Despite this assertion, I find that many digital asset investors get lost in this nascent market’s minutia. I’m not discounting the regulatory, operational, or custodial challenges unique to the new market, let alone the high volatility of the asset class and 24/7 market hours.
These are essential issues to consider when committing client capital. However, many analysts appear to place more emphasis on cryptography details, TVL (“total value locked”) and on-chain activity rather than spending time studying the broader macro environment.
This bottoms-up approach may stem from the early days of crypto markets when there were limited correlations with traditional asset classes. However, with the total market capitalization of digital assets averaging above $1 trillion over the past two years, evaluating the macro backdrop is becoming unavoidable.
10 Ways Crypto and AI Can Make Each Other Better (or Maybe Worse)
(Jacques Julien/Getty Images)
Poor crypto. Once the darling of the tech world, crypto — or blockchain or Web3 or whatever we’re calling it today — has been mired in lawsuits by the SEC; a frosty bear market; and now, perhaps most painfully, the indignity of playing second fiddle to AI.
Jeremiah Owyang, an influential entrepreneur who has been active in the Web3 space, lives in San Francisco and told me there are three to five AI events per day in his community, but there are “very very few Web3 events now.” (Owyang is now diving deep into AI.)
Sheraz Ahmed, Managing Partner at Storm (a blockchain consultancy), said that when he traveled to Dubai for a crypto event, “it was a bit shocking that in every blockchain keynote panel, AI was included. It was a blockchain conference, but only AI was being spoken.”
And there’s no question that the sloshy startup capital is now enamored by AI. As Meltem Demirors, Chief Strategy Officer at CoinShares, joked on Twitter, “2019: we are a crypto fund. 2020: we are a DeFi fund. 2021: we are a blockchain gaming fund. 2022: we are a web3 fund. 2023: we are an AI fund.”
But maybe pitting Crypto vs. AI is the wrong framework? Web3 might be in “winter,” but it’s not dying. Projects continue to quietly build. And, if it’s true that AI will impact every industry, clearly that will include Web3.
MicroStrategy’s (MSTR) founder and Executive Chairman Michael Saylor said recent enforcement actions by U.S. regulators have made it clear that the crypto industry is destined to be rationalized down to a bitcoin-focused industry.
XRP’s supporters believe the SEC unfairly targeted Ripple for securities violations while mysteriously giving Ethereum a free pass. Do they have a point?
An attempt at classifying decentralized protocols as regulated exchanges is a “gussied up ban on blockchain in the U.S.,” says ConsenSys lawyer Bill Hughes.
Disclaimer: The information contained in this newsletter, and any information linked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. You should seek additional information regarding the merits and risks of investing in any cryptocurrency or digital assets.
