Crypto Market Crashing And Crypto-Civil War
By MYBRANDBOOK
#DigitalAsset, #CryptoCurrency, #Crypto-Software, #Bitcoin, #Crypto-Civil-war
Last week Between Thursday and Friday, the crypto market sold off heavily and sent Bitcoin down by more than 10 percent. It even went below the USD 3,300 mark before slightly recovering, affecting several startups.
* It is greatly affecting the software-development community that produced over 1,000 digital coins.
* One of the primary reasons the companies suffered is because a portion of their funds is in digital assets.
* As prices collapse, It is difficult for many developers to raise additional funding.
The crash in the cryptocurrency market is weighing on the software-development community that spawned over 1,000 digital coins amid dreams of independence from traditional financial systems and instant wealth. ETCDEV, the startup that led development on Ethereum Classic, which is among the top 20 coins with a market capitalization of about $400 million, announced this week that it’s shuttering operations due to a funding crunch. Joseph Lubin’s ConsenSys, one of the largest crypto-related software startups based in New York, said Thursday that its workforce will be reduced by 13 percent as part of a reorganization.
In late November, Steemit Inc., also announced in a blog post, they have been forced to layoff almost 70 percent of their employees. In a recent tweet, Ameen Soleimani, CEO of SpankChain, an adult entertainment site also announced they have reduced their number of employers from 12 to 8.
Bitcoin SV (BSV), Bitcoin Cash’s (BCH) hard fork that had been ranked fifth yesterday on CoinMarketCap, is now down on the list, with major stablecoin Tether (USDT) having taken over both BSV and Bitcoin Cash. Tether’s market cap now amounts to over $1.8 billion, while BCH and BSV are almost equal with market caps of around $1.8 billion, also trading at an equal price of around $100 at press time.
Recently, the Winklevoss twins’ crypto exchange Gemini announced the listing of Bitcoin Cash custody and trading, adding that their platform will “only be providing support for the Bitcoin ABC network.”
Many of the companies are suffering because they kept a portion of their funds in digital assets, whether in tokens they sold through initial coin offerings or in Bitcoin and Ether, which served as the preferred means of exchange in the crypto world. As prices collapsed this year by more than 90 percent in some cases, and their so-called digital wallets thinned out, many developers found they couldn’t raise additional funding.
“We are definitely a part of this trend," Igor Artamonov, founder of ETCDEV, said in an interview. "There are a few things that happened at the same time. I am sure if that happened a year ago, that wouldn’t be a problem at all, a year ago there was a lot of free money in the market. But in a bear market there’s a change."
Venture capitalists funded about 1,180 crypto startups since 2012, to the tune of more than $5.6 billion, according to CoinDesk. Hundreds of other companies raised about $22.5 billion by issuing tokens to the public or so-called accredited investors via ICOs, according to the researcher.
Last year, Sirin Labs raised $158 million to create a mobile phone that will enable consumers to trade and use crypto. However, while they are expected to ship the first batch of a few thousand phones this month, they are now considering refocusing on shipping software for other phone makers instead.
In an interview, Moshe Hogeg, chief executive of Sirin Labs admitted they only have enough funds for 6 to 12 more months of operations. Pricing Pressure on Digital Assets
According to the global director of fintech strategy at Autonomous Research Lex Sokolin, the pricing pressure on digital assets this year will likely lead to 25 to 50 percent layoffs and shutdowns for current projects. He added: “However, the pace of new entrants and capital could counterbalance this contraction and still grow the sector overall.”
Other companies like East Wenatchee and Giga Watt filed for bankruptcy in November because their business models didn’t hold up.
ETCDEV discovered it was in a financial crunch last week, and couldn’t raise funds, Artamonov said. Its 12 workers are searching for other jobs and a few have been recruited by a rival company, he said.
In an email, Martha Bennett, principal analyst at Forrester Research stated many startups had trouble creating a viable product. She concluded by saying: “Sooner or later, this would have led to a contraction anyway. The crypto crash acted as both catalyst and wake-up call.”
The Bitcoin Cash Hard - "Crypto Civil War"
The most shocking event of the the month is, of course, the hard fork that Bitcoin Cash has undergone.
Now with two variants, Bitcoin Cash ABC and Bitcoin Cash SV, the contentious debate about how Bitcoin Cash should proceed into the future has led to a divorce — with severe repercussions for the market.
Brian Kelly, founder and CEO of investment group BKMC, called this a “crypto civil war,” which is about as accurate a description as any.
There are rumors that BCH holders have sold their bitcoins and diverted those funds to their respective forks. The resultant hash war has certainly, if not in any measurable way, caused both reputational and financial damage to the cryptocurrency market, nudging an already stagnant market to the wrong side of support levels.
Such incidents only further the impression that the cryptocurrency market is too volatile and uncontrollable to last into the future, but it should be known that the Bitcoin Cash fiasco is an outlier, and the coin has already been marked as an investment to avoid by the larger community.
With the market still maturing, such incidents are inevitable. However, in the grand scheme of things, it is but a blip in the development of a revolutionary asset class.
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