Opinions of contributing entrepreneurs are their own.
While you would expect something to grow in the winter, that’s not the same with the cryptocurrency market. Startups do, surprisingly, get started, and some are even thriving. In this article, we address your pressing question: launching your dream project during the seemingly barren crypto winters or waiting for a bull.
A crypto story of two super bowls
There was, of course, a time of bountiful boom for all cryptocurrencies – 2022 was one. Super Bowl 2022 saw a slew of ads from crypto companies. Super Bowl 2022 was even nicknamed the ‘Crypto Bowl’. The reason for this was not hard to figure out: it was the crypto bull market. There was a surge in demand in the market driven by the increasing popularity of NFTs, meme tokens and the metaverse.
Fast forward to 2023, the market crashed – no thanks to Luna, FTX and the strict crypto regulations that followed. There have been no Super Bowl crypto commercials this year, except for one misleading ad from an NFT-based game. The picture of the market in 2023 was in stark contrast to what it was in 2022. Retail and institutional investors who embraced crypto last year didn’t want to touch it with a ten-foot pole this time. Crypto startups that once thrived struggled to stay afloat, while potential startups looking to enter the market now faced a dilemma: to launch or not to launch?
Related: Bear With Me: 3 ways to capitalize during the crypto winter
The dilemma of crypto winters
There is no right or wrong answer to the question: to start or not? However, this article offers perspectives to help potential founders decide. But first we have to go back to 2009 – the origins of Bitcoin.
In the beginning there was no market — When Satoshi Nakamoto created the first cryptocurrency, there was no crypto market. All the anonymous creator had was an idea that could solve global economic problems by democratizing finance. They weren’t sure what to expect. Why would anyone believe, accept and use a digital currency? Despite these and other legitimate concerns, Satoshi Nakamoto continued to create Bitcoin. And from that one currency, 25,794 coins and tokens (according to CoinMarketCap data) were born.
Early currencies that followed Bitcoin, such as Ethereum, Litecoin and Ripple, stuck to the plot of innovation within the established democratized financial system. But this was not the case with many of the thousands of projects that followed. These projects, especially after the crypto boom of 2017, went off script. From ICOs and IDOs to meme coins and NFTs, the crypto industry became a center for speculation. Users weren’t concerned about use cases; they kept jumping from project to project, looking for quick profits. This is why new founders face the dilemma of crypto winters. Should they risk their new project failing because of the market’s high anxiety index, or should they just wait to ride the wave of market hype, albeit temporarily?
See also: How should investors survive this ‘crypto winter’
Startups vs Crypto Winters: The Current Dynamics
During bear markets, investors prefer to stick with the few resilient projects they know and to trust. New projects, even with viable utilities, may not get their attention if they don’t see a quick way to capitalize on them.
This is why the founders of meme coins don’t bother to provide utilities. For example, PEPE was of no use, but rose about 7000% in a matter of days, reflecting how greed, not value, is driving the crypto market.
But this is not to say that utility-based projects have not been successfully launched during the crypto winter. UniSwap is such a project. The decentralized crypto exchange was launched in 2018 amid a rough bear market. But as of October 2022, the parent company, Uniswap Labs, was worth $1.66 billion, controlled 64% of all DEX volumes, and the $UNI token had a market cap of over $5 billion. Users could see the project beyond temporary benefits.
I believe the crypto winter is the best period to launch a crypto company or product. It is a period characterized by less noise and less hype. A period to test the loyalty and sentiment of users or investors. However, the founder who wants to be successful during this period must fulfill two tasks: (1) have a viable product and (2) master the story.
Viable blockchain solutions have a high chance of surviving crypto winters. While the market is looking for the next ATM, a utility-focused project would never catch the attention of the market.
Ownership of your story as a crypto startup
Often, founders who successfully navigate the crypto winter are the ones who control their story. They are the ones who don’t allow themselves to be labeled “get rich quick” by the market. These projects continue to present themselves as utility-oriented and community-oriented, even if the market wants otherwise.
Any founder can capture the attention of the market during bear markets. In fact, a bear market is a period when investor attention is not divided between the many projects that are profitable at the same time. So it is the best time for startups to step up, provided they come up with unique crypto solutions. Once that’s settled, it becomes easy to sell their story to the market.
By focusing on viable products with usability and mastering the story, emerging crypto startups can increase their chances of success in an unpredictable crypto market.