Andreessen Horowitz Predicts A Fourth Bull Cycle for Crypto

It’s been less than a month since Andreessen Horowitz, or a16z had launched its new crypto fund worth $515 million. Now, however, the firm holds a bold prediction for the crypto industry at large. According to a16z, there could be an influx of high-quality projects that may drive yet another growth cycle in the crypto industry at large.

A Lecture In Price Innovation Cycles

The venture capital fund now holds a substantial crypto portfolio to coincide with its rather significant reputation. Through a post it made on Friday, the fund had speculated that a portion of the better projects that was created within the wake of the Initial Coin Offering (ICO) boom of 2017, would contribute to another boom period, in turn.

To support this, a16z pulled from the data and “anecdotal’ evidence stretching as far back as ten years ago. The fund explained the concept of “price innovation cycles,” and stated that these cycles had peaked in 2011, 2013, as well as 2017.

According to the fund, these cycles start with a price increase. This increase in price attracts new people with bright new ideas, who create promising projects and companies in the crypto space, in turn. These projects and companies then proceed to benefit the crypto space at large through its innovation.

Serving As The Foundation Of Another Growth Spurt

The blog post explained that a crucial element of these cycles is its self-replicating nature. In short, these cycles plant the seeds for the next one to grow out of by inspiring more people with more ideas to join the crypto space at large. As an example, Ethereum was created within the cycle of 2013, which itself became the building blocks for the ICO boom, which led to the cycle of 2017.

This, in turn, lets a16z explain that the 2017 cycle, in turn, had spawned a wide range of exciting projects, including that of finance, payments, games, web apps, and infrastructure. A large portion of these projects are set to launch in the near future, which may push out the fourth crypto cycle.

Building On The Success Of Previous Ventures

This blog post has come after just shy of three weeks since the firm had finished raising funds for its Crypto Fund II. Through a public statement, a16z stated that the fundraising had exceeded the initial target for $450 million, and will now launch with a total of $515 million that it will use to invest in the crypto space at large.

While the first fund was launched back in 2018, its investment prospectus was far more general in application. This new fund, however, has been stated by a16z to target specific sectors within the crypto industry. These sectors include things like next-generation payments, decentralized finance, or DeFi, as well as Web 3, the concept of a decentralized internet.