Web 3.0 business outlook in crypto bear market.

The drop in crypto valuations has been brutal this year. Bitcoin dropped more than 40% while Ether witnessed a 50% devaluation. The total market capitalization also dipped below US$ 1 trillion after January 2021. The bear market trends are forcing the leaders to revert their attention back where the blockchain industry always recommended: building effective new solutions. 

The crypto slump can be traced back to macroeconomic uncertainty this time. It is led by a combination of increasing interest rates and quantitative tightening. As a consequence, we are witnessing panic sell-offs both across stock exchanges and crypto markets, leading to asset devaluation. Experts forewarn the recurring possibility of events such as the Terra ecosystem collapse, failure of Celsius’ crypto-lending mechanism, or liquidation losses on a scale suffered by the Three Arrows Capital hedge fund.  

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A Comparison with 2018’s Crypto Winter

The crypto fallout in 2018 was accelerated by a non-positive market sentiment along with a loss in confidence. In comparison, the current crypto winter is the direct consequence of macroeconomics. In addition to Decentralized Finance(DeFi), equities and global markets have decreased significantly as well. The bearish trends are not just endemic to the crypto markets this time. The change in leverage is happening simultaneously across other markets as well. 

VCs and investors allocated assets of over $30 billion across blockchain projects. Approximately one-third of allocations went towards gaming and VR projects, for building the pillars of the metaverse. The migration of Web 2.0 talents towards Web 3.0 will lead to a growth explosion across the sector. Retail giants and global brands such as Warner Bros, Nike, Adidas, Gucci, HSBC, and others are collaborating with major developers associated with building the metaverse and blockchains, including The Sandbox, Yuga Labs, HashCash Consultants, and more. 

Also Read: Are Impact DAOS the Future of Web 3.0?

The Blockchain Mission: Growth Through Utility Creation

Decentralized applications powered by blockchain(DApp) and DeFi possess the potential to instigate an evolution across the global Web 3.0 platform, taking and distributing the power back from centralized gatekeepers. The Web 3.0 transformation is both imminent and inevitable, just waiting for a catalyst to trigger widespread proliferation. The ongoing crypto winter could very well be the turning point, presenting downtime for Web 3.0 projects to prioritize scalability and sustainability concerns. 

Post-2018 crypto winter, we were able to witness multiple disruptive projects including NFT marketplaces such as OpenSea. HashCash has been working on building prototypes across multiple domains, including space research, AI-powered electric grid system, and more. 

Despite market fallouts, analysts expect the availability of venture capital for funding newer blockchain projects will be sufficient. The projects will not only survive but also thrive in the upcoming surge. But, all that is subject to the viability of one condition- utility. Simply put, projects that offer practical uses, or at least demonstrate utility potential, will succeed. 

Wrapping Up                   

The implication of on-chain housing processes is essential for the transition from Web 2.0 to Web 3.0 projects. Blockchain or crypto projects, be it GameFi, DeFi, NFT or metaverse-related need to keep these in consideration, and accelerate growth while cutting costs efficiently.