Less than a month after the launch of a new $ 515 million crypto fund, Andreessen Horowitz (a16z) predicts that "high quality projects" could drive a new growth cycle in the sector.
The study on the historical cycles of the crypto sector
The famous venture capital fund, which has a sizable cryptocurrency portfolio, said in a post last week that it studied some of the best projects created in the wake of the 2017 Initial Coin Offering (ICO) boom to contribute to a new period. boom in the sector.
Starting from "anecdotal" evidence and data dating back to 10 years ago, a16z says that "price innovation cycles" – including those that peaked in 2011, 2013 and 2017 – begin with price increases that attract new people with brilliant ideas that end up creating promising companies and projects for the benefit of space in general.
"A key feature of crypto cycles is that each plant seeds that subsequently grow and guide the next cycle," reads the post. Ethereum was created in the 2013 cycle, for example, and this became the basis for the ICOs that led the next cycle in 2017.
The forecasts and plans of the VC company
"The 2017 cycle has spawned dozens of exciting projects in a wide range of areas including payments, funding, games, infrastructure and web apps. Many of these projects will be launched in the near future, likely driving a fourth crypto cycle," he said in an a16z post.
The post comes just under three weeks after VC said its new Crypto Fund II exceeded its initial $ 450 million fundraising goal and would be launched with a total of $ 515 million to invest in. space.
Unlike the first fund, launched in 2018 with a more general investment prospect, a16z said that the new fund targets specific sectors, including decentralized finance (DeFi), next generation payments and Web 3 (the idea of Decentralized Internet).
A post from the time, written by a16z general partner Chris Dixon, co-author of the latest post, said: "In just a decade of existence, cryptography has gone through several waves. With each new wave, the applications of cryptography have spread to a greater number of categories and more visionary entrepreneurs have entered the space ".
More than half of the reported projects are already in the company's portfolio
A16z does not predict exactly when this fourth cycle could hit the cryptocurrency. But many of the projects he believes could play a key role in the industry's next cycle are also, perhaps not surprisingly, those in which he has invested.
These include the exchange of dYdX derivatives, the cloud computing platform Dfinity, the manufacturer of stablecoin Maker and the cloud platform "privacy first" Oasis Labs – all four are part of the active portfolio of a16z. In fact, 10 of the 18 projects that a16z highlighted as potentially crucial in the sector's fourth cycle received investments from the VC fund.