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As in any financial market, the crypto sector is cyclical. Seasoned professionals remember the rapid rise of 2017 which was largely driven by the ICO boom and the market expectations that utility tokens will empower the new reality in many segments of the ‘regular’ life, from banking and payments to healthcare, digital ID, and so on.
Another big ‘if’ was crypto adoption. While crypto adherents expected millions of users to start using Bitcoin and other top currencies in day-to-day payments, state officials had somewhat different views: several countries, like Switzerland and Estonia, went all in allowing for tax payments in BTC and full-scale digital business procedures, other key global economies were way slower in adjusting their legislation.
The reasons were mixed, partly because of the obvious fears that decentralized currencies could challenge the monetary monopoly of Central Banks, partly due to anti-money laundering and fraud control restrictions. Real or not, those concerns led to massive limitations for end-users, thus reducing enthusiasm for crypto as a whole.
This led to Crypto Winter #1 which killed the majority of scam and unsustainable projects, reduced fundraising opportunities and squeezed the market. The moment everything changed was in 2019. With the helicopter money policy which was primarily aimed at the broad stock and bonds market, came the second round of crypto hype: Bitcoin at $65,000 apiece, multiple new blockchains launched on weekly basis, crypto exchanges opening their doors to accommodate cash-rich and risk-tolerant investors.
Again, the cycle took place: following the QE reverse moves by Central Banks and Fed in particular, markets went down starting yet another Crypto Winter. Many projects have been wiped out already, and it’s obvious that several other whales might have to go. The most loud bang was the FTX/Alameda collapse which not only has moved Sam Bankman-Fried from the Forbes list of billionaires but left thousands of small and medium investors with no funds.
Crises like this are painful but surprisingly helpful. Despite the destructive effect they bring, there is a silver lining after all. First and foremost, the market gets cleared from weak and useless projects that were unable to prove their utility and form a client base or community strong enough to navigate in stormy waters. Second, FTX-style bankruptcies do affect customer behavior with more people moving their funds to non-custodial storages, and looking closer to DEXes instead of CEXes.
In the end, those who survive will flourish but the main question is who. From past experience, we can learn that projects, ergo tokens, to survive and benefit are ones with enough funding and, more importantly, solid economics behind the project. Speaking in simple terms, if your bridge does help people convert tokens between chains, there’s some room for it, and if it doesn’t, marketing tricks won’t do the job anymore.
If you are a long-term believer in DLT and related services, the time is perfect now to meet the counter cycle which is largely driven by a rise of metaverses and related sectors. While waves one and two were pretty much technological and financial, this one looks more like a consumer and product-inspired one. Subsectors to grow are DeFi, consumer financial services, cloud solutions and GameFi (or let’s call it blockchain Games).
The latter is the most interesting to watch and has the biggest potential. A major shift that is taking place with political and macro concepts close to an unconditional basic income will undoubtedly lead to more and more consumer time spent in learning, traveling and gaming. That’s where game-related projects step in. It is good to remember that GameFi has already shined enough in 2019-2021 presenting several bright yet short-lived champions using play-to-earn / play-and-earn mechanics.
Were they good enough to satisfy the players? Probably not. The majority of those were simplistic representations of DeFi protocols with unclear economics and very basic graphic solutions to cover the deposit-and-grow schemes and inflated token prices. We shall avoid pointing fingers but there are whole blockchain ecosystems that rose and fell fueled exclusively by staking and quasi-staking on-chain solutions.
New successful games will have a capital ‘G’ in their descriptions, i.e. first comes the gameplay, and the rest is only to follow. The blockchain game has to have strong gameplay, multiple in-game interactions, an NFT market, good strategic tasks, and an attractive design with a variety of characters, locations, sets, items, and more. There is one new game that pretends to meet these criteria: Bluelight.inc.
Bluelight.inc is a free-to-play startup simulator in a virtual Silicon Valley that is a mix of business tycoon and challenging collectible card game mechanics with blockchain opportunities. The lore of the game is based on the universe of the Take My Muffin animation series, the first cartoon that was funded entirely by its crypto community.
Bluelight.inc is well positioned to benefit from the meltdown, and its internal currency, $KALE token, looks like a reasonable entrance point for anyone seeking long-term benefits from their crypto-exposed assets. The token is currency listed with the Cryptology exchange, and we believe that more listings are to come in the future.
Have a closer look at this one if you feel like making a long-term fundamental bet
