Market meltdown forcing several cryptocurrency start-ups out
Cryptocurrency investors are left licking their wounds after the colossal market collapse, that shaved off over $100 billion from the collective market cap in a month and sent coins to yearly-lows. Start-ups that have curated their business models around decentralized currency have also faced severe setbacks.
Last week, Bloomberg reported that several cryptocurrency start-ups have been forced out of operations due to the rapidly declining price of the market, induced by the falling anchor, Bitcoin [BTC], which fell by 48.6 percent since the beginning of November when the price was at $6,400.
The development team behind Ethereum Classic, the 17th most prominent crypto on the market, ETCDEV announced last week that it would halt its operations due to increased financial uncertainty and the plummeting value of crypto. Ethereum Classic posed a market cap of over $400 million when the development team had to succumb.
Igor Artamanov, founder of ETCDEV said, identifying the trend caused by the market fallout, “There are a few things that happened at the same time. I am sure if that happened a year ago, that wouldn’t be a problem at all, a year ago there was a lot of free money in the market. But in a bear market, there’s a change.”
Joseph Lubin, previously at Ethereum and now at ConsenSys, announced last week that his workforce would be cut by 13 percent and company reorganized as the price plummets and investor confidence escapes.
Steemit Inc. the social advertising site that rewards content creators for posts they put out also had to cut its staff to by 30 percent in late November. The adult entertainment site on a blockchain, SpankChain, which let go of 8 employees earlier in the year, recently had to remove 4 more as a result of the falling market. The total manpower now stands at 8, as confirmed by their CEO Ameen Soliemani.
On the other hand, 2018 has been fruitful for some crypto start-ups, Sirin Labs, the company behind the Solarin mobile phone raised $158 million last year for their crypto-centric mobile phone, which launched late last month. Finney, their crypto phone which costs $999, will begin to ship in December 2018. Moshe Hogeg, the Chief Executive of Sirin Labs has since indicated that the company would shift its focus from hardware to developing software for other phone manufacturers.
The cryptocurrency market does look gloomy and start-ups are being edged out of the main fray, but 2019 looks promising with the entrance of institutional investors imminent. Lex Sokolin, global director of Fintech strategy at Autonomous Research said, “The pace of new entrants and capital could counterbalance this contraction and still grow the sector as well.”
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