BitDigest April 21 · Issue #641

• Crypto prices fall 4% dropping total market cap back below $200 billion level
• Singapore’s tax authority has released e-guidance on payment, utility and security tokens
• German regulators are supporting concept of reversible ICO

The Fear & Greed Index for Bitcoin and other large cryptocurrencies rose 2 points since last week signifying improving sentiment, but investors are still remain overly worried.

The Struggling (Crypto) Marketplace

I have recently received a number of calls from friends and crypto colleagues who have been laid off or decided to leave their jobs. For the most parts the calls are similar. These are people who took a leap of faith and left jobs in traditional industries, many from known financial firms. They jumped “down the rabbit hole” and “drank the Kool-Aid” and are now considering their options. The problem they face is that there are not as many good opportunities today.

There are still many starts ups and businesses in the digital assets and blockchain sector but many of them are struggling. Some companies are liquidating, and there are only a few clear native-crypto market winners like Coinbase, Binance, Kraken and DCG (I have to distinguish them from non-native crypto companies like Fidelity and Square).

At the end of last year, there were 11 identified unicorns in the crypto business and in reviewing this list last night, I have real concerns with several of these names. More worrisome is that I am being told that some other known companies are struggling – companies which have been very active in the space, but have been supported by its founders. Some have already announced layouts while others are still being funded internally. If crypto prices decline, I could see real problems. There is great truth in the proverb that  ‘cash is king’ and it is never more meaningful than in periods of overall market weakness like we are facing today.

So where does this lead us? First of all, companies will need to demonstrate if they have a meaningful business plan. Secondly, I think a much greater emphasis will be placed on go-to-market strategies and the ability of management to execute. The proverb of “trust but verify” will evolve into “verify then trust.” Investors will be more weary – long gone are the 2017 days where we were asked to invest in a company without the ability to speak with management – and the lack of available / affordable capital will lead to increases in M&A. In the short term, this is likely to lead to less employment opportunities.

I am not sure if all the people looking for jobs will stay in the ecosystem. The opportunity for quick wealth, like the gold rush of the 1850s, is over, but like the gold rush analogy I expect digital currencies / digital assets and blockchain to continue to evolve and remain here for the next 150+ years. I also expect the true believes will remain in the market, I certainly hope so.

Poker Anyone?

Over a week ago, 275 people involved in different aspects of the crypto industry got together for a night of online poker and raised $25,000 for charity. The Crypto vs. COVID Charity Poker Tournament is holding its second event on Thursday night, April 23rd, at 8pm EST and hopes to raise $50,000 this time.  The No Limit Hold’em game has a $100 buy-in. Anyone can register and if you are not a poker player you can still make a donation to support charities on the frontlines of the crisis. I did. 

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