Is Crypto Winter the right time to invest in Web3?


Crypto Winter appears to have more longevity than just a passing season. A year after Bitcoin reached an all-time high, topping US$68,000, the collapse of FTX last month sent the OG of the crypto world tumbling to less than one-third of its former price, and the total crypto market cap is more than 15% down since the crypto exchange’s bust. But as the chill spreads and the market struggles, for some investors, the time is right to take reach for their wallets and build for the next cycle.

“At a very macro level, this cycle that we’re entering — depending on how you start the clock — we’re about one to two quarters into what I call the fifth sort of major cycle,” Gin Chao, Founder of CVP NoLimit Holdings, told Forkast in a video interview. “This is very similar to mid-2018, late 2018, into late 2019.” 

Having previously worked as chief strategy officer at Binance, Chao co-founded venture capital fund CVP NoLimit Holdings this year to focus more on the early-stage adoption of blockchain technology. Chao says the current Crypto Winter is an opportunity to build a healthy investment portfolio in Web3.

“During that time, at the end of season one, into season two, incubation seasons of Binance Labs, these are where some of our most successful investments emerge from this sort of crypto winter,” he said. “And we’re seeing that same macro environment right now — and even more so, given what’s going on with inflation, interest rates, etc. — globally. So this is really the period where you can really find teams that have already self-selected themselves away from ‘missionaries versus mercenaries’ and have built through a bear cycle … It’s also fortunately a good time to be negotiating on valuation and things like that.”

Based on his experience in both traditional finance and the crypto space, Chao says the current Crypto Winter is part of a cycle that repeats itself every 18-24 months, and that the spring of the next cycle might be on the horizon.

“The people that have been in this industry for a while, I think, are quite calm about what we’re seeing because it’s what we’ve seen before,” he said. “If you look at the rest of cycles and cycle-on-cycle, people are pretty happy, I think, with the results. We’re going to continue to see this volatility until there’s mass adoption or early mass adoption. But in the meantime, I don’t see any major changes from what we’ve seen in the past … Depending on where you think the low is — if you think maybe last mid-June or this past June was our low — then I’d argue we’ll see another all-time high late next year, early into 2024, if prior patterns hold. And it could get a little extended because of the overall macro environment we’re in. But I don’t think we see anything that would completely break this pattern.”

However, for the Web3 technology to attain mass adoption, much remains to be done in terms of regulation compliance and cybersecurity. Watch Chao’s full interview with Forkast Editor-in-Chief Angie Lau to learn more about what the Crypto Winter is bringing to the industry, what Web3’s attractions are for investors, and how to bring blockchain technology into the mainstream.

Highlights

  • Winter window: “This (Crypto Winter) is very similar to mid-2018, late 2018, into late 2019. And during that time, at the end of season one, into season two, incubation seasons of Binance Labs, these are where some of our most successful investments emerge from this sort of crypto winter. And we’re seeing that same macro environment right now — and even more so, given what’s going on with inflation, interest rates, etc. — globally. So this is really the period where you can really find teams that have already self-selected themselves away from ‘missionaries versus mercenaries’ and have built through a bear cycle … It’s also fortunately a good time to be negotiating on valuation and things like that.”
  • A Web3 shopping list: There are areas for structure — layers that are still very, very attractive to investing. And then, at the application layer, two broad thesis: one is DeFi (decentralized finance), which I think is the short-, medium-, long-term killer app across blockchain, and then the other being IP (intellectual property) content, which we’re a little more stringent about (in terms of) our investment criteria. We’re looking a little bit more for established IP creators that can bring immediate traction with users, as opposed to relatively new IP that still has to go out and adopt a fan base.
  • Compliance and custody: “At the larger institutions — and particularly in Western Europe and the U.S. — there are still compliance issues to work through around custodying this asset class for…



Read More: Is Crypto Winter the right time to invest in Web3?

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments

Get more stuff like this
in your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Thank you for subscribing.

Something went wrong.