Are we in a fourth cryptocurrency power cycle?

The crypto space is known for its volatility and cycles of public interest. Bitcoin began in 2009. The first cycle of interest peaked in 2011, the second in 2013, and the third in 2017, when Bitcoin reached an all-time high of $19,783.

Crypto cycles follow a certain dynamic, say Andreesen Horowitz partners Chris Dixon and Eddy Lazzarin: 1) Prices go up 2) Public interest and social media activity spikes 3) More people get involved, which fuels ideas, funding and startups 4) New products launch, inspiring even m

Money is often the initial motivator for people to get into crypto, but they become fascinated by the philosophy and technology behind crypto and blockchain. They start reading white papers, blogs and books, and become part of the crypto community.

Venture capitalists Lazzarin and Dixon examined the data on online comments on crypto on platforms like Reddit and Github. They added in startup and funding data from venture capital platform Pitchbook. From this they determined three clear cycles.

First cycle: 2009-2012. Before this time, most people who knew about crypto saw it as an interesting experiment. When Bitcoin spiked in 2011, interest got more serious. Many of today’s crypto miners, exchanges, and wallets were established, and they stayed committed even after pr

Second cycle: 2012-2016. The price spike of 2013 saw many people outside of tech become aware of crypto for the first time. There was a 10x increase in developers and startups. The Ethereum currency was established.

Third cycle: 2016-2019. The Bitcoin price peak of 2017 led to mainstream interest. Another 10x increase in crypto startups led crypto to become an established part of VC funding.

“A key feature of crypto cycles is that each one plants seeds which later grow and drive the next cycle,” say Dixon & Lazzarin. The 2017 cycle gave birth to hundreds of exciting projects across payments, finance, games, infrastructure, and web apps.

Many of these projects are launching now or soon as real products. We’re at the beginning of a fourth cycle of crypto activity and the inevitable enlargement of its societal and economic footprint, tipping crypto further into the mainstream.

Bottom line: the growth of crypto looks chaotic and volatile, but over its lifetime there’s been a steady increase in code, projects, and new businesses. If Bitcoin or other crypto currencies spike again, expect to see yet another wave of innovation and growth.