Michael Saylor Has Been Ruined, But Bitcoin Investors Don’t Need to Panic

As cryptocurrency investors know, the market moves in cycles. We had the up cycle when Bitcoin (BTC) and Ether (ETH) hit their all-time highs, and now the bears are back in town.

One of them this week abused Michael Saylor, MicroStrategy’s founder and CEO. In this case, it was a very powerful bear – Attorney General Karl Racine of Washington, DC – who sued the Bitcoin evangelist for allegedly owing $25 million in unpaid taxes. MicroStrategy’s stock price has fallen more than 13% on the news, from $251 on August 29 to less than $220 on September 1st.

Still, now is not the time for investors to panic. It’s been about three months since the now infamous terraform ecosystem crash – which ended the biggest bull party of all time – and the skies still aren’t falling. The world is not ending and the blockchain is as immutable as ever.

Does this mean industry leaders should stop viewing market downturns as an existential threat to cryptocurrency as a business? Maybe not considering that $2 trillion in value was erased from the cryptocurrency market cap following the collapse of Terraform. Such extreme market events cannot be dismissed as volatile swings that we should expect in the future. Not all of the factors that go into it are healthy.

Related: Crypto developers should work with the SEC to find common ground

If previous down cycles bore the mark of things like the Initial Coin Offering (ICO) scam of 2017-18 or the Decentralized Autonomous Organization (DAO) hack of 2016, this one too has a story to tell. This time, relying on leverage too much is not good for you. Businesses that tried to go too far too fast ended up being overwhelmed and now face a moment of reckoning.

Many cryptocurrency projects tend to blame traditional finance in favor of a new way forward. This mentality should be welcomed. Platforms, including Celsius, introduced the prospect of lenders being able to earn high returns on loans without using a bank as an intermediary. This idea will not and should not go away.

However, breaking the old ways doesn’t mean crypto companies can defy the laws of gravity. Not assessing the risk of failure and not having a strategy for when that will happen—because it will eventually happen—doesn’t count as innovation.

This principle far beyond decentralized finance (DeFi) applies throughout the crypto industry. As hundreds of crypto projects added “Metaverse” and related words to their messages after Facebook rebranded to Meta, legitimate business people understood that this was often another marketing ploy by rogue nonfungible token (NFT) projects that were made wanted to capitalize on the hype. In fact, OpenSea, the industry’s largest NFT marketplace, claimed in January that a whopping 80% of the NFTs minted for free on its platform are scams or spam.

Related: Bored Ape prices have fallen, but the NFT market is headed for new heights

In the early days of the ICO Wild West, we could accept some level of this type of mania as normal early-stage new technology. But that cannot be the status quo for the future.

Exchanges like OpenSea don’t have to become like Robinhood to be successful, but they do need to employ the same mechanisms that legitimate trading platforms use to prevent scams from taking over. Again, the laws of gravity still apply to the Metaverse, NFT projects, and platforms offering their tokens for trading.

OpenSea users, volume and transaction statistics. Source: DappRadar

That doesn’t place the sole burden on the exchange or minimize what I and others have written about projects themselves bearing the burden of behaving responsibly. Having an actual product is necessary before launching another purposeless token sale and accompanying marketing campaign.

In fact, memecoins could still play an important role in the industry. But projects that aren’t meant to be the next Dogecoin shouldn’t use the marketing strategy of the world’s Shiba Inu. Some projects get it right, and they’re the ones that stand a serious shot at being successful in the next bull run.

Another hurdle the industry has to overcome is crypto platforms, which are only being launched to allow investors to trade other digital currencies. We have so many of them. Projects finding other ways to spend crypto will push the industry beyond speculation.

Of course, these projects must also justify their innovative strength in realistic business plans. If we see more of it, maybe the great crypto experiment can finally overcome the fear of extinction in each crash.

The allegations against Saylor, one of Bitcoin’s biggest supporters and an icon among crypto enthusiasts, in the midst of a bear market are a PR nightmare. But crypto investors are going nowhere. It’s about time the projects that are better at product development than marketing took advantage.

Ariel Shapira is a father, entrepreneur, speaker and cyclist, and serves as the founder and CEO of Social-Wisdom, a consulting agency that works with Israeli startups and helps them connect to international markets.

This article is for general informational purposes and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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