The value of many leading cryptocurrencies dropped dramatically over the last week or so. The fall is bad news for people holding cryptocurrencies, but ongoing volatility in the market has supercharged growth in the crypto media companies supporting the sector.
Takeaways
- Cryptocurrency is infamous for its dizzying rises in value and equally rapid falls. Just this week, over $500 billion was wiped off the cryptocurrency markets as overall valuations dropped to about $2 trillion from a peak the week before of about $2.5 trillion.
- This level of volatility, coupled with the growing relevance of cryptocurrencies – almost 15% of US adults are thought to own some form of cryptocurrency – has spotlighted the demand for strong information on crypto market movements.
- Jason Yanowitz, co-founder of investor focused media brand Blockworks, told Axios: “For the first time ever, crypto has become relevant to the global macro-economic conversation, and therefore, the investment conversation.”
Maturing markets
For several years, there was a sense that the crypto market was a trend that might disappear at any time. But growth in media businesses serving the cryptocurrency audience is seen by some as a sign that the market is maturing.
- “Similar to how previous cycles in crypto saw the emergence of new exchanges, this current cycle has seen an emergence of several media firms all trying to win mindshare in a young market,” said Mike McCaffrey, CEO of crypto-media startup The Block.
- Media commentator Jacob Donnelly worked at CoinBase and has detailed the growth of the crypto-news site. It went from just under 1 million monthly users in November 2016 to over 12 million users a month by December 2017. He says current reports put traffic at 20 million users a month.
- Revenue for these businesses comes mainly from advertising.
- Blockworks strategic advertising partners include Fidelity Digital Assets, Coinbase, and BlockFi.
- About 70% of The Block’s revenue comes from advertising, the rest from subscriptions to its paid news content and research products.
- Besides advertising, CoinDesk sells custom reports.
Future growth
Axios advises that media companies supporting interest in the crypto market will continue to flourish alongside interest in the market. But there is a warning in the fact that growth in traffic to crypto sites tracks rising valuations – a bust could dent the upward trajectory.
- Jacob Donnelly explains that it is important to understand that the ‘crypto media story’ is founded on an obsession with the price. “The vast majority of the visits to these sites are to price pages, where you can see the charts move in almost real time.”
- Donnelly points out that the most popular search terms in crypto include “Bitcoin Price” and “Ethereum Price” and sites are benefiting from the ‘addictive nature that is 24/7 crypto pricing’.
- “The problem with living by the price is that you die by it as well,” he says. CoinDesk’s December 2017 traffic of over 12 million monthly visits coincided with a Bitcoin price of $20,000. When the value dropped to $3,000 the audience fell below 2 million.
That kind of audience movement makes it very difficult to run a sustainable advertising funded business. The ups and downs of the cryptocurrency markets have a direct impact on revenue making budgeting ahead almost impossible.
For Donnelly, a sustainable future for crypto media is about blending a sophisticated reporting capability with unique data and developing a subscription business.
“If I were looking at this space, either as an operator or an investor, that’s what I’d have my eye on. Which player can blend proprietary data with solid reporting? That’s the company that will be able to withstand the ebbs and flows of this market.”
