It was hard to tell at first from EthDenver — the biggest Ethereum developer conference in the world — that we’re in a bear market. The conference earlier this month attracted some 20,000 attendees to Denver, where hundreds of side events and impromptu meetups crowded trendy bars and restaurants day and night.
The sector has certainly slowed down: In 2022, the crypto market lost as much as $2 trillion. But if you stopped to talk to any investor or founder, it became clear that many entrepreneurs and investors believe the market downturn is constructive to the long-term health of the web3 space. Projects are settling down into real value and foundation building rather than pump-and-dump schemes and hyped-up NFT sales.
My conversations with EthDenver attendees took place just before Bitcoin’s value surged to its highest since last June. Even with the cryptocurrency at over $28,000, the price is still way below its all-time high of $64,000.
Developers and founders I talked to celebrated the toned-down parties as a good thing because it meant that most of the speculators were gone. Even local Uber drivers noticed. Last year, they were shuttling people between much more extravagant parties. “You could just smell money in the air,” one of them told me. “And this year it felt more serious.”
Applying the brakes
The downsizing of events and parties went in tandem with shrinking investments for startups, which now face a harrowing time to attract financing. The amount of venture capital for web3 companies saw a sharp decline in Q4 2022, totaling $2.4 billion compared to $9.3 billion a year ago, according to Crunchbase. The number of web3 startups funded halved to 327 during the quarter.