Starknet Co-Founder Says Crypto Industry Faces Worst Downturn in Its History
Summary
- Starknet co-founder Eli Ben-Sasson said the cryptocurrency industry has entered the most severe downturn in its history and that the industry's cash crunch is worsening.
- He said startup closures, budget cuts, and bankruptcies and business suspensions caused by funding shortages are continuing, adding that the market has reached a point where a reset is needed.
- Interest from traditional financial institutions in the cryptocurrency market has weakened recently, and large-scale capital outflows have emerged. Still, some see this as a natural industry shakeout that could prompt the sector to revisit its core purpose.
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Starknet co-founder Eli Ben-Sasson said the cryptocurrency industry has entered the most severe downturn in its history.
In comments published by crypto media outlet U.Today on June 17, Ben-Sasson said startup closures and budget cuts are setting new records, highlighting a deepening cash crunch across the industry.
He added that the current crisis could have a positive long-term effect on the market.
In past bear markets, even uncompetitive projects were able to survive for extended periods. Now, many startups are going bankrupt or suspending operations because of funding shortages, he said, adding that the market has reached a point where a reset is needed.
Ben-Sasson also said interest in the crypto market from traditional financial institutions has weakened recently, though he does not view that solely as a negative.
Cryptocurrencies were not created to replace the existing banking system, he said. Rather, they were born to expand the freedom of financial innovation. Large-scale capital outflows could also provide an opportunity for the industry to reflect on its core purpose.
Ben-Sasson has previously said the crypto industry is facing a severe identity crisis.
While investment has been falling and projects across the market have been restructuring, some see that as a natural industry shakeout that clears out excessive speculation and inefficiency.
