Head of Nansen predicts deterioration of the cryptocurrency market next year

Alex Swanevik, the head of the Nansen research company, wrote on Twitter that 2023 will be a «bloodbath» for cryptocurrency startups. The analyst explained that most of the startups that started operations in 2021−2022 will run out of money, so some of them will be acquired by larger market players next year. According to Svanevik, some of the newcomers are now conducting regular investment rounds. At the same time, they receive 80% less money than before.

I think 2023 will be a bloodbath for crypto startups:

1. Most '21/22 seed startups will run out of money
2. Some get acquired
3. A few raise new rounds (>80% downrounds)
4. Tech salaries come down
5. Tech job titles deflate
6. VCs invest in other sectors (AI etc.)

— Alex Svanevik (@ASvanevik) December 12, 2022

2023 will also be a difficult year for crypto projects because the salary threshold for technical specialists will be decreasing. Recently, we reported on a study by Pantera Capital, which published data on the salaries of cryptocurrency and blockchain developers at this time. Thus, in the Web3 sector, junior engineers can earn up to $ 144,000 per year, and senior engineers — up to $ 346,500. As for Web2, a senior engineer can expect an average annual income of $ 183,000. Web3 marketers earn an average of $ 127,000, and financiers — $ 109,200.

Swanevik also noted that venture capital funds currently prefer to invest in other technology sectors than crypto projects, for example, focusing on artificial intelligence-related developments. Earlier, we talked about several promising tech startups, such as DeepMind, focused on creating an algorithm capable of generating, editing, and rewriting program code independently.

Amid a prolonged bear market, many cryptocurrency companies have begun to massively reduce their workforce. For example, in early November, BitMEX laid off 30% of its staff, Galaxy Digital laid off 20%, and Digital Currency Group (DCG), a venture capital firm, laid off 10%. In order to stay afloat in the current market conditions, the Kraken cryptocurrency exchange laid off 1,100 employees at the end of the month. And in early December, the head of Bybit announced massive layoffs as part of a long-running business reorganization. Back in late November, cryptocurrency experts from Coinbase Research predicted long-term problems for the industry that would reach the beginning of 2023 and may well continue in the future. Analysts suggest that market turbulence and the lack of large investors investing in digital assets may prolong the ongoing cryptocurrency winter.