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By: www.ProfitableInvestingTips.com
The crypto world has been suffering through a
crypto winter for more than a year. Several
large crypto exchanges like FTX and Celsius
have gone into bankruptcy. Now the Coinbase
exchange is laying off employees for the second
time in less than a year to reduce costs.
As quoted on Bloomberg, its CEO noted that the
company needs to adjust it business plan away
from betting on continual growth in crypto
prices and a guaranteed steady increase in
numbers of customers. As Coinbase makes
adjustments, crypto winter drives changes in
crypto business plans far and wide.
Second Round of Coinbase Layoffs
The New York Times reports that Coinbase is
laying off twenty percent of its staff after
having laid off twenty percent in June of 2022.
Coinbase went public in 2021 and experienced
impressive expansion during the Covid
pandemic. The Times quotes their CEO as
saying that with hindsight as a guide they
should have cut more staff back in 2022.
It is consistent with the general retreat in markets
that Coinbase stock is down 88% from its 2021
$342 peak. Coinbase’s situation is a milder
version of those companies now in bankruptcy.
Everyone was betting on crypto going up
forever.
Perpetual Expansion as a Business Plan
Many businesses have experienced exceptional
growth and then moved into a maturity phase.
Microsoft and Amazon are prime examples.
But, even in their mature phases companies can
continue to grow and to shrink. Amazon.com
made history recently for being the first
company to lose a trillion dollars in market
capitalization as the stock market imploded
due to inflation and the Federal Reserve
steadily raising interest rates.
Coinbase and, in fact, the entire crypto realm is
similar to Microsoft and its growth with
personal computers and the internet
throughout the 1990s up until the dot com
crash when its growth fell back, recovered a
bit, and leveled off for 14 years. The comes a
point at which the market for a company’s
products and services gets saturated. At that
point only the best managed companies with
the best business plans and the highest margins
of safety survive.
Does a Business Plan Make Money and Will It
Continue to Do So?
One of the most successful investors ever is
Warren Buffett. Buffett does not invest in a
company unless he clearly understands how
that company’s business plan will make money
now and will continue to make money into the
distant future. The concept of intrinsic stock
value is based on projected cash flow for the
long term.
This is an approach that investors need to take
when coping with crypto investment losses.
Many fortunes have been made or at least
added to by investors who spotted unfairly
devalued stocks during bear markets. In the
case of a company like Coinbase, their two
decisions to cut back drastically on expenses in
order to stabilize cash flow instead of simply
waiting and hoping for crypto winter to end
and prices to soar again appear to be a wise
ones.
Despite the crypto ideal of total independence
from the old financial system, crypto is part of
the financial and investment world and anyone
doing business in this realm needs assets in
reserve as well as the promise of more
business.
What Will Investors Think of Cryptocurrencies
in 2023?
As we see it, there have been two types of crypto
investors. There have been those who
speculated on buying Bitcoin, Ethereum or one
of the other tokens and were fortunate to
purchase very early or during a trough. These
folks stayed with crypto because it seemed to
work to produce wealth.
The other folks are the true believers who likely got
into cryptocurrencies early and believe in the
original purpose of Bitcoin which was to provide a
fair and equitable way to buy and sell things on
the internet free from third parties and
government interference. A lot of folks in the first
group are bailing out because the crypto winter
has shown us that crypto is not a hedge against
inflation, not a safe refuge for wealth during times
of geopolitical and social turmoil, and not divorced
from the stock market and other investment
vehicles.
These were “selling points” previously and as
they have been shown to be wrong the rather
shallow faith of the first group of investors has
dissipated. The true believers are becoming
disillusioned because crypto seems to have lost
its way. The system that was meant to be
decentralized became a closely knit boys club
with assets loaned or invested behind the
scenes, often fraudulently so.
What Crypto Business Plans Will Succeed
Going Forward?
The Metaverse, NFTs, decentralized finance, and
the blockchain itself all show promise as ways
to make money. The Metaverse, especially, is in
an early stage and decentralized finance has
taken a hit with crypto prices having fallen so
badly. Our opinion is that crypto businesses
that offer real world opportunities to make
money, not based on pure speculation, have a
chance at long term success.
It is always hard to pick who will be the winners
in an evolving niche but in the end, it turns out
to be the companies that are fast on their feet,
able to maintain a monetary reserve, and
provide what the public wants from their
business niche.
For more insights and useful information about
investments and investing, visit
www.ProfitableInvestingTips.com.

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Crypto Winter Drives Changes in Crypto Business Plans

  • 2. The crypto world has been suffering through a crypto winter for more than a year. Several large crypto exchanges like FTX and Celsius have gone into bankruptcy. Now the Coinbase exchange is laying off employees for the second time in less than a year to reduce costs.
  • 3. As quoted on Bloomberg, its CEO noted that the company needs to adjust it business plan away from betting on continual growth in crypto prices and a guaranteed steady increase in numbers of customers. As Coinbase makes adjustments, crypto winter drives changes in crypto business plans far and wide.
  • 4. Second Round of Coinbase Layoffs
  • 5. The New York Times reports that Coinbase is laying off twenty percent of its staff after having laid off twenty percent in June of 2022. Coinbase went public in 2021 and experienced impressive expansion during the Covid pandemic. The Times quotes their CEO as saying that with hindsight as a guide they should have cut more staff back in 2022.
  • 6. It is consistent with the general retreat in markets that Coinbase stock is down 88% from its 2021 $342 peak. Coinbase’s situation is a milder version of those companies now in bankruptcy. Everyone was betting on crypto going up forever.
  • 7. Perpetual Expansion as a Business Plan
  • 8. Many businesses have experienced exceptional growth and then moved into a maturity phase. Microsoft and Amazon are prime examples. But, even in their mature phases companies can continue to grow and to shrink. Amazon.com made history recently for being the first company to lose a trillion dollars in market capitalization as the stock market imploded due to inflation and the Federal Reserve steadily raising interest rates.
  • 9. Coinbase and, in fact, the entire crypto realm is similar to Microsoft and its growth with personal computers and the internet throughout the 1990s up until the dot com crash when its growth fell back, recovered a bit, and leveled off for 14 years. The comes a point at which the market for a company’s products and services gets saturated. At that point only the best managed companies with the best business plans and the highest margins of safety survive.
  • 10.
  • 11. Does a Business Plan Make Money and Will It Continue to Do So?
  • 12. One of the most successful investors ever is Warren Buffett. Buffett does not invest in a company unless he clearly understands how that company’s business plan will make money now and will continue to make money into the distant future. The concept of intrinsic stock value is based on projected cash flow for the long term.
  • 13. This is an approach that investors need to take when coping with crypto investment losses. Many fortunes have been made or at least added to by investors who spotted unfairly devalued stocks during bear markets. In the case of a company like Coinbase, their two decisions to cut back drastically on expenses in order to stabilize cash flow instead of simply waiting and hoping for crypto winter to end and prices to soar again appear to be a wise ones.
  • 14. Despite the crypto ideal of total independence from the old financial system, crypto is part of the financial and investment world and anyone doing business in this realm needs assets in reserve as well as the promise of more business.
  • 15. What Will Investors Think of Cryptocurrencies in 2023?
  • 16. As we see it, there have been two types of crypto investors. There have been those who speculated on buying Bitcoin, Ethereum or one of the other tokens and were fortunate to purchase very early or during a trough. These folks stayed with crypto because it seemed to work to produce wealth.
  • 17. The other folks are the true believers who likely got into cryptocurrencies early and believe in the original purpose of Bitcoin which was to provide a fair and equitable way to buy and sell things on the internet free from third parties and government interference. A lot of folks in the first group are bailing out because the crypto winter has shown us that crypto is not a hedge against inflation, not a safe refuge for wealth during times of geopolitical and social turmoil, and not divorced from the stock market and other investment vehicles.
  • 18. These were “selling points” previously and as they have been shown to be wrong the rather shallow faith of the first group of investors has dissipated. The true believers are becoming disillusioned because crypto seems to have lost its way. The system that was meant to be decentralized became a closely knit boys club with assets loaned or invested behind the scenes, often fraudulently so.
  • 19. What Crypto Business Plans Will Succeed Going Forward?
  • 20. The Metaverse, NFTs, decentralized finance, and the blockchain itself all show promise as ways to make money. The Metaverse, especially, is in an early stage and decentralized finance has taken a hit with crypto prices having fallen so badly. Our opinion is that crypto businesses that offer real world opportunities to make money, not based on pure speculation, have a chance at long term success.
  • 21. It is always hard to pick who will be the winners in an evolving niche but in the end, it turns out to be the companies that are fast on their feet, able to maintain a monetary reserve, and provide what the public wants from their business niche.
  • 22. For more insights and useful information about investments and investing, visit www.ProfitableInvestingTips.com.