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Daily headlines, price charts and social media today are filled with stories of the great crypto crash and how all cryptocurrencies are trading in the red. The total crypto market cap fell short of $1 trillion recently, for the first time since January 2021. Bitcoin and Ethereum slid by 60% and 25%, respectively, and are trading at an 18-month low. Several altcoins, including BNB, ADA, SOL and DOGE, are also in the bear run.
For reference, it was only in November 2021, that the crypto market touched $3 trillion, with Bitcoin at its all-time high. So, financial experts consider this one of the worst market crashes in history. The crash started with the Luna-Terra fiasco in which investors lost their life savings on the Terra-Coin. It was then fueled by the Ukraine-Russia conflict and carried forward by the Celsius Network freezing its crypto transactions.
Now, whatever the reason, the fact is that the crypto market is plummeting to a new low every day. Not only is this creating waves of panic among investors but also causing a myriad of crypto projects to shut down their operations. And this is primarily due to the lack of long-term vision and utility among a majority of these projects.
Lack of utility in the crypto market
As of March 2022, there are about 18,465 cryptocurrencies. While the market is dominated by the top 10 coins, a new crypto project emerges nearly every day, and the industry today is swarming with thousands of such projects.
The problem, however, is that most of these projects have little or no real-world utility. Primarily, these projects were built to ride the crypto wave to reap short-term gains. So, in the case of a market crash, these projects find it difficult to survive and often shut down.
Situations like these aren’t new, though. During the dot-com mania of the 1990s, we witnessed the rise of a plethora of projects trying to change the world. But just like crypto projects, most of the then dot-com projects lacked utility and a solid business model.
So, when the dot-com bubble burst, popular projects like eToys, 360Networks, Webvan, Pets.co. and several others were liquidated and declared bankrupt. However, projects like Amazon, Qualcomm, Microsoft and eBay that survived the bubble, went on to become tech giants with trillions of dollars in market cap.
Bringing utility to the forefront
A single look at the projects that survived and the projects that didn’t survive the dot-com bubble paints a clear picture of how everything boils down to the core utility and long-term vision. The same goes for the crypto industry. It is undoubtedly an unstable space.
And with only four percent of the population on board, even small changes in demand-supply dynamics can wreak havoc on the market. Crashes and all-time highs are a regular phenomenon this will, more or less, continue until the industry matures.
However, projects that focus on solving real-world problems and providing real utility to investors have the chance to rise above these market conditions to survive anything that comes their way. The best example is Amazon. When companies at that time were focused on gaining short-term profits, Amazon’s business plan focused more on brand building and utility, and less on income.
The company wasn’t profitable until the fourth quarter of 2001. But its focused approach to providing value and building the brand paid off in unprecedented ways, making Amazon one of the biggest brands in the world today.
In the crypto market, Ethereum takes this cake. By introducing smart contracts to the world of blockchain, the network created a core foundation of utility. As a result, Ethereum not just survived but came out stronger after every bear run. This success of Amazon and Ethereum goes on to show that people are most likely to stick by a product or a service, despite market conditions, if it solves a problem in their life.
So, the blueprint for new crypto projects to survive the market crash is quite simple. The focus needs to shift toward solving real-world problems and brand building, instead of quick profits and short-term gains. With utility at the forefront, crypto projects not just have the chance of surviving the market crash but also establish themselves as the Amazon or Microsoft of the future.
Market conditions are great filters
The turbulent conditions in the crypto market today seem difficult to get past. But on the other hand, these market conditions are a great filter of sorts, eliminating projects that weren’t robust in the first place.
When the market recovers, which many crypto experts believe it will, the industry is left with projects that have real potential to grow. In this regard, shifting the focus toward utility is the key necessity and the only way forward for the crypto industry.
Jamie El-Kaleh is the head of marketing at Mogul Productions, a DeFi and NFT marketplace platform for the film and entertainment industry. Jamie is an influencer with over 21 million views and has managed multiple marketing projects for several years.
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