The crypto industry is going through the heaviest downturn in its history, Eli Ben-Sasson said, pointing out that the number of startups shutting down and budget cuts is breaking records from previous years. Nevertheless, the Zcash co-founder and StarkWare CEO believes this crisis could be useful for the future cleansing of the market.
Having been engaged in crypto since 2013, Ben-Sasson noted a key difference between the current crisis and previous years. In the past, weak projects still managed to survive even during prolonged market declines.
Now, startups are running out of money en masse, forcing teams to go bankrupt or shut down operations completely.
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Funding problems have also affected industry leaders. StarkWare itself went through a forced budget reduction a couple of months ago. According to Ben-Sasson, even strong teams with quality products are now shutting down simply because they did not have enough financial runway.
The exit of young teams from the market has become only the first part of a broader shift. At the same time, the industry is losing support from those on whom the biggest hopes were recently placed — large traditional investors.
Major funds lose interest in crypto
According to the StarkWare chief’s forecast, traditional financial institutions will continue to lose interest in the crypto market. This trend will last at least until the U.S. midterm elections. If Democrats win a majority of seats, major investors will become even more cautious, the StarkWare CEO believes.
At the same time, Ben-Sasson sees the withdrawal of large capital as a positive factor. He stressed that cryptocurrencies were never created as new rails for the old banking system. The goal of the industry is the opposite — to give freedom to financial innovation, which directly contradicts the actions of the heavily regulated traditional financial sector.
While old banks are losing interest in the industry, new trends are emerging inside the community itself. Ben-Sasson believes that getting rid of the influence of major funds is forcing developers to look for other points of support for the next technological leap. As the entrepreneur summarized, the next wave of hype should not be expected from artificial intelligence or corporate blockchain products.