We know crypto is a retail-centric market. It’s been painfully clear that retail is the dominating market force. Institutional adoption — or rather institutional funding — has been a core narrative in crypto. These players tend to make their entry when markets are ripe and they can allocate a meaningful amount of capital. In the current environment, liquidity isn’t sizable enough and funding rounds aren’t large enough to accommodate the likes of Benchmark, Tiger Global, and Point72.
Institutions took a major hit last cycle. Between FTX and Terra blowing up, there was a ton of collateral damage that shook institutional players and their belief in crypto. Tiger Global’s venture fund was down 20% as of earlier this year — and a significant piece of those losses came from Web3. With institutional confidence seemingly at a trough, what does the future look like?
History doesn’t repeat itself, but if often rhymes. If we’ve learned anything from the last cycle, it’s that larger funds have an oscillating sense of conviction with crypto. There isn’t enough real-world impact (yet) for them to invest through all seasons, but there’s enough potential for them to jump on the bandwagon when the going gets good. If you believe history will rhyme, the market will come back, and large investment funds will look upon the space favorably again, does the current market environment not represent a significant opportunity for retail?
It’s not an easy task by any means. It’s not about throwing darts at random and hoping to strike the bullseye. I mean, sure that could work during “on-chain shitcoin season.” But finding the real movers of the next cycle takes time, effort, and — quite frankly — luck. Most investors in crypto are narrative and story-centric. And that has worked so far given the demographics of this market. In the end, each investor — retail or institutional — needs to have their own thesis for how the space evolves and what projects will help move the needle. Whether that’s based on pure narrative or fundamentals is down to each person’s investment philosophy.
But the bottom line is, a market that looks dry is an opportunity for smaller players to catch things that will only be viable for larger players after they’ve appreciated significantly and built deep liquidity. Again, it is definitely a high-risk endeavor that requires a lot of focus. But it isn’t impossible. And this market environment could be one of the best opportunities in a while if you truly believe in the future of crypto.
