Crypto Market Crunch Casts Cloud Over Web3

Cheyne Gateley/VIP+

The past week has cast a dark shadow over the crypto world once again. 

After market instability led to the collapse of stablecoin TerraUSD and its sister token Luna, the price of Bitcoin has fallen to levels not seen since December 2020. 

Bitcoin had already dropped nearly 60% from its all-time high in November by mid-May. As of Thursday, Bitcoin has dropped more than $10,000 in value in just the past 10 days. 

The overall bear-market status is certainly hanging over the crypto world, but more blockchain-based institutions continue to face trouble. Celsius Network, one of the most prominent lenders globally of cryptocurrencies, announced Sunday that it had halted customers’ ability to withdraw funds from their accounts, citing “extreme market conditions.” 

Given the company’s own mission statement of introducing “financial freedom through crypto” to via curated services it claims have been “abandoned by big banks,” such as fair yield, no fees and speedy transactions, this recent development comes across as a backstab to crypto enthusiasts and Web3 hopefuls alike who have long pined for a decentralized financial market. 

For more on the role that cryptocurrencies are expected to play in Web3, check out Variety Intelligence Platform’s latest data-driven special report, “Web3 Demystified,” available only to subscribers. 

Much was made of blockchains, cryptos and NFTs throughout 2021, driving up venture capital interest massively to the point where $9.2 billion was invested in such firms over the first quarter of 2022. 

Adding to the recent panic, a crypto-friendly bipartisan bill seeking to write legislation for the industry at large has the SEC concerned that regulations governing wider stock exchanges and mutual funds could be compromised.  

The bill in question seeks to craft a “complete regulatory framework for digital assets,” with one provision aiming to shed light on which cryptocurrencies can meet the legal definition of securities that would fall within the SEC’s realm to regulate. But it also runs the risk of isolating other cryptocurrencies from what the SEC can legally preside over and potentially enable issuers of certain tokens to follow less intensive disclosure practices than what public companies normally contend with. 

After the NFT mayhem of 2021, it’s clear 2022 is proving to be a true test of blockchain’s overall longevity at a time when the biggest tech entities like Meta (née Facebook) have restructured themselves around Web3 prospects like the metaverse, which would need to rely on a far stabler crypto market to function adequately.