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After the digital asset crash, Canadian crypto firms look to the future

Pimentel also sees this period as a great consolidation opportunity for more established businesses, giving a boost to smaller, newer, and better crypto businesses and projects.

“Companies that have really good market economics, good fundamentals and good ideas that might not have been able to raise so much money a month or two months ago,” he explains. she.

The jigsaw in the crypto market can be partly blamed on the combination of soaring inflation, interest rate hikes, and Russia’s invasion of Ukraine. But the massive sale of shares also played a major role.

As the market matures, Bitcoin and other cryptocurrencies are behaving more and more like stocks and have fallen this month along with global markets.

Pimentel says the impact of these events on the crypto market is a clear indication that the industry is becoming mainstream.

“Cryptography is no longer an isolated phenomenon,” she says. “It is no longer a small ecosystem. It is increasingly integrated into the global financial structure and is [therefore] not immune to global risks.

Another part of the equation is the collapse of stablecoins TerraUSD and Terra Luna, which sent shockwaves throughout the crypto market.

Stablecoins are used to facilitate crypto exchanges – traders looking to buy crypto can exchange their regular dollars for stablecoins in order to make their crypto purchase. Stablecoins are supposed to be less volatile than digital currencies like Bitcoin because they are tied to reserve assets like the US dollar or gold, so their sudden drop was unexpected.

Despite the decline in the digital asset market, Canadian crypto companies say they still see growth opportunities and their plans for 2022 are intact.

“We are not fazed by these price movements, even though they may be alarming to outsiders,” says Brian Mosoff, managing director of Ether Capital, a Toronto-based company that offers investors exposure to the ecosystem. Ethereum. Ethereum is a platform built on the blockchain where transactions are made with tokens called ether, but also allows users to do much more than transfer money.

Like Bitcoin, which is currently hovering around US$30,000, Ethereum has taken a big hit, losing nearly 60% of its value since late last year, but Mosoff says his business is moving forward and growing. focuses on “staking” Ethereum, a process that involves locking up amounts of ether for a period of time, receiving rewards for doing so, and ultimately strengthening the Ethereum network so that it is more secure, efficient, and scalable . Staked ether essentially becomes an income-generating asset like a government bond.

“We remain very bullish on Ethereum,” he says. “The eye on the prize is five to 10 years away.”

While Mosoff has no definitive idea of ​​how long the market decline will last, he is not shy about considering the possibility of a one-to-two-year crypto bear market.

Vancouver-based WonderFi Technologies, which recently acquired crypto exchange Bitbuy and is in the process of closing its acquisition of crypto asset reseller Coinberry, sees the stock market crash as a chance for the company to accelerate its plans to consolidation and potentially add more companies to its portfolio. .

Meanwhile, Calgary-based crypto trading platform National Digital Asset Exchange (NDAX), which began operations amid the crypto bear market in 2018, says it is not delaying or halting projects and announcements, and preparing to launch decentralized finance (DeFi) and non-fungible token (NFT) products.

At the same time, some financial challenges could come into play for crypto businesses, and some companies openly acknowledge this.

Billionaire Mike Novogratz’s Galaxy Digital Holdings, which trades on the S&P/TSX and offers Canadian products, said in a May 13 statement that it expects a loss of US$300 million in comprehensive net income. in light of recent market conditions”.

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