Why You Should Be Building in This Crypto Winter

Unlike tough times, only tough projects last in the crypto world. The crypto winter comes with a strong wind that shakes the space. Weak projects sink and as the dust settles, newer ones surface.

Without the adrenaline that drives fake projects in bull seasons, these new ones emerge slowly, despite the shortage of capital, pessimism, and gloom surrounding the bear market, and take on the world. To put this further into perspective, let’s take a look at what happens in the bull and bear markets.

What Happens In A Bull And Bear Market?

The bull market creates unrealistic expectations, exaggerated optimism, and even opportunities for unworthy projects to “moon”.

Because there’s only so much ‘air of fake projects’ a bubble can take till it bursts, in no time, the inevitable (Rugpulls, evasion, project failure, or some fundamental flops) slips in. People lose their money and a slippery slope follows.

The real projects take a massive bleeding blow due to panic. The bear market is ushered in and eats off most of the shady projects feeding off the bull market’s boom. These projects typically do not have the perseverance or capacity to contend with difficult times. They were not built in it or for it.

The bear market purges the market and creates space for new projects to emerge. The prior noise of projects springing forth every second in the bull market is silenced for new and genuine use cases to be heard.

We’ve seen a lot of strong crypto-centered projects emerge in the bear market. But it’s not enough basis to say the bear market—characterized by fear, paper hands, liquidation, and shortage of capital is the best of markets to build. This piece aims to provide a strong ground on why it’s better to build in the bear market.

First, let's establish some precedent with projects and waves that emerged in bear markets.

Popular Projects That Emerged In The Bear Market

Let’s begin by laying the floor with popular non-crypto projects. Airbnb and Uber are stellar examples of this purpose.

Airbnb launched in 2008 at the peak of a 17-month recession (2007 - 2009), the greatest one in history at that time. Uber launched in the same vein during this crisis in March 2009. I’d be a Captain obvious to mention Airbnb and Uber are both worth $68.54 billion and $45.22 billion respectively. How did the bear market help?

Using other people’s stuff had some stigma attached to it. But the bear market had tarried for a long and people needed new ways to make money. This factor enabled Airbnb and Uber to gain speedy adoption. This points to the fact that the bear market is usually desperate for a “saving product” and as the clouds of the bull run clear, people begin to prioritize, and budget and are more inclined to pursue value rather than hype.

The NFT Wave

Okay, let’s save the talks about the spiffing, superlative, out-of-this-world magnificence of NFT’s use cases. It also has the bear market to thank for its popularity in a major way.

NFTs first came around the scene in 2014/2015 in a bear market and only took a turn towards their current mega-ness in 2020, also during a recession. Although the 2020 recession was short-lived, it gave NFTs the final push into the mainstream.

Good stories begin great waves and the best time to broach these would be times when the urge to regain lost funds dominates the market. A bear market would perfectly fit into the description of this time.

Lightning Speed

As the name implies, enables the Bitcoin blockchain to make faster and cheaper transactions. It also emerged in the 2015 bear market.

One of the reasons the bear market is great for building is that attention is no longer on speculation as the speculators are out of the market. Once the speculators are in their dormant state “Attention” is very likely to shift from Ether (the token) to Ethereum (the blockchain). This means there’s a shift of motives from quick profits to actual exploration of underlying technologies which make solutions and projects more valuable.

Reasons Why The Bear Market Is Perfect For Building Projects

Crypto winters create bear-market-resistant projects. A very simple explanation would be that the bear market creates already storm-tested products. While there might be a shortage of capital, the inherent goodness of the bear market being the best to build comes to play.

As researchhas it, capital only accounts for 14% of successful startups while market timing, 42%.

Let’s play a little game of logic together to establish more tangible reasons why the bear market is the best time to build.

Accessibility Of Talents

Bear markets are characterized by massive layoffs. In this current bear market, Coinbase already laid off around 1,100 workers, BlockFi, 170 of its strong workforce, and Crypto.com, 250 of its employees. These companies are leading the crypto space and have some of the best minds. Newer projects with a very little budget will definitely assimilate some of these talents and this makes the bear market one of the best times to build a great team of experienced people.

Opportunities To Rise With The Market

Regardless of the project's strength, the nature of the market affects profitability. The market works in a cycle and no market is permanent. Projects that incubate during the bear market, take part in the rise that comes eventually in the bull season.

In the bear market, people are no longer pursuing the winning projects, they’re brought back to considering potential since every project would have experienced a low. Equal chance is given to projects.

Adaptability

Projects that failed during the bear market serve as a deterrence to newer ones. While avoiding mistakes made by failed projects, they’re also able to maneuver and build full-scale leveraging the newest technologies.

They can do this easily and in real-time without going through stakeholders and red tape. Established companies lack this flexibility. Also, they’re not making any changes at all that might affect their business as it’s yet to fully exist.

Conclusion

The bull market favors investors that take good advantage of the bear market to accumulate assets at cheaper prices. The same happens to crypto projects that lay their foundation and maybe even launch during the bear season. The reasons explained in this article don’t imply that bear-market-launched projects are immune to failing. But more often than not, it has nurtured many solid projects in the crypto space today. And is poised for many reasons as a great time to build.

Also published here.