If you haven’t noticed, the blockchain world has been pretty volatile.
OpenSea non-fungible token (NFT) volume is down more than 90%, and nearly everyone has heard about the multibillion-dollar scandals and subsequent collapse of FTX, Celsius and more.
Anyone that has been in the world of investing for more than a minute knows business magnate Warren Buffett’s famous quote, “Be fearful when others are greedy and greedy when others are fearful.”
Why It Matters: Recessions can be a great time to buy assets on the cheap, and ride the rebound. Given the severe decline in the price of blockchain-based assets, it could be a good time to start buying the dip.
This generally presents the question of whether or not blockchain technology is here to stay. If yes, then this could be a strong buying opportunity as the blockchain-based markets find their footing in a post-collapse world.
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If investors can accurately predict the future of this market, there could be substantial upside in it for those who get it right. Even a return to highs for Bitcoin, for example, would be nearly 300% gains following its 73% decline.
Despite the worries, retail investors are seemingly unphased as they are still investing millions into blockchain-based startups. Gameflip, for example, has already raised over $600,000 on StartEngine from everyday investors and is open for anyone to invest. Gameflip is a gaming marketplace where people can buy and sell gaming items, including blockchain-based items, with over $140 million in volume.
Retail investors aren’t the only ones still optimistic about the investment prospects of the blockchain industry. Venture Capitalists (VC) are still investing billions into the space, and VC funding in blockchain was actually higher in 2022 than in 2021. This includes VCs investing $10 million in Gameflip alone.
So the sentiment in the space is still there, but if it’s not investable in the long term, then it doesn’t necessarily matter. One of the biggest criticisms of the space is the lack of regulation. While states have already cracked down on certain types of blockchain-based investments, the federal government has been largely silent.
That might be turning around, but it’s not entirely clear. While firms across the U.S. have been calling for regulation, the Security and Exchange Commission’s (SEC) intentions are still somewhat unclear. The SEC recently released guidance to public companies about disclosing risks associated with any connection to crypto, indicating they are looking into the scene. But this is unlikely to be anywhere near enough.
If the regulatory framework continues to develop positively, institutions and the broader retail investor base may reopen the space as a means of investing. This would develop a more sustainable investment environment and ideally disallow losses resulting from scams, fraud and other financial crimes that deter investors.
If the sentiment from the SEC and other regulatory authorities is shifting, blockchain-based assets could rally following positive regulatory news. For example, following the SEC’s updated guidance for disclosures, Bitcoin rallied roughly 3% in the days following.
Startups like Gameflip are traditionally long-term investments. If you believe in the long-term prospects of an industry, startup investing can be a great way to capitalize on the upside despite the volatility.
Gameflip is one of the top marketplaces in the U.S. for buying and selling in-game and blockchain-based assets with over $140 million in volume. While the investment is speculative and illiquid, equity crowdfunding investments are highly regulated, so startups can be a good workaround to invest in the blockchain space where a regulatory framework exists, with the same upside potential as a successful crypto project.
While the blockchain market has experienced significant volatility, there might still be considerable upside for investors who can find value.
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