Like many in 2020, I predicted loose monetary policies and delirious speculation would end with everything falling back down to earth. I was off on the timing by two months, but pretty spot-on about the scale of the reversal. With Bitcoin recently falling below $20,000 and stablecoins breaking their pegs last month, stomach-turning markets seem to be all anyone is talking about.
Welcome to the bear market. We knew it would come eventually. The question is: what do we do now? Simple: we build.
Trial by Fire
Bear markets are not cheerful times. The bull run’s festive, can’t-lose atmosphere gives way to paranoia and finger-pointing. Celebratory voices fall silent, replaced by choruses of schadenfreude. But I welcome bear markets – because when the drama dies down, there’s a precious opportunity to focus on shipping and getting things done.
If you have the right people around you, you can make bold strides. Or to put it another way, a bear market ain't no thang with the right team at your back.
There are many, many examples of successful companies laying the groundwork for big advances during bear markets, just when most people began to close up shop and start running for the hills.
Hewlett Packard, Microsoft, and Hyatt were all formed during some of the 20th century’s deepest economic slumps. In the wake of the 2008 financial crisis, the Kaufman Foundation issued a report called “The Economic Future Just Happened,” that predicted the next generation of global corporations would rise from its ashes. And as predicted, along came some of the biggest global players on the planet today: Airbnb, Uber, Slack, and Venmo, just to name just a few. And ahem, not to mention Bitcoin...
Crypto downturns are no different. Some of the most successful decentralized projects were conceived during bear markets.
When markets are over-hyped, they exert pressure on founders to raise a lot of capital. Each project is up against a seemingly endless stream of new competitors trying to make headway in any given niche. The flip side is this: being truly disruptive isn’t so straightforward when the money is easy – and it has been very easy for a long while now. In that environment, everyone in the world seems to be rushing to launch new products while the market is hot.
When conditions turn tougher, there’s a greater emphasis on quality. It’s harder to raise money, so the projects that do attract funding tend to be more robust and have stronger fundamentals. Founders who were in the game for the wrong reasons – the ones who were trying to ride the hype with iffy use cases and a shaky grasp of technology – wash out.
Sticking to Fundamentals
These fundamental principles are just as important today as they were when the term DeFi first appeared on the scene years ago – if not more so. Since then, the world has been rocked by a string of global-scale events that have driven significant changes in how we live, work, and interact, not all of them for the better.
Increased reliance on centralized tech giants like Google and Amazon during the COVID-19 pandemic has made them more powerful than ever. Their growing primacy is a critical reminder that our freedoms cannot be taken for granted. While finance and privacy are human rights, they are not guaranteed.
The projects that survive the bear market – and come out stronger on the other side – will be those with a genuine commitment to decentralization. As DeFi begins to confront the consequences of its meteoric growth, teams must build useful, high-quality decentralized tools and services that meet real market needs. Recent events, notably Celsius Network’s decision to halt withdrawals and trades – along with the mere fact that it had the ability to do so – underscore how crucial this is. The founders that succeed in the long term will be those building products and services that help people exercise sovereignty over their identities, creating new kinds of value that allow people to safeguard their assets without being subject to the whims of a centralized authority.
This is why decentralized technology exists. Building autonomous systems that can operate without centralized oversight is the key to ensuring that people from all walks of life will have consistent access to their finances, even in times of global crisis.
We’ve all seen firsthand the ways in which the things that we all take for granted can disappear in an instant. So there’s not a moment to waste: now is the time to build the tech that will enable a more autonomous future, bear market or not.
That’s what we’re doing at Tally Ho, heads down building out the first community-owned web3 wallet. Because it’s owned and operated by its users, there is zero chance any centralized entity can take it offline or restrict its access. It will be up to each user what to do, or not do, with their assets.
Talk Less, Build More.
Bear markets are tough. But they have magic, too – bitter, curative magic that washes out the hype and froth. People talk less and build more. Those still standing – the projects that can really go somewhere and build something new and valuable – double down on shipping. The seeds of the next growth period are being sown now.
Easy for me to say, right? I know. It’s an unfortunate reality that many people will suffer in the short term as weaker projects fail and FUD rears its head. There’s no way around it, and this particular bearish period may turn out to be hairier due to the injections of free money that sustained and extended the rally for so long. But ultimately, as the wheat is separated from the chaff, the space as a whole will become stronger and its use cases more obvious. As distractions and diversions melt away, the true gems will shine brighter, moving us closer to the future we’re all working to build.
That’s the reason we got involved with this technology in the first place. It’s what we all should be focusing on now.