Thoughts on the state of crypto in 2018, which marked the start of a crypto recession, and predictions for 2019 as experts now focus on adoption and usage
My thoughts on the state of crypto in 2018 and where we're headed — As another year wraps up, I started writing an email …
Context & Ripple Effects
Balaji's year-end review lands weeks after Multicoin Capital published its own state-of-crypto-at-the-end-of-2018 assessment framed as open questions rather than answers — together they mark the moment the industry stopped narrating the bear market as temporary and started treating it as a structural reset. The through-line both share is that the next phase gets judged on adoption and usage, not price.
That framing proved durable: a16z later built its State of Crypto 2023 report around separating market cycles from product cycles, arguing development continued steadily through downturns — an analytical move that descends directly from the 2018-19 reframe this piece participates in.
First-order effects
- Investors and analysts tracking crypto shift their scorecards from token prices to active users, transaction volume, and developer activity — metrics that survive a drawdown that price-based theses do not.
Second-order effects
- Capital allocation follows the new scorecard: funds and founders competing in a post-recession market differentiate on demonstrable usage, pressuring projects whose value rests purely on speculation.
Third-order effects
- If the pattern holds across cycles — which a16z's analysis of ten years of funding and discussion data suggests it does — each 'crypto winter' institutionalizes a usage-first evaluation standard, making adoption metrics the industry's default legitimacy test regardless of where prices sit.
The trend: Crypto's recurring boom-bust cycles are pushing the ecosystem's self-evaluation from market performance toward product adoption, with each downturn hardening that shift.