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We’re in ‘crypto winter.’ Here’s what locals think about the future of the industry.

Bitcoins featured in ads in Washington, D.C., in 2021. The crypto world has gone into full meltdown mode in a sell-off that illustrated the risks of the experimental and unregulated digital currencies.Samuel Corum/NYT

The cryptocurrency market has been tanking in recent weeks, wiping out billions of dollars in wealth and causing some tech and business leaders to question the industry, while locals working in crypto say they remain confident about the future.

The latter is perhaps a surprising outlook given that the best-known digital currency, Bitcoin, is down 70 percent from its high in November, far worse than traditional investments such as the stock market. And this week, crypto exchange Coinbase announced layoffs, and lending network Celsius paused its service due to “extreme market conditions.”

Even so, the biggest players in the sector are standing by its long-term prospects, as well as the potential for the underlying technologies to affect businesses.

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That includes Abigail Johnson, chief executive of Fidelity Investments, which sells crypto-related financial services. She called the downturn an “opportunity” during a keynote session at a crypto conference last week in Austin, Texas.

“I figure this is my third crypto winter,” she said, referring to a prolonged period when cryptocurrency prices are low. “If you believe that the fundamentals of a long-term case are really strong, when everybody else is dipping, that’s the time to double down and just dive extra hard into it.”

Abigail Johnson, CEO of Fidelity Investments, at a 2017 meeting. She said recently called the crypto downturn an "opportunity."Andrew Harrer/Bloomberg

Fidelity has become a major player in crypto, most recently launching a program that allows companies that use its retirements services to offer their workers a bitcoin option in their 401(k) plans. The move has drawn scrutiny from the Department of Labor and Senator Elizabeth Warren, who wrote in a letter to Johnson that investing in crypto is a “risky and speculative gamble.”

A spokesperson for Fidelity said this week that it does not comment on “crypto price volatility.”

Bitcoin, the most popular cryptocurrency, has lost a third of its value since last week. With the price of bitcoin now under $20,000 per coin, it’s down sharply from a high of more than $68,000 in November.

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There’s a clear disconnect between the tone at ongoing crypto conferences — known for lavish, over-the-top parties that last until the early hours — and the steep drop in the market. The macro environment didn’t stop a group of Boston executives from joining some 17,000 people at Consensus 2022, one of the largest crypto conferences, last week. They included representatives from Fidelity, as well as prominent startups Circle Internet Financial, Algorand, and Flipside Crypto.

Crypto critic Molly White, a Massachusetts-based software engineer known for her website called “Web3 is Going Just Great,” said in an interview there is an incentive to be “incredibly positive about the crypto space, regardless of what’s happening.” That’s because “so much of crypto’s value is predicated on people believing in it,” she said.

She expects the sentiment at upcoming industry conferences, including NFT.NYC next week, will remain positive.

“No one’s going to be like, ‘Oh, gosh, maybe we’re in the wrong industry,’” she said. “Obviously people might be a little bit less willing to speak about their own personal portfolios.”

Molly White, a 28-year-old software engineer, documents the failures of the cryptocurrency industry on her blog "Web3 is Going Just Great." Tristan Spinski/For The Washington Post

Like Johnson, the Fidelity CEO, other local crypto leaders appear to be shrugging off the bad news.

“Sometimes I go to these conferences, and I’ll be in a moment of doubt [when] the market is crashing for crypto,” said Dave Balter, chief executive of Flipside Crypto, who was in Austin last week. “Then I run to these people and I’m like, they’re not wrong.”

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He’s talking about the industry’s longer-term promise. Balter believes crypto’s underlying blockchain technology has the potential to transform how all financial transactions are conducted, and that’s what keeps him optimistic despite the sobering market.

He thinks the technology’s potential to make traditional banking more efficient, for example, is “getting mixed up in this political issue related to investors being harmed.”

Dave Balter, CEO of Flipside Crypto, believes crypto’s underlying blockchain technology has the potential to transform how all financial transactions are conducted.Erin Clark/Globe Staff

Among those advocating for blockchain tech is Massachusetts state Representative Kate Lipper-Garabedian. While digital currencies are the most well-known application, she said, there are several others. She’s trying to create a state blockchain and cryptocurrency commission, which would offer recommendations to the Legislature about how to utilize the technology and support the local business ecosystem.

“I don’t see the State’s interest in pursuing the value of blockchain diminishing due to the volatility of the digital asset market,” she said in an e-mail to the Globe.

The state announced on Wednesday a nearly $2 million grant to fund a partnership between Quincy-based incubator QUBIC Labs and Boston-based Algorand, intended to support blockchain startups and entrepreneurs.

But local players admit the downturn will be painful for individual investors who lose money or startups forced to lay off workers.

Travis Lowry, a partner at Vinyl Capital in Boston, said the so-called crypto winter will likely be “pretty disruptive,” especially for projects and companies that failed to come up with useful or practical applications. But as an investor, he’s optimistic because the “hype and the froth is going to blow off.”

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“We’re probably going to have a lot of big, dope companies in three to seven years coming out of the space,” Lowry said. “There’s going to also probably be a lot of really public pain.”

White said crypto companies that don’t issue tokens or rely on crypto funds might weather the storm better than others, though any company related to the industry could be hurt.

“Longer-term success depends somewhat on whether or not this downturn also results in a cooling off of the venture capital interest in crypto and blockchain,” she said. “I wouldn’t be surprised if it affects any of the Boston companies, but I would also say that the companies that I’m most worried about are not the ones based in Boston.”

Eyhab Aejaz, cofounder and chief executive of Boston-based Breach Insurance, an insurance-tech startup focused on cryptocurrencies, said he thinks the recent crash will be “painful for most founders and investors” in the near term. But he thinks it is an important “reset” that will allow the industry to “re-focus on building products and businesses that will help bring crypto to the masses.”

Still, he said the crash is already making business more difficult.

“Does it impact us? Yeah, it’s really hard to fund-raise and do partnerships,” said Aejaz.


Anissa Gardizy can be reached at anissa.gardizy@globe.com. Follow her on Twitter @anissagardizy8 and on Instagram @anissagardizy.journalism.