Anyone who’s been paying attention knows that the last few months have been turbulent for cryptocurrency. The industry has seen a lot of shake-ups because the market is being driven by macroeconomic factors that extend far beyond just crypto, reaching into stocks, assets, equities, and even real estate.
Since December 2021, the crypto market has been trending downward, correlating with the S&P500 and Nasdaq. Most investors are weary because inflation numbers are coming back higher than expected, and many centralized finance exchanges are in turmoil after the May collapse of Luna Coin and Luna’s algorithmic stable coin, US Terra. This collapse sent shock waves through the entire crypto market, causing a massive sell-off. Billion-dollar protocols saw user withdrawals increase to an unstable point, leading companies to stop them altogether and causing more FUD (Fear Uncertainty Doubt) to fill Twitter, further exacerbating the downward trend. Then, when CPI Inflation data came out for May and inflation was .3% higher, the crypto/NFT markets, along with the stock market, suffered yet again. At this point, some of the most prominent cryptocurrencies are now down 60–95% from their all-time highs.
While this may seem like grim news, the reality is this: Crypto isn’t going anywhere. In fact, the current state is to the advantage of business owners with dollars to invest. So, how should one proceed? There’s a famous Warren Buffett quote that comes to mind: “Be fearful when others are greedy and greedy when others are fearful.“ For businesses that have the ability, now is a good time to embrace that mentality and influence their business through crypto in two major ways.
Add Crypto/NFT to the Balance Sheet
For those wanting to get into the crypto market, this is the best time to DCA (Dollar Cost Average) their way in. Many businesses, ours included, carry cash in a savings account that earns almost no interest; therefore, that money isn’t helping them earn more. Crypto is a great tool to increase capital for a business simply by making regular investments into it; it can be considered as diversifying the company’s investment portfolio.
Businesses can start by buying cryptocurrencies in small increments every few weeks. It should be treated like a long-term investment account, with a plan of holding for at least three to five years. One way to pick the right investment is to focus on coins that developers have built software around, such as Ethereum, Solana and Polygon. As developers launch more startups on these chains, more users will be driven to use their token as it’s needed to interact with the system, thus increasing their volume, price and utility, and making them better investments than random alternative coins.
Another route is to buy blue-chip NFTs — which are generally considered to be a good long-term investment — from successful and trusted projects. What determines a successful and trustworthy project? Venture capitalist or corporate backing on crypto projects typically indicates that they will continue building and increasing the value of an investment over time. Some examples of this include Adidas, which bought rights to Bored Ape Yacht Club; Nike, which bought rights to RTFKT; and Shopify, which purchased a few Doodles and has done interactive events with them at SXSW and NFT NYC.
Build a Web3 Product
For those looking to do more than just invest, now is the time to build a Web3 product. Leadership should consider how their business can solve a problem by building a product for NFTs, gaming, decentralized finance, real estate, video, music or another industry they may be familiar with.
At Fyresite, we’re currently building a Shopify plug-in for token-gating called 0xAuth with our NFT partner Galaktic Gang. The plug-in allows exclusive access to products or discounts that only NFT holders can take advantage of.
As Web3 grows over the next decade, this is prime time to embark on a Web3 product or startup that offers a solution of a new way to engage in this space. In addition, VC funding in crypto is very high right now and if a project shows traction, raising capital won’t be as difficult as Web2 startups.
Jason Turnquist is co-founder and CEO of Fyresite, which specializes in web design, web development and app development.