Despite the recent gains in the crypto market, many experts agree the market is still in a bear phase. Simply, a bear market refers to a phase when asset prices dip in price, and investors feel overly pessimistic about the future of the asset’s price. A bear market in crypto typically lasts a few months to a couple of years, and the current bearish run seems set to continue deep into the year.
Despite its discouraging nature, bear markets in crypto can provide an opportunity for investors with a long-term outlook to purchase digital assets at a discounted price, anticipating a market reversal and a future increase in prices.
Nonetheless, investing in bear markets could pose a tricky and risky situation for investors hence the need to be cautious and strategic in selecting assets. In this article, we dissect five of the most innovative crypto-affiliated companies during the current 2023 bear market and why these assets could prove winners in the upcoming bull run.
The top five most innovative crypto companies in 2023
As explained above, the prospect of investing in a bear market can be a daunting one. However, with the right strategies, patience, and research, investors can easily make profitable returns in the long term. Below are our selections for five of the most innovative crypto companies in the current crypto bear market.
1. Lido Finance
Lido Finance is a liquid staking solution for proof-of-stake (PoS) cryptocurrencies. Since its launch at the height of the DeFi bull run of 2020, little was known about the platform despite its mammoth growth in 2022. Following the Capella and Shangai upgrades on the Ethereum blockchain earlier this year, Lido Finance gained traction and has become the largest decentralized finance (DeFi) platform, according to DeFi Llama.
Chart showing Lido Finance’s TVL from January 1, 2023, to date. (Image: DeFi Llama)
The protocol supports post-Ethereum Merge consensus layer (formerly Ethereum 2.0) staking, as well as other layer-1 PoS blockchains like Polygon, Kusama, Solana and Polkadot. Simply, liquid staking services lower the barriers of entry for users wishing to participate in securing PoS networks. Users can stake any amount of proof-of-stake assets in exchange for block rewards.
This innovative solution has pushed Lido into the top 30 coins with a market valuation of $1.5 billion. The total locked value (TVL) of Lido Finance stands at $12.6 billion, an impressive 110% increase since the turn of 2023, data from DeFi Llama shows. The project shows potential for further growth in 2023, as the recent crackdown by the SEC on centralized exchanges showed. Following the charges on Binance and Coinbase, Lido Finance saw an uptick in the total number of ETH stakes on the platform – recording an increase of 13% a day following the charges.
2. Binance
The second company on our list is one of the most scrutinized crypto exchanges of 2023 – Binance, the largest crypto exchange in trading volume. In the second quarter of the year, Binance has been on a rollercoaster ride as Binance US and Binance’s CEO, Changpeng Zhao, were charged by the SEC and CFTC for offering securities on their platform. A charge that befell fellow centralized exchange, Coinbase. On the other hand, Binance has seen multiple developments and innovations prop up from its team, enhancing user experience and boosting crypto adoption.
One of these innovations is the NFT Loans service. This is a novel development available for Binance Global users, allowing users to borrow crypto using their blue chip NFTs as collateral.
In a fun innovation, Binance launched Bicasso in March at the height of the AI craze. The AI-powered image generator allows users to generate NFT profile pictures, bringing their creativity and genius to life. The generator was limited to 10,000 NFT mints in total, users can join a waitlist to generate future NFTs.
While the news may have flown under the radar, Binance also added an Airdrops portal that provides information on all the airdrops it supports. The portal gives users a complete overview of airdrops along with relevant information such as current status, snapshot time, and the airdrop period. This could see the exchange attract mainstream adoption as users flock to claim airdrops.
If the regulation woes are settled, it could be a massive year for Binance and its native crypto, $BNB.
3. AllianceBlock
Image: AllianceBlock
AllianceBlock is an integrated system that combines the best of TradFi and DeFi to increase capital flows and technological innovation. The decentralized finance solutions provider aims to shape the future of financial infrastructure.
One of AllianceBlock’s main attractions is its Data Tunnel, which aims to create the foundation of a global financial data economy, facilitating information sharing, analysis, integration and revenue-sharing across participants in the global economy. Earlier in the year, AllianceBlock announced a partnership with Crunchbase, allowing the latter to provide valuable financial data to AllianceBlock’s Data Tunnel, further connecting the world of DeFi and TradFi.
Apart from connecting TradFi and DeFi, AllianceBlock also aims to ease the tokenization of real-world assets on the blockchain. In May, AllianceBlock partnered with ARTBANX, an art collection management system, to tokenize a range of assets, including physical artwork, bringing art-banked financing to the industry.
4. Bitcoin
Despite ranking fourth on our list, Bitcoin is the most important crypto project to watch during this bear market. Unsurprisingly, Bitcoin, as the most dominant crypto (48% dominance), moves the market along with it – a massive rise or drop in BTC prices will affect the crypto market positively and negatively, respectively.
While the altcoin market has faced a torrid six months, BTC has seen a healthy rise since January 2023 – witnessing an 83% rise to $30,200 as of writing. In March, Bitcoin rose over 21% amidst crypto-friendly bank failures, crucially Silicon Valley Bank (SVB), and ongoing inflationary and other macroeconomic factors. This drove an influx of investors to rush to alternative assets such as Bitcoin, which proved a favourable asset compared to the traditional stock market, with the S&P 500 only rising 1.2% during the month.
However, the following months saw Bitcoin dip below $25,000 and maintain the range till Blackrock, the world’s largest asset management firm, announced its application of a spot Bitcoin ETF. A spot Bitcoin ETF tracks BTC’s price and will expose institutional investors to the digital asset without directly buying it. Following the reveal, the price of Bitcoin shot up from $25,000 to above $30,000 in less than three days.
5. Polygon
Our final pick is Polygon (or MATIC), an Ethereum-based Layer 2 blockchain. The leading development team on Polygon, Polygon Labs, entered a partnership with Google Cloud to ease the development of Web 3 and decentralized apps. The partnership will see Google Cloud integrate its Blockchain Node Engine on Polygon, bringing a new suite of developer tools to the blockchain.
While the announcement did little to affect the price of $MATIC, the announcement could have far-reaching effects in the long term. The integration of Google Cloud’s node service could see an exponential increase in transaction throughput, enabling the development of novel apps in gaming, decentralized finance, NFTs, etc.
Conclusion: How strategy and patience play a role in selecting winners
When selecting digital assets to invest in during a bear market and investing in general, two major factors come into play – strategy and patience. Before buying any asset, it is important to do significant research on the cryptocurrency and its project, and if possible, consult with a financial advisor before investing. Secondly, investors should set a long-term investment timeframe to give the projects ample time to grow and the market to recover.
Lastly, investors should only invest what they are willing to lose. By following these key steps, investors could turn the stark challenges in the bear market into opportunities for handsome returns on their investments.