Warnings that the crypto bubble would burst came to fruition in the spring of 2022, and even bitcoin, the premiere cryptocurrency, made a slow motion dive. On Monday June 13, bitcoin fell 15%, the largest one-day drop in 18 months. Although it stabilized to $20,816, the flagship digital currency has lost 70% of its value since its high point at $69,000 in November 2021, Reuters reports.
This is bad news for cryptocurrency holders worldwide, but what does the crypto selloff mean for Israel’s tech sector?
Israel Tech Sector Largely Insulated from Crypto Losses
Interestingly, what was considered a disadvantage for Israeli Tech in March, when cryptocurrencies were flying high, is now a saving grace amid plummeting crypto prices. In spite of a number of Israeli startups specializing in cryptocurrencies, some of which were purchased by larger companies such as Coinbase and Paypal, Calcalistech observed in March, “There is almost a consensus on the fact that Israel’s tech sector has been slow in embracing the Web3 movement, despite its growth and potential.” It should be noted that “Web 3” refers to the crypto space.
Clearly, a liability in March of 2022 has become an advantage in June 2022. Although the crypto drop has reverberations through the global tech sector, Israel’s relative lack of Web3 exposure has spared its tech sector comparable losses.
In addition, since many of Israel’s crypto-related startups, such as Unbound Security and Curv, were purchased and absorbed by large overseas companies, these losses have consequences for parent companies, rather than the Israeli tech sector.
Cryptocurrencies Remain Volatile, but the Technology Is Here to Stay
However, the recent bitcoin selloff doesn’t spell the end of cryptocurrencies. Although it may take digital currencies more time to rebound than similar assets, blockchain technology isn’t going anywhere.
Sasan Goodarzi, CEO of major financial software player, Intuit, urges making the distinction between cryptocurrencies and the blockchain technology that supports them. On a visit to Israel just before the crypto crash the CEO of Intuit, which has several hundred employees in Tel Aviv made prescient and encouraging remarks.
“The technology is not temporary,” Goodarzi told Ctech, “Blockchain and decentralized technologies…we believe in these technologies … These technologies are going to be an enabler of much faster money movement … we’re not betting our future on the valuation of currencies, we’re betting on the impact of technologies.”
Invest in Israel’s Tech Sector and Blockchain Innovation
Crypto enthusiasts have realized that it isn’t worth gaming the rise and fall of bitcoin price–the main source of innovation is decentralized technology, like the blockchain. Fortunately, few Israeli startups were fully levered to the troubled crypto sector yet many are innovating with the sector’s underlying technology. Tech stocks in blockchain innovation are clearly excellent Israeli Investments.
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