The first week of December, I went to Miami Art Week (Art Basel), the for-profit, privately owned and managed international art fair. Although fine art was in the spotlight that week, the event attracted several tech and financial companies looking to grow their network and make or receive investment.

I spend 100% of my time at events for venture capitalists, bankers/financiers, startups, and people who work in technology. The conversations I had in those spaces gave me a better idea of ​​the current sentiment around digital assets, given the ongoing bear market. This is what I learned.

no one says blockchain anymore

The first thing I noticed is that nobody refers to blockchain or digital asset projects as “blockchain-based projects”, “a project that uses cryptocurrency”, or “a project that uses digital assets”. However, everyone it throws projects of that nature under the broad umbrella of web3.

Although web3 started out as a way to describe private ownership of your content and property that could be directly distributed and consumed among peers, it has now become the new way of saying, “This project uses a blockchain or digital asset. It’s no secret that web3 is one of the latest buzzwords to be thrown around in the blockchain and digital asset space, but still, it came as a surprise that people took pains to avoid saying the word blockchain or ‘cryptocurrency’ in these days. I think they do it for two reasons:

• Events that have taken place in the digital asset industry in the last six months have given words like “blockchain”, “bitcoin”, “Ethereum”, “crypto”, etc. a negative connotation, while web3 is so wide and dark. which narrowly escapes being lumped in with the words that have been used to describe blockchain-based projects for the past eight years.
• I think the newcomers, the people who started getting into the blockchain and digital asset space around 2020 and after, really know that the space is known as web3, because they came together at a time when the buzzwords from the past were beginning to disappear. conversation.

This brings me to my next observation… everyone I spoke to who joined the blockchain and digital asset space in the “web3 era” is significantly under-invested.

Retail investors are broke

Most of the web3 era retail investors I spoke to said they were down about 85% of their initial investment. With hindsight, it is clear why this is the case. The web3 era of blockchain enthusiasts and investors made their first investments just before the bear market started.

Unfortunately, the poor timing of their investments has scarred them deeply and played a significant role in shaping their overall opinion of the blockchain and digital asset space. Most of the people I spoke to in this category have admitted to investing outside of FOMO and expressed that the bags they have left are of no use outside of price gouging.

As a result, many of these web3-era retail investors will stay away from the blockchain and digital asset industry for quite some time. If a new trend comes along and picks up steam, the web3 era of retail investors will be skeptical, reminiscing about their personal experience of getting into a promising trend, only to lose 85% of their money. I believe that the group that has been deeply scarred will only return to the blockchain and digital asset space when everyone around them is making money except them, and FOMO kicks in once again.

Accredited investors and institutions continue to invest

Despite retail investors being financially bankrupt and hesitant to return to digital asset markets, accredited investors and institutions have told me that they continue to invest in the space, albeit at a different pace than before. One hedge fund I spoke to even said they are plus profitable now than before the bear market because there are more arbitrage opportunities available now that one of the largest market makers, Alameda Research, has gone out of business.

Some of the investors I spoke to are still on the hunt for companies that use coins or tokens. Others were actively moving away from models that use coins or tokens and seeking/investing in “infrastructure kits”, companies that create solutions that use blockchain protocols but not coins or tokens. It is important to note that investors looking for coins and tokens were a vocal minority. Most VC firms and entities that invest as an institution are more interested in investing in a company in exchange for shares.

Despite persistent optimism, everyone Investors said they are scrutinizing potential deals on their desks to a greater extent and are spending more time and energy on the due diligence process than before the bear market began.

In summary

Sentiment around companies using a blockchain is generally negative when talking to retail investors, and sentiment is neutral when talking about “smart money.” Retail investors speak ill of blockchain projects and are skeptical about their future because most of them invested in vaporware at the wrong time and have now lost about 85% of their initial investment.

I think smart money is neutral because some are not ready to accept the fact that they made a bad investment in a company that uses a blockchain for some illegal purpose, so the investor is using their capital to defend the bad investment. . But I recognize that others in the “smart money” crowd are bullish for two reasons: (1) they genuinely believe that a blockchain can be used somewhere within an enterprise technology stack to increase operational efficiencies and reduce costs , (2) and they know there are some good deals on the market right now as the bear market has forced both companies and investors to reassess valuations.

Unfortunately, these two groups (retail investors/consumers and accredited investors/blockchain companies) do not have clear lines of communication with each other. So the companies that is it so working at legitimate companies tends to go under the radar, while retail investors and consumers who made bad investment decisions continue to believe and spread across their network that they got burned on a web3 project and that most coins and tokens don’t create any value real in the world.

Until a company or individual develops a product or service that consumers want and demand uses blockchain somewhere in the technology stack, the negative sentiment around blockchain and the digital asset space will continue. Consumers and retail investors are the vast majority in this situation and at the moment they don’t have much, if any, good things to say about blockchain because they have been burned by coins and tokens that live on-chain.

The good news is that companies and independent developers are creating desirable applications and services, especially in the business arena. The bad news is that enterprise solutions typically don’t have the same network effect driven by social media that leads to a shift in market sentiment.

No one I spoke to put a number on the amount of time it will take for things to change; Regardless, all the talk that had indicated that people continue to look at the blockchain space and digital assets, regardless of whether they plan to be a market participant again.

Watch: BSV Global Blockchain Convention Panel, Web3 Core Is Data Ownership

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