The steep fall in cryptocurrency prices throughout 2018 has been the source of a major headache for many traders and investors. However, they are not the only ones being affected as start-ups that entered the market looking for a piece of the crypto-cake have been stricken too. In December last year, Bitcoin was peaking at $20,000 as compared to $3,500 now.
Bloomberg’s December 6th report mentioned a round-up of all the start-ups that went bankrupt this year due to the price crash. Among the list of unfortunates was ETCDEV – the same group that launched Ethereum Classic.
ETC was ranked seventeenth in market capitalization with a value of over $400 million. The company announced last week that it was closing its doors due to a shortage of funds and the inability to raise more capital to keep the company’s activities profitable. The founder of ETCDEV and the forked coin Ethereum (ETH), Igor Artamonov talked about his company’s standing and the repercussions of the price drop across the market, in an interview. He said,
“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.”
But ETCDEV was just one of many previously successful startups that found themselves with empty pockets. The report also mentions New-York based software company ConsenSys. It says that the company was forced to lay off 13 percent of its workforce as a direct consequence of the falling cryptocurrency prices. Similarly, Steemit Inc., the company that created the currency Steem (STEEM) to conduct in-house transactions was forced to lay off 70 percent of its workforce in November.
The report puts the majority of the blame on projects over-extending themselves on digital assets, setting up significant losses as a result of 2018’s ongoing bear cycle,
“Many of the companies are suffering because they kept a portion of their funds in digital assets, whether in tokens they sold through initial coin offerings or in Bitcoin and Ether, which served as the preferred means of exchange in the crypto world. As prices collapsed this year by more than 90 percent in some cases, and their so-called digital wallets thinned out, many developers found they couldn’t raise additional funding.”
With prices and the market resetting to a valuation to that of over a year ago, cryptocurrency will find itself of having to do more with less, which includes focusing on development routes that will lead to the highest adoption by Main Street customers while drawing the interest of Wall Street investors.