Will Rising Interest Rates Sink the Crypto Ecosystem?



But there are also significant structural and transparency differences in crypto that make an impact. Most of all, a conventional startup with high spending in excess of income, or “burn rate,” will see its equity value drop faster in a higher interest rate environment because “burn” implies future borrowing. But in crypto, the “burn rate” of a blockchain is not collated in a single place – arguably, it is instead spread out among the various maintainers and contributors in a way that’s hard to read. In other words, it’s more difficult to figure out the real financial picture of a blockchain ecosystem, particularly whether it’s somehow reliant on outside financing, than when it comes to equities.

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