big Tech has cornered the market in Web2, so creators including artists, influencers and musicians aren’t able to reap the rewards of their success. 👎
Slide from a16z's 2022 State of Crypto report
Slide from a16z's 2022 State of Crypto report
Dixon also talked about a16z’s 2022 State of Crypto report that came out last week, which provides an insightful overview of trends including how Ethereum stacks up against other protocols. One of the big takeaways is that we’re still very much in the early days of Web3, and according to the report:
While it’s hard to know the exact number of web3 users, we can reason about the scale of the movement. We estimate there are somewhere between seven million and 50 million active Ethereum users today, based on various on-chain metrics. Analogizing to the early commercial internet, that puts us somewhere circa 1995 in terms of development. The internet reached 1 billion users by 2005 – incidentally, right around the time web2 started taking shape amid the founding of future giants such as Facebook and YouTube.
Newsworthy Links & Highlights 🗞️
Speaking of a16z, the venture capital giant announced a new US$4.5 billion dollar crypto fund, which is more than double the size of its last fund. The sharp decline in crypto prices over the past few weeks doesn’t seem to phase those behind the fund — a16z says it remains steadfast in its conviction and is focused on the long term.
StarkWare Industries, which provides IT consulting and services to make blockchains more scalable, has raised US$100 million in a Series D funding round putting it at a US$8 billion valuation. This is up from the US$2 billion valuation at its last fundraising in November 2021.
Terra Update ☝️
The dust has barely settled following UST/LUNA’s cataclysmic collapse earlier this month, but the protocol’s founder has confirmed that Terra 2.0 😱 is set to launch this week. CoinDesk provided a breakdown of what the revival plan looks like. Meanwhile, blockchain analytics firm, Nansen, undertook an investigation to find out exactly what led to UST de-pegging in the first place. Another important thing to note: On Wednesday, Ethereum co-founder Vitalik Buterin, shared his thoughts on whether algorithmic stablecoins like UST are sustainable. If you ask us, we think it’s too soon for a Terra comeback tour. 😬
European Central Bank (ECB) President Christine Lagarde is known to be a fierce critic of cryptocurrencies and says she won’t go near digital assets. However, she recently told an audience during a college tour that her son invests in crypto. Interesting.
Have Questions About Crypto? 🤔
The industry is quickly evolving and there’s a lot of information to keep up with. That’s why we want to help! 🦸
Email us your questions and we’ll respond to as many as we can. While we can’t provide investment advice, we do want to steer you in the right direction so you can be informed.
Thank you for subscribing to our weekly newsletter! We’d love to hear from you, so please don’t hesitate to reach out. 😎 🚀
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