California-based venture capital firm, Andreessen Horowitz (A16z), predicted on Friday that innovative start-ups and projects would bring about the next growth cycle in cryptocurrency.
In an official blog post titled “The Crypto Price-Innovation Cycle”, Andreessen Horowitz explains how the last three bull cycles came about, following a seemingly chaotic pattern.
Based on a 10-year observation and resulting data, the VC firm found that these price-innovation cycles start with Bitcoin and other altcoins going up, which gets people interested and talking on social media. The increase in interest sparks new ideas that lead to new start-ups and projects, which in turn drives prices further up.
In the past decade, there have been three cycles that peaked at 2011, 2013, and 2017. A key player in the second cycle (2012-2016) was Ethereum, “which drove a lot of the excitement in the third cycle in 2017” reads the blog post.
A16z posits that the success of such projects drives the next cycle. The VC firm believes that the seeds planted in the 2017 cycle will grow very soon, and will trigger the fourth crypto cycle.
Unlike the first and second cycles, the fourth cycle will include projects from industries such as gaming, web applications, infrastructure, finance, and payments. A16z plans on investing $515 million into its new fund.
Last year, A16z led a funding round for Anchorage, a crypto custodian for institutional investors.
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