The cryptocurrency market has been crashing for weeks now. A few days ago, the largest cryptocurrency per market capitalization, BTC, reached a yearly low leaving cryptocurrency investors anxious. The first thing that comes to mind when you think of price crash is the investors portfolio. However, cryptocurrency startups are also suffering as the market crashes. In fact, many of them are going bankrupt.
Startups Are Going Bankrupt
According to the reports from Bloomberg, many cryptocurrency startups have been shutting down thanks to the price decline that has cost some coins more than 90% of their gains since December last year. ETCDEV recently announced that it would be closing shop because it has run out of funds to continue operating in this bearish market. ETCDEV is the group behind the development of Ethereum Classic (ETC).
The founder of ETCDEV, Igor Artamonov, talked about how his company has been affected by the bearish trend in the broader market. In his words:
“There wouldn’t have been a problem if some of these things that happened now happened about one year ago. About one year ago, there was a lot of free money to go around in the market but the bear market has changed everything.”
Apart from ETCDEV, other cryptocurrency startups have closed shop because of lack of funds and an inability to raise capital at this time. ConsenSys, the blockchain startup founded by Joseph Lubin, is making plans to cut 13% of its workforce because of the fall in the price of cryptocurrencies. Steemit Inc, the well known blockchain based content publishing platform, laid off about 70% of its staff because of this fall in price.
According to Bloomberg, the main reasons why these startups are having challenges is that they are over-extending on digital assets thus linking themselves directly to the price of cryptocurrencies. Part of the post was as follows:
“Most of these companies are currently suffering because they kept part of their funds in digital assets. Some did this through token sales while others kept huge portions in BTC and ETH. This is because these coins were the preferred means of exchange in the cryptocurrency world at the time. So, as the prices started to fall drastically against the USD, the digital wallets these companies had thinned out. Also, because of the bearish nature of the market, developers were unable to convince investors to invest in their projects.”
Bitcoin (BTC) Price Today – BTC / USD
While the declining price has cost a lot of projects their business, it has pushed stronger projects to the top. Projects that were not consumed by greed and made the smart choice because they believed in the industry are still standing tall. Most of the projects that have already collapsed are the ones that rushed into the blockchain and cryptocurrency world during the 2017 boom in a bid to make huge profit. There were also a lot of scam projects unfolding at the time. Even some projects that were legit were less focused on durability, use cases and quality and more focused on profit. This contributed a great deal to the price crash everyone is now experiencing.
The prices are still crashing and the market is resetting to how low it was before the 2017 price boom. If the prices remain in the current range long-term, the industry will have no choice but to do less with more. With the focus shifted from making huge profit new development breakthroughs will be made and this will increase the level of mainstream adoption.