Q2 risks becoming the worst quarter post-2018, says Framework Ventures co-founder on why he remains optimistic

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Dim Performance in Q2 2021

After maintaining a continuous upward trend for six months, the cryptocurrency market saw a significant pullback in the second quarter of this year. According to data released yesterday by the cryptocurrency data platform Skew, if Bitcoin fails to recover by the end of June, the second quarter of this year is likely to be the second worst quarter in performance since 2014.

#bitcoin up 10% year-to-date but on track for worst quarter since Q1 2018 pic.twitter.com/z3PpsAlIJK

— skew (@skewdotcom) June 22, 2021

More and more retail investors, especially newcomers entering the market at this cycle, are beginning to question the future of Bitcoin and the cryptocurrency market. As Su Zhu, the founder of Three Arrows Capital, stated in an interview:

"People are starting to doubt the whole theory, that this is all a bubble."

However, institutional investors (especially those who have been in the crypto market for many years) seem to unanimously believe in recent viewpoints that this pullback is the prelude to driving the industry towards the next cycle.

Market Insights from Framework Founder

Vance Spencer, co-founder of the renowned VC company Framework in the cryptocurrency field, posted a series of tweets yesterday, sharing his views on the current market as a VC and a seasoned participant in the ups and downs of the crypto world.

I could tell you all the war stories from '18-'20 bear

Playing Tronbet to make money to pay rent, moving into Michael's parents basement for a summer, selling the 401k at the depth of the bear to buy more ETH and make tax payments, bank overdrafts

But none of that matters

— Vance Spencer (@pythianism) June 22, 2021

Vance Spencer pointed out that back in 2017, although he had begun investing in cryptocurrencies, DeFi had not yet been launched, and many current applications did not exist at that time. He did not know what practical uses blockchain could bring. After the ICO frenzy in 2018, the cryptocurrency market entered a bear market, venture capital funding dried up, many excellent projects went unfunded, many project founders fled, and products had no users. Vance Spencer recalled:

"There was a feeling that the entire industry would evaporate within six months."

But Vance Spencer stated that now we know DeFi can provide better financial services, protocols are like money trees, DeFi's overall Total Addressable Market (TAM) is limitless, and Ethereum generates billions of dollars in fees annually, resembling a growth stock. Therefore, VCs are entering this industry with billions of dollars in funding, and Web2 developers are flocking in.

Even though the market performance this week has been poor, Zapper's daily active users, trading volume, and number of transactions are still hitting record highs. Furthermore, in the DeFi field, there are 500K to 1.5M active users every month who are willing to try new financial services, governance protocols, and build communities. All signs indicate that the cryptocurrency industry has not collapsed due to the market downturn. Vance Spencer concluded:

"Yes, I am optimistic, I look forward to this cycle recovering quickly and continuing. This volatility is necessary, many teams are distracted by these paper fortunes, improper incentive mechanisms, meme coins skyrocketing, the market lacks focus. Now we can separate the high quality from the majority, which will lead us to prosperity once again."

(Vance Spencer warns that the above statements are by no means investment advice.)