One of our previous blog posts tells you how to do crypto and blockchain marketing. This task, however, gets exponentially more challenging when all industry state-wise odds seem to be against you.
In all areas of business, being flexible and adapting to changes is of vital importance. But is it possible to adapt to a market as volatile as that of crypto? Every day brings new technological developments, regulatory hurdles, and influxes/outflows of investment from both retail and institutional investors.
Just recently, speculation about the American Federal Reserve raising interest rates has caused a renewed sell-off in the markets, prolonging what many hoped to be a short-lived crypto winter.
Despite the negativity surrounding the markets, development continues regardless, sowing the seeds of the next bull run. While there is tougher competition out there, projects can take inspiration and examples from platforms that began in the last bear market, cementing their place before the huge bull run.
In this blog, we’ll be looking at:
- The current market situation.
- Where investors are putting their money.
- Examples of successful bear-market projects.
- Tips for how your product can come out on top.
Finally, we’ll show you how our experienced marketing team at 42DM can take your project to the next level. So read on for some insights you may not have considered!
Summary of the current market situation
As we can see on the chart below, capital in the crypto market increased by more than 2,300% in less than 2 years, then dropping almost two-thirds over the last 6 months.
In spite of that, private equity and venture capital investors are reluctant to give up their distributed ledger technology-related objectives. McKinsey estimates that the amount of money they will have poured into Web3 deals by the end of this year will stand at US$36.6 billion, marking a 21.2-percent increase from the year before.
The consulting giant also predicts that metaverse — one of the decentralized world’s hottest trends — will reach a valuation of US$5 trillion by the year of 2030. In the first half of 2022 only, the aggregate investment (i.e., VC, PE, and M&A combined) into the metaverse space surpassed the figure it had reached in all of 2021 by almost 100%.
black square: Venture capital and private equity
blue square: Mergers and acquisitions
The bigger picture
While the situation doesn’t appear to be appealing at first sight and could be considered disastrous by people examining the market over the last year alone, we can understand the drop in digital assets’ prices and market capitalization by looking at it in the context of past bull and bear market cycles.
In the previous cycle of 2017, Bitcoin fell from its all-time high (ATH) of 19k to just 3k over a period of 13 months. It then went through accumulation over a period of 15 months.
The current decline from Bitcoin’s new ATH of 68k is still ongoing, but we are only in the 10th month. This means it is still too early to talk about a global change in crypto market trends; we will only be able to tell after further time.
Where investors are putting their money now
A bear market doesn’t mean a period of continuous capital outflow. Rather, there are periods where a lot of money is taken out, but also times when money is put back in; it just depends on whether investors are attracted by something with solid prospects. This is shown with the rapid influx of investor capital ahead of the Ethereum Merge.
Investors are indeed more cautious, but they are still willing to put their money into projects once their worthiness has been evaluated. Importantly, they need to show they can survive and really deliver come the next big cycle.
Projects that survive and grow
Looking at previous bear market projects, we can get an idea of what it takes for a project to thrive and grow. Like athletes training in harsh conditions, projects born in the crypto winter learn how to build to survive, no matter the adverse market conditions thrown at them.
We talked before about the need for businesses to be flexible, but of course this is within the structure directed by the project’s roadmap. If we think of projects as ships trying to keep their course, the bigger the ship, the more difficult it is to turn it around.
Project roadmaps may have a correlation to market cycles, but as these cycles are changeable, this can only be one planning factor amid a wider technical and systematic approach.
As prolonged market crashes are extremely hard to foresee, however, there are some projects that don’t leave any wiggle room in their development plans, running on inertia and pretending that outside market forces don’t have an impact on how the project runs. This is not realistic and it is why a lot of new applications may gain some initial traction but then quickly fade away.
The competition
We can’t lie, while in bull markets there is more chance to gain significant investment, the crypto winter also presents opportunities for worthy projects. After all, even at this low point, there is still US$900,000,000+ to share in, the key is to prove your credentials and build connections to muscle out the competition.
We can see this happening with both Uniswap and OpenSea. Projects that are able to demonstrate their credibility and show flexibility within the current market conditions are taking a larger share of the market.
UniSwap is absorbing the trading volume of other DEXes…
…while OpenSea takes over the NFT marketplace.
So what exactly are these products doing right? In the next section, we’ll examine Uniswap as part of DeFi, OpenSea as part of the NFT space, and NEAR blockchain as part of layer-1 solutions, seeing how they are managing to stay successful in the crypto winter.
Project 1: Uniswap – DeFi
Back in May last year, Uniswap v3 went live. The upgrade saw the arrival of a number of breakthrough features aimed at helping users earn more — something that the DeFi is all about:
- Concentrated Liquidity has allowed liquidity providers to put less of their capital at risk, essentially acting as stop-loss. In the second version of Uniswap, liquidity was provided across the entire price range, meaning if either token’s price had plummeted to US$0, the user would’ve lost all their money. With v3, LPs can deploy liquidity into a specific price range and use the remainder for supplying elsewhere or choosing any other strategy they prefer.
- Range Orders have enabled liquidity providers to make use of a feature widely known among those trading on traditional centralized venues — limit orders. Apart from better proactive planning, a major benefit here is that when the target price is triggered, the user earns swap fees along the way.
- Flexible Fees have introduced three different tiers of fees that depend on the riskiness of a given pool — namely, 0.05%, 0.3%, and 1%. The more volatile the pair, the greater the reward.
All these innovations have proven right when looking at the daily market liquidity, which as of March of this year was already richer on v3 than on v2.
Project 2: OpenSea – NFTs
OpenSea has taken advantage of both technical product improvement (integration of various chains, improvement of UX, improvement of security, reduction of commissions, etc.) and programs aimed at the development of the community itself:
- OpenSea’s ecosystem investments. Ecosystem Grants and OpenSea Ventures are community investment programs aimed at supporting the creators, teams, and emerging technologies advancing the global growth of Web3 and NFTs.
- The 2022 NFT Awards. There were numerous categories; winners in some were determined by data obtained from the platform, while in others, by a community vote. By allowing users to become part of something big, OpenSea increased the level of engagement substantially.
These moves have allowed OpenSea to maintain the growth rate of users, or at least reduce the outflow of those already there.
Project 3: NEAR – Layer 1 solution
During this time, the NEAR Protocol has decided to focus on the support of its user and developer communities, as well as rolling out a stablecoin of its own, which is crucial for risk-averse trading strategies:
- For users, NEAR offers a vast number of various how-to’s, manuals, and tutorials that are written and updated frequently;
- For developers, the protocol has Guilds — a vibrant community of experienced engineers that assist those building dApps on the NEAR network — multiple grant programs awarded by the NEAR Foundation, and a wealth of CLI, SDKs, APIs, and other tools;
- In April 2022, NEAR issued a native stablecoin dubbed $USN. It introduced an ability to benefit from arbitrage in case the price lost its peg.
The chart below demonstrates that even despite the crypto winter, the quantity of new NEAR accounts has skyrocketed since the beginning of Q2 2022.
Guide for new projects
Looking at the examples of these successful projects, here’s what you should do:
Build community to create loyal user base
Effective actions in building a stable community and new opportunities for users can enable the project to keep its users in the crypto winter and learn to compete in the domestic market (with limited resources) or increase dominance. New projects are able to attract venture capital with a unique idea of solving the problems of crypto and blockchain adoption.
Integrate with other projects
Striking partnerships will not only help you expand the technology stack and help your users unlock new opportunities amid the crypto winter, but also gain more exposure and get an opportunity to acquire an additional audience that may be on the lookout for diversification.
Develop a crypto winter (competitive) mindset/ always look to improve
As crypto prices reach new all-time highs and dip in cycles, start preparing yourself for the next crypto winter while the current one is still ongoing. Track stats and KPIs, figure out the strategies that enable you to grow despite significant market downturns — or at least to stay afloat — and measure their impact, and be ready to equip them next time the on-chain panic kicks in.
Retain interest through competitions, grants, rewards
Since we’re all in the crypto winter already and the broader global economic recession is looming, what everyone wants is support. One of the ways to provide such support to your users or customers is by keeping them engaged thanks to competitions (trading or coding), grants (dev), and rewards (yield-farming and staking programs with higher yields).
Make sure you solve a unique problem
Don’t get us wrong, but these days, almost every project offers low transaction fees and fast confirmation times. Make sure that the product you go to market with or are currently improving does really solve a problem many people experience — and it does not necessarily need to have to do solely with crypto-fluent enthusiasts. The ways to fix those problems will unveil your Unique Selling Point, around which everything else will revolve.
Being born in the crypto winter can be yet another important factor for, well, survival in the crypto winter. Each project should bring some solution to the problem of adoption and work for the common good — the adoption of the blockchain in the real world. Newly created projects in a bear market can be more attractive for investors because they can have a unique solution to adoption problems.
According to J.P. Morgan, in H1 2022, venture investments in the blockchain already reached US$17.9 billion, which is even higher than last year when there was a boom. A bear market is the time to build, and in a bull run, the market evaluates what you built in a bear market. “Smart money” does the opposite to the market — it evaluates your offering in a bearish market to later sell it when everything’s in the green, which is exactly what the institutionalists do right now. Smart money’s watching how you build when no one else is watching, so this is the best time to declare yourself.
Projects that performed well in their first run rarely perform just as well in their second one. The market prefers fresh blood. This is indicated by the fact that the top 10 cryptocurrencies by capitalization differ greatly each cycle (normally, 5 out of 10 currencies are new). Below is how the top 10 crypto currencies looked in 2018 and 2021, respectively.
42DM as your team to boost your product
Given an all-encompassing experience we’ve had with customers involved with decentralized apps, decentralized finance, smart contracts, and crypto wallets, 42DM may be rightfully considered a full-fledged crypto marketing agency.
If you want to leverage our knowledge navigating these rough, frozen waters of the crypto winter, you’re more than welcome to reach out.
