What the bear market means for crypto and web3

    It was difficult to initially tell EthDenver – the largest Ethereum developer conference in the world – that we are in a bear market. The conference earlier this month drew some 20,000 attendees to Denver, where hundreds of side events and impromptu meetups populated trendy bars and restaurants day and night.

    The sector has certainly slowed down: in 2022, the crypto market lost as much as $2 trillion. But if you stopped to talk to an investor or founder, it became clear that many entrepreneurs and investors believe the market downturn is constructive for the long-term health of the web3 space. Projects settle into real value and foundation building rather than pump-and-dump schemes and hyped NFT sales.

    My conversations with EthDenver participants took place just before Bitcoin’s value hit its highest since last June. Even with the cryptocurrency above $28,000, the price is still well below its all-time high of $64,000.

    Developers and founders I spoke to celebrated the toned-down parties as a good thing, as it meant most of the speculators were gone. Even local Uber drivers took notice. Last year they shuttled people between much more extravagant parties. “You could just smell money in the air,” one of them told me. “And this year it felt more serious.”

    Apply brakes

    The downsizing of events and parties has been accompanied by shrinking investment for startups, which are now facing a harrowing time to raise funding. The amount of venture capital for web3 companies has fallen sharply in the fourth quarter of 2022, to $2.4 billion compared to $9.3 billion a year ago, according to Crunch base. The number of funded web3 startups halved to 327 during the quarter.

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