Crypto is dead. Long live crypto

On Wednesday, Andreessen Horowitz, Silicon Valley’s leading venture capital group, made a $ 4.5 billion bet in what it called a “golden age” for cryptocurrencies, citing “a massive wave of world-class talent” that has entered in the sector in the past. anus.

“That’s why we decided to go big,” wrote Chris Dixon, the firm’s managing partner.

On the same day, a former bullish investor made headlines predicting that bitcoin could fall to $ 8,000 from its current level of $ 30,000.

“Bitcoin and any cryptocurrency at the moment has not really established itself as a credible institutional investment,” Scott Minerd, chief investment officer of Guggenheim Partners, told Bloomberg News at the Davos World Economic Forum. “It’s really become the market for a lot of yahoos and backwaters.”

That’s been a big change since February last year, when Minerd told CNN’s Julia Chatterly that she could see that bitcoin, which at the time was trading at around $ 40,000, was finally rising to “$ 400,000 to $ 600,000.”
Bitcoin peaked at $ 69,000 in November. It has lost more than half its value since then as investors withdrew riskier assets in the face of rising interest rates.

Despite the crash, there have been several panels on cryptocurrencies and digital money in Davos this year, not to mention an avalanche of cryptocurrency-linked sellers along the city’s famous boardwalk. But the voices of the establishment at the summit did not waste time despising the web3 crowd.

“Bitcoin can be called a currency, but it is not money,” Kristalina Georgieva, managing director of the International Monetary Fund, said on the first day of the event. “Not a stable value reserve.”

So where do we go from here?

It’s easy to see the day-to-day volatility of cryptography, as well as marginal projects like Earth and Moon entering a “death spiral” and discarding the technology and philosophy of the blockchain that underpins them. But the faithful of cryptography say that despite its problems, cryptography will not go away.

On the one hand, according to some experts, cryptography has to deal with its trademark problem.

The term cryptocurrency can be misleading, said Marcus Sotiriou, a global asset brokerage analyst at GlobalBlock.

“Ninety-nine percent of cryptocurrencies are not trying to be currencies; they are trying to be active behind these blockchain networks,” he said. “And I think it’s only a matter of time before all companies integrate the blockchain in some way.”

Calls for tighter regulation are growing, especially after the collapse of TerraUSD and its sister currency, Luna, earlier this month. Many advocates support greater oversight, in part because it could help cryptocurrencies gain credibility. It is estimated that there are currently about 300 million cryptographic users and Sotiriou says the number doubles every year, almost double the historical rate of Internet adoption.

“Although the feeling is very, very negative at the moment and everything seems sad and sad,” he says, “the real fundamentals of cryptography have not changed.”

Davos office

Here is Julia Horowitz, the lead writer of Before the Bell, with an office from Davos, Switzerland, where she is reporting on the World Economic Forum.

Mykhailo Fedorov, Ukraine’s digital transformation minister, has a message for tech giants SAP and Cloudflare: Get out of Russia now.

I spoke to Fedorov on the sidelines of the Davos summit, the first place he has visited outside of Ukraine since Russia invaded three months ago. He has been here with the mission of urging business and government leaders to do more to help, and has met with leaders from Google, Microsoft, and Facebook Meta.

“Each of us can do it even better,” he said.

Nearly 500 technology companies have left Russia since President Vladimir Putin sent troops to Ukraine on February 24, according to Fedorov’s count. But he called on technology firms Cloudflare and SAP to continue operating in Russia, which he said undermined the effectiveness of the “digital lock.”

“When a company is working in the Russian market, it injects funds into the Russian budget from which the money comes to the Russian army,” Fedorov said. “This allows to kill Ukrainians.”

Germany’s SAP, which makes business software, said in April that it planned to leave Russia. But Fedorov said the company is moving slowly at its exit and should move faster.

“I am convinced that they will leave Russia sooner or later, but sooner rather than later [is better] that later, because people are being killed, “SAP said in a statement. Russia’s unjustified. ”

Cloudflare, meanwhile, said it is still operating in Russia to protect the flow of uncensored information to Russians.

“They say they are supposed to be there to defend some kind of democracy,” Fedorov said.

In a statement, the cloud service operator said it “has minimal business and sales activity in Russia” and that it “terminated customers we identified as linked to sanctioned entities.”

Fedorov stressed that a “digital lock” is an important tool in the fight against Russia, as it could delay the country by “two or three decades”, encouraging engineers and other experts to leave.

“We also want people in Russia to understand that ‘Guys, something is wrong.’ And they have to deal with the war,” Fedorov added.

China’s leaders are panicking

In an unusual move, the Chinese cabinet convened an emergency meeting on Wednesday with more than 100,000 participants, according to state media. The agenda: do whatever it takes to save the economy.

During the unexpected video conference, Premier Li Keqiang offered what is perhaps the darkest assessment of the state of the economy by China’s leadership to date. Li said that in some ways it is in a worse state than in 2020, during the initial coronavirus outbreak, writes my CNN Business partner Jessie Yeung. He urged leaders across the country to reverse rising unemployment.

Backlash: The world’s second-largest economy, which previously had growth rates of 10% or more, has suffered from its own Covid-19 protocol, which keeps millions of people locked up.

Earlier this week, UBS lowered its year-over-year GDP growth forecast to 3%. China said it expects growth of about 5.5% this year.

Sustained growth is not just an economic priority. China’s party leadership has maintained its control of power in part through the growth of engineering that has lifted tens of millions out of poverty. Leaders are especially sensitive to the signs of social unrest that could result from declining economic prospects.

Earlier this month, Li, the No. 2 figure in the Communist Party after President Xi Jinping, described the country’s economic conditions as “complex and serious.” Despite the difficulties, President Xi only doubled the zero-covid policy, saying the state would punish those who questioned it.

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