The crypto winter has been in play for the past 12 months, and Tezos’s co-founder believes it could get worse in the coming months.
Kathleen Breitman, the co-founder of the Tezos blockchain, believes that the crypto winter is only going to get worse.
The cryptocurrency market has been in a bearish cycle for the past year. More than $2 trillion has been wiped out from the market during that period, with Bitcoin and the other leading cryptocurrencies down by more than 70% from their all-time highs.
While talking about the decline in crypto prices, Breitman said;
“A lot of this was inflated on cheap money, and a lot of this was backed by basically, like, VCs trying to pump. There was a lot of easy money going into the system, and I think it was artificially stoking a number of different things, mainly valuations of these companies.”
She mentioned this point while speaking at the ongoing Web Summit conference in Lisbon, Portugal. She cited the NFT marketplace OpenSea, which saw its trading volume plunge from $2.9 billion in September 2021 to $349 million in September 2022. The Tezos exec added that;
“Clearly, there is a phenomenon that has kind of crested and gone away in a lot of these markets, but meanwhile, they’re saddled with a $13 billion valuation. So I think there’s a lot of cheap money that went in, valuations went super sky high, you had people scrambling to make those valuations justified in some form, usually through cheap tactics like yield farming, and now that the easy money’s gone away, all that’s left is we’re getting communities, I hope,”
Analysts expect that a pause in Federal Reserve’s rate hikes next year could see cryptocurrencies rally once again. Breitman believes that there would be a shift in how crypto and tech companies are valued, and it would be based on anticipatory benefits to actual user growth. She added that;
“Crypto hasn’t been evaluated by that metric, and neither has technology in the last 10 years that we’ve had low-interest rates. It remains to be seen, but basically, I think what you’ll find is the things that are useful are going to thrive. But that’s the small minority of crypto applications, whether people want to admit it or not.”
Tezos has been increasing its presence in the web3 ecosystem. Last month, Tezos-based nonfungible tokens (NFTs) became available on the popular ecommerce platform Shopify.
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