The deepening chasm between the crypto evangelists and naysayers may never have been as stark.
On Wednesday, Andreessen Horowitz, the most prominent Silicon Valley venture capital group, made a $4.5 billion bet on what it called a “golden era” for cryptocurrencies, citing “a massive wave of world-class talent” that’s entered the industry in the past year.
“That’s why we decided to go big,” wrote Chris Dixon, a managing partner at the firm.
On the same day, a once-bullish investor made headlines predicting bitcoin could fall to $8,000 from its current level of around $30,000.
“Bitcoin and any cryptocurrency at this point has not really established itself as a credible institutional investment,” Scott Minerd, Guggenheim Partners’ chief investment officer, told Bloomberg News at the World Economic Forum in Davos. “It’s really become the market of a bunch of yahoos and backwaters.”
That’s quite a shift since February last year, when Minerd told CNN’s Julia Chatterly that he could see bitcoin, which at the time was trading around $40,000, eventually soar to as much as “$400,000 to $600,000.”
Bitcoin hit its peak of $69,000 in November. It’s lost more than half its value since then as investors have pulled out of riskier assets in the face of rising interest rates.
Despite the crash, there were several panels about cryptocurrencies and digital money at Davos this year, not to mention a spate of crypto-linked vendors along the town’s famed promenade. But establishment voices at the summit didn’t waste any time disparaging the web3 crowd.
“Bitcoin may be called a coin but it’s not money,” said Kristalina Georgieva, managing director of the International Monetary Fund, on Day One of the event. “It’s not a stable store of value.”
So where do we go from here?
It’s easy to watch crypto’s day to day volatility, as well as fringe projects like Terra and Luna enter a “death spiral,” and dismiss the blockchain technology and philosophy underpinning them. But the crypto faithful say that despite its problems, crypto isn’t going away.
For one thing, according to some experts, crypto has to confront its branding problem.
The term cryptocurrency can be misleading, Marcus Sotiriou, an analyst at digital asset brokerage GlobalBlock, told me.
“Ninety-nine percent of cryptocurrencies aren’t trying to be currencies — they’re trying to be assets behind these blockchain networks,” he said. “And I think that it’s only a matter of time before all businesses integrate blockchain in some form of way.”
Calls are growing for closer regulation, especially after the collapse of TerraUSD and its sister coin, Luna, earlier this month. Many advocates support greater oversight, in part because it could help cryptos gain mainstream credibility. There are an estimated 300 million crypto users currently, and Sotiriou says the number is doubling every year — nearly twice the historical rate of internet adoption.
“Even though sentiment is very, very negative at the moment and it all seems all doom and gloom,” he says, “the actual fundamentals of crypto haven’t changed.”
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