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Disclaimer: We are not financial advisors and do not offer financial advice. Always do your own research. Consult a professional investment advisor before making any investment decisions. Our content is for entertainment only.
Crypto Winter 2022
Well – this has been a chilly WEEK for the crypto community with talks of a crypto winter.
When we were writing this newsletter last week, the Total Market Cap of crypto was about ~$1,2 trillion. As we write this today, it’s down to ~$0,9 trillion. We aren’t used to working in trillions, but quick math says that $300 billion of value has disappeared in the last seven days.
That’s a lot.
If you follow the crypto space much on Twitter, discord, podcasts, etc., you know that the tone has changed very quickly. Before, web3 newsletters focused on “how to best build community within your DAO.”
Now we are hearing warnings that we are approaching a “crypto winter” where everything freezes, nothing grows, and the community goes into pause mode.
We’ve survived a crypto winter before
There have been two previous crypto winters — in 2014, 2018, and potentially, now again in 2022 (Bloomberg 2022: The Crypto Winter is Here). Where traditional markets have “bear” cycles, crypto seems to have four-year cycles of winters.
What’s different about this time versus previous crypto winters was that people worried that the fundamentals of blockchain were flawed. We are already 8-10 years past that worry.
This winter reflects the general financial issues we are seeing in high-interest rates, inflation, and market hesitation.
Still, this does not reflect problems with the functionalities of blockchain or crypto itself, implying that the concepts are sound, but the market is tough for everyone, everywhere.
Without a crystal ball, we don’t know what will happen and wouldn’t want to hazard a guess.
Cryptocurrencies are highly variable, and while Bitcoin has crashed to the lowest value seen since July 2021, we’ve also seen it rise just as quickly.
We believe web3 is still relevant, necessary, and revolutionary
This downturn has caused us to think deeply about why we are so interested in the overall crypto space and, even more importantly, why we are interested enough to put out this weekly newsletter.
1) We still believe that web3 enables new ways for authors to get fairly compensated for their work.
2) We still believe that web3 makes it easier for books and authors that mainstream publishers have traditionally overlooked (i.e., due to audience size, not having the right network, etc.) to be published.
3) We still believe that web3 allows new ways for authors and readers to connect and for communities around stories.
4) We still believe that web3 unlocks new ways to write stories- through community engagement, integration with NFTs, and more.
5) We still believe that both authors and readers will value all of the above.
6) We still believe that the billions of dollars that Venture Capital funds have invested in this space improved web3 technologies, tools, and experiences. We all know that these things take time to launch.
7) Overall, we still believe that we are just beginning to see traditional firms (i.e., banks, consumer-facing companies, etc.) put money in the space by launching NFT projects, investing in companies, and making crypto available to the broader public, etc.
Passionate communities will always prevail
So while we have NO IDEA what will happen in the crypto/web3 markets in the future, we feel comfortable with these core beliefs.
We’ve been around long enough to know that anything built by determined, passionate groups of people won’t disappear with a little tumult and hardship.
The people who continue to explore and build in the space are the ones who will hit the ground running when crypto resurfaces again.
We will keep those beliefs in mind and get inspiration from the amazing project’s building and growing within the web3lit community.
So whenever we get too bummed out about our portfolio value, we’ll look at what we see from Sitka World, SolType, Readl, Jenkins the Valet, Page DAO, StoryPrima, and so many more and realize that we’re in good hands.
Until next week!
Jon and Lisa Ferland
Fueled by passion, coffee, and late night conversations, we appreciate any and all donations of appreciation
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