Investing in cryptocurrency during a bear market: overview, opportunity, and challenges
Get an overview of cryptocurrency and blockchain investment with two investors in the REDeFiNE TOMORROW 2023 wrap-up, "Navigating Crypto Investing in the Bear Market: Landscape, Opportunities, and Challenges." Paul Veradittakit, Managing Partner of Pantera Capital, and Min Teo, Managing Partner of Ethereal Ventures. Cryptocurrency investments during the bear market were discussed, along with the difficulties and opportunities.
Discover Ethereal Ventures
Min Teo described Ethereal Ventures as a global investment firm that specializes in investing in the cryptocurrency market. By providing funding to founders from the start, it invests in technical founders in addition to platforms and crypto protocols.
With their most recent investment, Ethereal Ventures and Pantera Capital have partnered to create a trust-minimized staking platform that opens up the cryptocurrency ecosystem and takes investors one step closer to the risk-free world of cryptocurrencies.
According to Min Teo, Ethereal Ventures began funding the staking platform because of its potential to expand into many other financial services. As an example, it has recently invested in liquidity service providers for staking with institutes, which is a fresh approach that prioritizes institutional clients.
Get to know Pantera Capital
According to Paul Veradittakit, Pantera Capital is one of the pioneers in the blockchain and cryptocurrency industries. It's been run since 2013 by Dan Morehead, an expert in common shares, hedge funds, and financial issues. In 2011, he realized the traditional financial market would be disrupted. After studying and focusing on cryptocurrency markets for two years, he founded Pantera Capital.
Currently, Pantera Capital is almost up to USD 4 billion in asset management. Fundraising occurs in both venture funds and hedge funds, with an emphasis on early-stage investments.
Obol Labs' co-investment with Ethereal Ventures is another fascinating fact. They recently invested in M^ZERO, a decentralized money middleware platform that offers Treasury as a reward.
The current perspective on the bear market
Min Teo said that the bear market—a period of unfavorable investing conditions—caused investors to seek protection in the gold, Web3, and cryptocurrency markets since they were perceived as more reliable than other asset classes. The market becomes more robust with stronger development, tools, and technology.
She also believed that people needed enhanced security and privacy and that the cryptocurrency market could effectively meet this need.
Paul disclosed that, during a bear market, investors would begin their investments early by making small investments to minimize risk.
They felt that investments performed better in markets with less competition because we could acquire more shares and grow our stakes as shareholders. Investors had an advantage in a bear market when values dropped, especially in Series A and B investments and early-stage ventures.
Crypto market challenges during a bear market
There are still ongoing cryptocurrency investments, said Min Teo. It was a positive sign for the industry to see that appealing companies had strong founders and capable developers entering the blockchain and cryptocurrency space.
Despite the lower market value, investors can now enter the market, while companies holding onto their previous image from early 2022 will take more time to close deals.
During the bear market, Paul Veradittakit claimed AI didn't compete with cryptocurrency for market share. He clarified that AI is one of the areas contributing to cryptocurrency market growth. If investors are interested in AI investments, they should invest in AI that supports the cryptocurrency ecosystem.
According to Paul, retail investors who invest early in early-stage companies have a better chance of succeeding during a bear market since they can evaluate the companies, determine the necessary funds, and explore strategies.
However, high-net-worth individuals who avoided startup investments and clearly successful business categories instead had to deal with uncertain market conditions, manage growth, and adjust to changing market dynamics. He used NFT as an example to show how, in contrast to earlier times when people were strongly excited about NFTs' contents, this kind of business now concentrates on infrastructure rather than content or collection.
What Ethereal Ventures and Pantera Capital look for
Ethereal Ventures
Min Teo said that Ethereal Ventures will support early-stage companies from zero to one, concentrating on pre-seed to series A ventures. Founders should possess the assurance that they can start their businesses immediately. This is not like the past, where investors and founders collaborated to test products, markets, and businesses.
We could see that the cryptocurrency market was different from the past, Min Teo said. For the cryptocurrency market to see a surge in the number of users, businesses must be able to quickly determine whether their products and markets fit.
So far, Ethereal Ventures has shown interest in infrastructure investments. It has recently participated in the application and discovered that it can create, grow, and integrate in a variety of ways. Additionally, it was drawn in by cryptography, a field of study that VC Fund had recently taken up, and it thought that interest in this area of study could advance the product.
Pantera Capital
Paul Veradittakit stated that investors are currently focused on infrastructure. There is an increasing interest among institutions and organizations in the DeFi industry, in addition to the general public's increased awareness. In what ways can individuals and institutions connect?
According to him, they were investing in businesses that would be more valuable to them. Recently, Pantera Capital has worked well with developers and businesses. They therefore anticipate investing in areas that expand the ecosystem, like security and tokenomics laws and regulations.
Bear market opportunity
Regarding the bear market investment opportunity, Min Teo stated that Asia has an attractive cryptocurrency market. As a next step, she plans to support Asian founders in looking at this market as a global one and giving them the chance to produce goods not limited to Asian markets' needs.
As a result of the bear market, Paul Veradittakit argues that investors have learned to prioritize in order to provide funds for unexpected events. It is not appropriate to pay a large sum of money at every stage of investment. Addressing the most critical issue first is the best course of action. Prioritizing investments will allow investors to see the big picture and decide whether this type of investment is worth it. Investors can explore the possibility further.
In addition, Paul thought that laws and regulations present both a challenge and an opportunity in a bear market because people all over the world are watching and responding to changes that are occurring simultaneously.
Watch more on YouTube at Navigating Crypto Investing in the Bear Market: Landscape, Opportunities and Challenges
This article was taken from the May 2023 virtual conference.
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