The Coming Crash and Rebirth
You can't have a Cambrian explosion of growth and innovation without a latter period of consolidation. We may be at that moment. If so, don't panic and prepare to persist through a bear/build market.
One of the most level-headed people in the web3 crypto space posted this yesterday:
Chris is not alone in this thinking. Many who have tracked the multiple boom-bust cycles of Bitcoin know that we are due for a major correction at some point given the insanity of 2021. Things like…
Multiple dog/meme coins blowing up to $20B+ market caps.
Multiple VC funds raising $1B+.
The hundreds (thousands?) of projects/protocols now built in the DeFi space, many of them overlapping and redundant.
The NFT explosion whereby there are multiple 10,000+ PFP projects released on a daily basis, and crypto punks + bored apes selling for 250K.
The explosion of scams, scammers, influencers, grifters, and celebrities all chasing the hype cycles and trying to still chase every last dollar.
It’s true. There are tons of excesses and it’s only a matter of time before the pendulum swings the other way to correct. In many ways, we are already well on the way in the correction with Bitcoin down nearly 40% from it’s all-time highs and many other projects down 60-80%. Everything could drop another 50-75% from here before going into the next crypto winter.
And this is not a bad thing. Or a scary thing.
Bear markets are build markets. I loved this figure from the Electric Coin Company’s Annual Developer Report.
The last bear market crash didn’t see a mass exodus in developers. They stayed, weathered the storm, and kept building. Many of the projects that took off in 2020-2021 were built during the slower, harsher times in 2018-2019. People weren’t distracted about price and charts and media attention. They were heads down and forced to focus.
If you have found yourself in web3 and feel a bit nervous about what the future may hold, take comfort. There will be many that will make it through this next cycle. If you or the project you work with have enough capital to persevere through a 2-year dip, you’ll be fine. Many won’t, and that’s also fine. Something like 80-90% of all startups fail, and the same will be true of the many web3 projects out there.
But just like Amazon crashed almost 95% after the dotcom boom, but it’s up 300x since those lows 20 years ago. It’s not a guarantee the same will happen for Bitcoin or any specific web3 project, but it’s likely that whatever correction we go through is a temporary pullback towards a brighter future. Buckcle up. Get ready to build.