Markets

Crypto market is ‘dominated by predatory VCs’, says analyst

Published

7 months ago

28 June, 2024

Crypto market is ‘dominated by predatory VCs,’ says analyst

Justin Bons, founder and CIO of Cyber Capital Europe’s oldest cryptocurrency fund, criticized the current market dominance finance model in cryptocurrency market based on fundraising from venture capitalists (VCs).

According to Justin Bons, cryptocurrencies are currently dominated by “predatory VCs”. This situation, according to Bons, arises from regulatory pressures that made Initial Coin Offerings (ICOs) effectively illegal, handing the entire early market to VCs.

Formerly Finbold reported another analyst sharing a similar view on the topic. Miles Deutscher highlighted these new fundraising dynamics as one of the “fundamental flaws” preventing cryptocurrencies from reaching higher ground.

In short, the two analysts seem to agree that the venture capital model punishes retail and drives away small investors.

The Rise of VC Dominance in Cryptocurrencies

Notably, Bons argues that the current state of affairs in the cryptocurrency market is far from ideal. He points out that VCs often enter into “pre-pre-pre-sales” at deeply discounted prices, only to sell to retail investors at inflated rates later. This practice, he argues, is unfair and exploitative.

The analyst emphasizes the need to bring back ICOs, which he believes have democratized fundraising in the crypto space. “Fundraising in crypto used to be democratized; anyone could participate on equal terms,” Bons says.

He further explains that the current system, with its stringent requirements for accredited investors, effectively puts high-return investment opportunities out of the reach of retail and less affluent investors.

01/14) We need to bring ICOs back!

Crypto fundraising used to be democratized; Anyone could participate on equal terms

Now the market is dominated by predatory VCs!

The culprit; regulators made ICOs illegal as this handed the entire early-stage market to VCs: 🧵

-Justin Bons (@Justin_Bons) June 27, 2024

Regulatory obstacles and their consequences

Furthermore, Bons highlights the irony of current regulations, noting that while poor people are allowed to buy lottery tickets, they are prevented from participating in potentially lucrative early-stage cryptocurrency investments. He argues that this situation has turned the cryptocurrency market into a “VC boys’ club.” In particular, the CIO compares this to what is seen in traditional stock markets.

Regulatory requirements, such as extensive Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures, often require lawyers and accountants on the payroll. Additionally, minimum investment amounts, often set at $100,000 or more, further exclude smaller investors from participating.

The case for democratizing cryptocurrency investments

The founder of Cyber Capital makes a strong case for the return of ICOs, arguing that they have the potential to democratize investing for everyone. He points out that many of the major decentralized finance (DeFi) blue chips, including Ethereum (ETH), originated from previous ICOs. He argues that the ICO model has proven successful but was abandoned due to regulatory pressure.

Furthermore, the analyst mentioned an inherent conflict between crypto tokens and crypto capital. When both exist for a project, there can be a battle over revenue streams, potentially leading to rent-seeking behavior by VCs that can weaken the token economy.

Despite the challenges posed by venture capital dominance, recent data suggests a slight recovery in crypto funding. According to CryptoRank, cryptocurrency projects have raised an average of $1 billion in funding rounds per month since March 2024. This represents a modest improvement over previous months. However, it falls short of the VC boom of 2021-2022, when projects raised over $3 billion per month.

Crypto Fundraising Trend. Source: CryptoRank

Conclusion: A call for change

In conclusion, Justin Bons calls for a reassessment of the current regulatory landscape. He argues that banning retail participation in early-stage investments only leads to their exploitation at a later stage. The analyst believes that convincing regulators to allow retail investors to participate on an equal footing is crucial for the healthy development of the crypto market.

While acknowledging the important role VCs play in funding early-stage projects, Bons argues that regulation has artificially pushed their prominence to damaging levels. He advocates a return to a more open and transparent investment model, where knowledge, rather than privileged access, determines investment success.

Source

Related Topics:cryptocurrency HI C Venture capital venture capitalists

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We are the editorial team of FinCrypt, where seriousness meets clarity in cryptocurrency analysis. With a robust team of finance and blockchain technology experts, we are dedicated to meticulously exploring complex crypto markets with detailed assessments and an unbiased approach. Our mission is to democratize access to knowledge of emerging financial technologies, ensuring they are understandable and accessible to all. In every article on FinCrypt, we strive to provide content that not only educates, but also empowers our readers, facilitating their integration into the financial digital age.

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Markets

Crypto Markets Rebound as Spot Bitcoin ETFs Attract Massive Inflows

Published

6 months ago

17 July, 2024

FinCrypt Staff

Crypto Markets Rebound Ahead of Early Ethereum ETF Approval

This week saw $722 million worth of Bitcoin spot ETF inflows, including the largest daily inflow in a month.

Cryptocurrency markets rallied on Wednesday, driven by inflows into spot Bitcoin exchange-traded funds (ETFs).

The price of Bitcoin (BTC) is up 3% over the past 24 hours to last change hands at $65,200, according to CoinGecko. Ethereum (ETH) is up 2% and is trading at $3,471. Solana (SUN) and Polkadot (POINT) increased by 4%.

Bitcoin spot ETFs saw $422 million in daily inflows on Tuesday, the highest in the past 30 days, according to Far side data, . The all-time record for a single day was $1.05 billion on March 12.

Among Tuesday’s top contributors, BlackRock’s IBIT led with $260 million in inflows, followed by Fidelity’s FBTC with $61 million. This week has already seen more than $722 million in inflows.

Among the top 100 cryptocurrencies by market cap, Worldcoin (WLD) led with a 28% increase, followed by Helium (HNT) with 20% and Lido DAO (LDO) with 15%.

Worldcoin, a decentralized identity project led by OpenAI CEO Sam Altman, announced is extending the lockups for early investors and team members. This means that tokens will be gradually released through 2029, instead of the original 2027 plan. Token unlocks are generally seen as a negative because they increase supply and early investors can sell their tokens for profit.

Meanwhile, XRP, the token of the XRP Ledger network, jumped 8% after the CME and CF benchmarks introduced new indices and reference rates for XRP.

U.S. stocks faced a downturn on Wednesday. The S&P 500 fell 1%, while the Nasdaq Composite and Dow Jones Industrial Average both fell 2%.

Source

Markets

Altcoins on the cusp of a major breakout – WLD, AR, and INJ prices could surge by 20% in the coming days

Published

6 months ago

17 July, 2024

FinCrypt Staff

Altcoins on the cusp of a major breakout – WLD, AR, and INJ prices could surge by 20% in the coming days

Crypto markets appear to have been taken over by the bulls as major tokens have surged above their crucial resistance zone. Bitcoin surged above $65,000 while Ethereum was above $3,500, and XRP, which had remained passive for quite some time, surged over 40% in the past few days to hit $0.6. The uptrend has been captured in most altcoins, with Worldcoin (WLD), Arweave (AR), and Injective (INJ) leading the rally. Here’s what to expect for these tokens in the coming days.

Worldcoin (WLD) Price Analysis

O Worldcoin Price has been trading inside a descending wedge since it marked a new ATH near $12 in the final days of Q1 2024. The recent price action helped the price break out of the upper resistance of the wedge, breaking above the crucial resistance zone between $2.21 and $2.39. Market sentiments have changed, but technicals suggest that the bulls may remain passive for a while, which could offer some room for a bearish pullback.

The price broke out of the wedge with a significant increase in volume, but the current volume suggests that the bulls have taken a step back. Meanwhile, the RSI is about to reach the upper boundary, which could attract bearish forces. Additionally, the DMI has undergone a bullish crossover, but the decline in the ADX suggests that the rally may remain consolidated above the gains. Therefore, the WLD price is expected to maintain a horizontal consolidation between $3 and $3.3 and trigger a fresh rally to $4.4 during the next bullish rally.

Arweave (AR) Price Analysis

Arweave formed a strong base around $25, which helped the rally trigger a recovery during the bearish attack. Mt. Gox and German terror forced the price to fall below $20. However, the recent price action has brought the altcoin within the bullish range and raised expectations of maintaining a decent uptrend for a few more days.

AR price has hit one of the major resistances around $30 to $31.5, which could act as a strong base once overcome. The buying volume is slowly increasing, which could keep the bullish hopes for the rally high. Moreover, the supertrend has just flashed a buy signal, indicating a clean reversal of the trend. Therefore, AR price seems primed to maintain a healthy uptrend and rally above $40. However, if the bulls maintain a similar trend, making new highs above $50 may not be a tedious task for the bulls.

Price Analysis of Injective (INJ)

Injective price has been showing sharp strength since the beginning of the year and hence, the recent turnaround is expected to revive a good uptrend going forward. The bears engulfed the rally to a large extent, but the recent price action suggests that the bulls have regained their dominance. Therefore, INJ price is expected to maintain a strong uptrend with a bearish interference on the way down.

INJ price has surged above the lower support zone and has registered consecutive bullish candles. Although the volume is below the required levels, the OBV is maintaining a sharp uptrend. Furthermore, the Ichimoku cloud lead span B is heading towards the lead span A and a healthy crossover indicates the start of a new uptrend. However, INJ price may be out of the bears’ reach once it secures the resistance zone between $30.77 and $32.12, which seems to be on the horizon.

Source

Markets

Ethereum at $3.5K, Exchange Supply Hits 34-Month High

Published

6 months ago

17 July, 2024

FinCrypt Staff

Ethereum at $3.5K, Exchange Supply Hits 34-Month High

Ethereum (ETH) supply on exchanges has hit a 34-month high as the asset’s price surpassed the $3,500 mark.

ETH has risen 2.3% over the past 24 hours and is trading at $3,490 at the time of writing. The second-largest cryptocurrency — with a market cap of $419 billion — briefly touched an intraday high of $3,517 earlier today.

ETH Price, Whale Activity, RSI, and Exchange Supply – July 17 | Source: Santiment

Ethereum’s daily trading volume also increased by 7.6% to reach $19.8 billion.

According to data provided by Santiment, the supply of Ethereum on exchanges has reached $19.52 million ETH. This level was last seen in September 2021, when the asset was trading around the same price.

On the other hand, data from the market intelligence platform shows that the number of whale transactions has fallen by 12% in the last day — falling from 8,730 to 7,629 unique transactions per day.

The move shows that the supply of Ethereum on exchanges has been increasing with small deposits rather than large transactions from whales.

Additionally, the ETH Relative Strength Index (RSI) is currently hovering at the 60-mark, per Santiment. The indicator shows that Ethereum is slightly overbought at this price point, but it may not be in a critical position due to its large market cap.

One of the main drivers of Ethereum price increase is ETH spot expectations ETFs in the US Investment products are scheduled to start trading on July 23rd.

Source

Markets

Bits + Beeps: How to Play the ‘Trump Trade’ in Cryptocurrencies After the Assassination Attempt

Published

6 months ago

17 July, 2024

FinCrypt Staff

Bits + Bips: How to Play the ‘Trump Trade’ in Crypto After the Assassination Attempt

Also, how much will the Fed cut rates (and when)? What will be the inflows into ETH ETFs? And what is the near future for Bitcoin?

Posted on July 17, 2024 at 12:00 PM EST.

Listen to the episode at Apple Podcasts, Spotify, Capsules, Source, Podcast Addict, Pocket molds, Amazon Musicor on your favorite podcast platform.

In this episode of Bits + Bips, hosts James Seyffart, Alex Kruger and Joe McCann, joined by guest Jack Platts, dive into the market reaction to the recent assassination attempt on former President Donald Trump, analyzing how this event will influence the 2024 US presidential election and the cryptocurrency markets.

They also cover potential rate cuts: Could there be a cut in July? How big could the September rate cut be? Could the decision be influenced by the upcoming election?

They also give their predictions on what percentage of BTC ETF inflows the ETH ETFs will reach, and James talks about what he expects for Grayscale’s ETHE (hint: his outlook would be positive for ETH).

Finally, they delve into what’s next for Bitcoin as the German government runs out of BTC and Mt. Gox distributions begin. Just now?

Program Highlights:

Whether Trump’s shooting decided the election and whether the event caused a “flight to safety”
How election markets are becoming a place to watch election probabilities and whether cryptocurrencies “lean right”
Whether rate cuts will occur in July or September and by how much they will cut: 25 bps or 50 bps
How Joe sees the relationship between global liquidity cycles, rate cuts, and the potential rise of Bitcoin
What are the new updates about Ethereum ETFs and their expected launch?
Why Solana Hasn’t Performed Significantly Better Since Trump News
What Market Breadth Indicates About the Current Market Rally and the Impact of Rates on Small Caps
Everyone’s predictions on ETH ETF inflows and how much outflow we’ll see on Grayscale’s ETHE
What’s Next for BTC After German Government Exits Bitcoin and Mt. Gox Giveaways Starting This Week