“We need to understand this downturn won’t be like previous tech bubble bursts,” Grim told Verdict. Henrik Grim, an experienced investor and now MD of Europe for startup founder funding firm Capchase, believes this downturn won’t be as bad as previous tech bubble bursts – such as the dotcom bust in the early noughties. While this does all seem pretty doom and gloom, some industry wonks remain hopeful for the future. The Elon Musk-run electric car company revealed in February 2021 that it had bought $1.5bn in the digital asset. This week it was revealed that Tesla has dumped 75% of its bitcoin holdings. It has also seen other market stakeholders lose faith in the nascent industry. This “crisis” has coincided with other factors playing out in the wider market – Russia’s invasion of Ukraine and rising inflation included. The total value of all cryptocurrencies has fallen from $3tn to just $1tn since November. “Fast entered a new, growing payments market, spearheaded by true trailblazers such as and Stripe, on the assumption that it didn’t need to be a differentiated product.”Īs stocks in technology businesses continue to fall across the industry, the crypto market has had a terrible crash of its own. Leon Gauhman, CSO and CPO of digital transformation consultancy Elsewhen, previously told Verdict: “Fast is another example of the era of cheap money coming to a grinding halt. US crypto lender Celsius filed for bankruptcy in July, claiming it was currently down to $167m “in cash on hand,” a long way away from their claim of having $25bn in assets under management in October 2021.įintech startup Fast was also forced to close operations this year despite a super-loud marketing campaign and raising over $124.5m in total. This changing market has been too much for some companies and led them to close or file for bankruptcy. This drastic fall in investment hammers home the decrease in investor confidence in high-growth tech stocks, adding to fears of a tech bubble crisis. The Swedish fintech company announced it raised a new $800m in funding from investors valued at $6.7bn: a huge decrease from $45.6bn it secured in 2021. Privately owned companies haven’t escaped the suffering either, as buy-now-pay-later giant Klarna saw its valuation drop a drastic 85% last week. Other coronavirus-thriving businesses like Zoom are losing big too, with the video-conference service reportedly dropping from $54bn to $27bn since the beginning of this year. Peloton, which was once hailed as the ultimate winner of the pandemic has now reportedly lost over 90% of its value since its peak. Public traded companies once sporting high-growth tech stocks are also seeing their shares fall at a rapid rate. Overvaluation and falling shares plaguing the tech industryĪnother underlying cause for the tech bubble seemingly being about to pop is the overvaluation of the industry.Īnalysts claim the dramatic fall in stock for companies like Tesla, which was valued at a whopping 1tn last year to currently just over $700bn, are the signs of a market correction. The pressures he was referring to share some of the aforementioned issues which experts feel are contributing to this bubble burst – the raging war between Russia and Ukraine and the return to pre-covid habits included. Meta CFO David Wehner said that the company must “be responsible by responding to the unpredictable market forces that have put pressure on our business over the past few months”. Even Facebook-owner Meta – who has been promising to rocket us into the Metaverse – has frozen hiring until further notice. Google, Apple and Microsoft have reportedly halted hiring. The looming warning comes as several large tech firms have announced hiring cuts. Even Amazon founder Jeff Bezos spoke out in a warning that the party days of rapid pandemic growth will be ending soon. Companies like Netflix and Peloton grew rapidly due to both factors, while companies like Uber suffered during the pandemic but also benefitted from a decade of low-interest rates and huge VC investment.”īut this Covid boom appears to be ending drastically. “These included historically low-interest rates and, more recently, the Covid-19 pandemic. Laura Petrone, principal analyst at GlobalData, told Verdict: “Over recent years, the tech market has grown thanks to exceptional and hard-to-replicate conditions. Russia’s unjust invasion of Ukraine, the end of the pandemic, the threat of incoming regulation and increasingly high-interest rates have all exacerbated the situation.
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