One year ago, around Christmas time, almost everyone was talking about the “Bitcoin Mania”, internet money and investment tips. This year, the fireside chat will be about the plunge the crypto market has been taking for a few weeks now.
The price of Bitcoin fell below $3,500 last week after hitting an all-time high of 20,000 about a year ago. The previous time Bitcoin was below the $4,000 threshold was August of last year when the coin’s trajectory was set to climb upwards steadily. The cryptocurrency is finding it difficult to find a foothold in the market with the price ranging around $4,000 and many investors even backing out.
This is not the case only with Bitcoin, but other cryptos as well since the entire market seems to be facing a downhill trend. Ethereum is trading at around $89 and Litecoin at about $24. This is not only causing problems for investors but for startups as well since many had no option but to close shop.
What’s Happening in the Industry
The first to put a full stop was ETCDEV–the group best known for launching Ethereum Classic, which is among the top ten cryptos out there in terms of market capitalization.
ETCDEV made the announcement last week. A lack of funds was given as the reason for the move. Company’s founder, Igor Artamonov, said:
“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.”
Unfortunately ETCDEV cannot continue to work in the current situation and has to announce shutdown of our current activities pic.twitter.com/N6xWnpBNJJ
— ETCDEV (@etcdev) December 3, 2018
The news came as a shock to many, but ETCDEV is not the only one that had to bite the dust. Another major name that got hit due to the new wave was ConsenSys. The company is reported to have reduced its workforce by about 13% due to the change in market conditions.
An adult entertainment service called SpankChain, started the year with a market cap of $190m this year, only to end it with a staggering $6m and a cut of their staff team.
According to the Telegraph, Coinfloor, a UK-based crypto exchange, and Kraken, a US-based BTC exchange, are said to have cut down in the number of staff.
Another company had to go through a similar fate last month was Steemit Inc., when the company behind STEEM coin fired 70% of its employees.
Experts blame the decision to count so much on digital coins for the failure of many projects.
“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,” said Bloomberg.
The Final Word
Startups are finding it difficult to raise capital. While this is a bad thing for the industry, many experts believe that this trend would ensure only good projects see the light of the day.
With the wave of ICOs last year, it had become “normal” for projects to raise money only by saying they would add blockchain to their project, without focusing on the durability and the real use cases of the product.