Does the Crypto Crash Affect Web3’s Future?

Key Insights:

• Over the last two months, the crypto markets have witnessed massive corrections.
• The global cryptocurrency market cap has shrunk to $930 billion, but traditional markets are taking a beating too.
• The Web3 and blockchain market is anticipated to register a CAGR of 45.20% despite the recent crash.

American internet entrepreneur Chris Dixon has defined Web 3.0 as ‘the internet owned by users and builders orchestrated with tokens.’ While Dixon’s definition of Web 3.0 doesn’t describe the entirety of the same, it does, however, present a decent picture of what Web 3.0 is truly capable of.

More often than not, mainstream media and newbies put words like blockchain, NFTs, Web 3, DeFi, and many others under a more significant umbrella term – cryptocurrencies.

Over the last two months, crypto markets have witnessed massive corrections. News pieces and blogs have been filled with narratives of ‘crypto is dead.’ Amid the larger bearish undertone, a lot of critics and analysts have argued whether the recent crash would derail the future of Web 3.0 and blockchain.

So, Is Crypto Dead?

Well, while some say ‘crypto is dead,’ others believe that it could just be playing dead. Even though crypto market enthusiasts are desperately waiting for cryptocurrencies like bitcoin, ether, and altcoins to bounce back with their full might, it wouldn’t be wrong to say that a significant recovery could be a little optimistic for now.

The global cryptocurrency market cap has shrunk to $938.66 billion as of July 7, from the $3 trillion high it touched in November 2021. While numbers present a gloomy picture, it’s not just the crypto market that’s bleeding.

2022 has also been a year of losses for major indexes. High inflation, rising interest rates, and growing concerns about corporate profits and economic growth affect investors’ appetite for risk. The technology-heavy Nasdaq Composite Index is down over 25% through roughly the first six months of 2022, while the S&P 500 Index is down by nearly 20%.

The crypto market has been ravaged by weak global cues amid heightened inflation and interest rate hikes. Crypto investors and traders are now wondering whether the market will bounce back again this year.

While tension and panic continue to plague crypto investors, it needs to be kept in mind that macro market conditions haven’t been ideal. In fact, the higher correlation between cryptocurrencies and the traditional finance markets could be viewed as a positive move as this cloud mean that cryptocurrencies as an asset are maturing.

Innovation Stays Intact

While cryptocurrencies being an asset class, are prone to volatility and price change, pretty much like stocks, blockchain technology on which Dapps are made, and crypto functions is an ever-growing technology.

Notably, a May 5 report by Prophecy Market Insights presented that the global Web 3.0 blockchain market accounted for $1231.54 million in 2020 and is estimated to be $87761.35 million by 2030. The sector is anticipated to register a CAGR of 45.20%.

On the other hand, according to another report, the IT services market is expected to register a CAGR of about 10.36 % during the forecast period, 2022-2027.

Thus, numbers indicate a healthy growth graph for blockchain technology and the Web 3 market. Seemingly, innovation continues to take place even though the price trajectory was largely disappointing for the crypto crowds.

Crypto narratives in mainstream media have also been plagued by standalone events like Terra and Celsius’s collapse over the last few months. The marketwide sell-offs, lower open interest, and larger-scale lay-offs in the crypto market added to the space’s bearish pressure.

A Crypto Recovery Incoming

This isn’t the first time the crypto market is seeing a significant pullback; in 2015, 2018, and then 2020, during the pandemic – the global crypto market has seen its ups and downs. Over the many bear markets and long-drawn price pullbacks, the technology behind cryptocurrencies has only evolved.

Taking a look at the previous market cycles highlights that market volatility and macroeconomic conditions have often affected the price of cryptocurrencies pulling the larger market down. While bear markets give rise to lay-offs and selloffs in the market, portraying doom for the space, it’s only the tip of the iceberg.

As the technology and the Web 3.0 narrative grows, a certain market maturation silently takes place on the side. Nonetheless, critics of the space have long argued that using digital currencies for online interaction gives users a financial motivation to take actions previously freed of commercial incentives. The same could financialize online services and lead to interactions becoming a business.

However, crypto geeks and supporters of the space argue that crypto critics fail to reflect the highly diverse nature of online services.

That said, a lot of traditional finance giants like Amazon, Meta, Google, HSBC, and IBM have also embraced crypto and blockchain. A majority of institutions cite consumer demands and the larger adoption of Web 3 as a reason behind turning towards the space.

Nonetheless, the adoption narrative has received a beating due to the larger bear market. In fact, the bearish blues have slowed down the larger crypto adoption, especially since newcomers are cautious about their entry into the space. However, the crypto crash hasn’t derailed the crypto or Web 3 adoption, if at all, it has delayed the pace of growth.