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Anchorage Digital Believes The Crypto Bear Market Is the Best Time To Build

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Cryptocurrency unicorn Anchorage Digital launches full-stack API infrastructure for delivering cryptocurrencies to institutions. The new “Build With Anchorage” service provides comprehensive access to various crypto services. Also, President Diogo Monica believes the current bear market is a great opportunity to build.


Monica and CEO Nathan McCauley founded Anchorage Digital in 2017.The pair previously worked as engineers at Square, but now block (SQ), Docker security software and infrastructure protect billions of transactions and data annually for leading banks, governments and cloud providers.

Anchorage also leverages its expertise to provide a secure crypto platform and infrastructure with institutions in mind. The company has raised more than $3 billion of his funding from Andreessen Horowitz (a16z), GIC (Singapore’s Sovereign Wealth Fund). goldman sachs (GS), KKR (KKR) When visa (). Last year, her Anchorage Digital Bank received approval from the Comptroller of the Currency to become the first federally sanctioned crypto bank.

Covering Institutional Crypto Needs

The new Build With Anchorage is the culmination of the last five years of work. “This is the culmination of our journey,” Monica told Investor’s Business Daily. I have reached a place with

Powered by Anchorage’s API software, the Build With Anchorage service provides institutional investors with access to crypto payment gateways, financial instruments and market participation tools. And Anchorage’s suite of API services covers everything industry players want to offer their customers.

Industry clients can also tap into Anchorage’s engineers, deployment strategists, and testing team to help bring their services to market.

Anchorage has already secretly partnered with fintech companies AngelList and Series Financial, as well as a number of cryptocurrency companies.

Target industry insiders

Also, the institutional cryptocurrency market has been largely overlooked due to the project’s focus on individual customers. That brings opportunity to Anchorage.

“Many of the protocols weren’t really built with institutions in mind. In fact, I think the spirit is somewhat anti-institutional for many of them,” Monica said.

Institutional adoption of cryptocurrencies has been slower than consumer adoption, but they are likely to be the most consistent investors during the current bear market.

Monica said consumer adoption has been very bumpy and volatile so far, but the agency is on a different trajectory.

“Financial institutions are all about understanding value, product/market fit, and use cases. But they are low and slow,” he said. Retail-focused projects have suffered from inflationary pressures on consumer pockets, but not in Anchorage. Most institutions working with Anchorage have built consistently through bear markets.

“They have a very long-term view of how they invest in these assets and really participate in this asset class,” he said. “What’s really happening on the ground is that institutions keep building whatever the price.”

Building in a recession

This institutional investment will continue even in a recession. Even if the amount or number of projects is reduced. “You’re still focused on making sure you’re building into the future,” Monica said. And he’s never seen anyone exit this space completely. .

“It’s much easier to build during recessions and bear markets,” he added. “It embodies the product his market fit, so it embodies real goals. It also allows him to build only products that actually have some business need. This reduces a lot of speculation. increase.”

In fact, we could see many more projects in this area. “Because it has a clear cohesive distribution,” he said. And, of course, there is the fear of missing the next bull market. “Many of these agencies want to be there because they couldn’t be in the last agency…so it’s definitely something in terms of strategic positioning.”

And as industry adoption progresses, Monica said there will eventually come a time when adoption by stable institutions will outstrip adoption by volatile consumers.

Security in the spotlight

But what sets Anchorage apart from other custodians is its focus on security. “It’s a very technical undertaking, so it’s very different from a traditional custody or a traditional custodian,” Monica said. Being formed by security engineers is a huge advantage.”

Hackers have stolen more than $2.5 billion in various crypto heists so far in 2022, according to VPN service Atlas VPN.

Many of these protocols were not built with institutions in mind, so security is often an afterthought. Monica said she recognizes that many cryptocurrency projects are still in beta testing and needs to communicate that fact more openly.

“I think they want to put their tokens on the market, so they go straight to producing products,” he said. “And that’s how they essentially make money, so it makes sense…but very few have spent enough time testing that they have a public blockchain. Yes, and some of them I think I’m doing right – producing before launching the actual tokens.”

Consumers and institutions should be aware that many of these cryptoassets and protocols on blockchain are beta software. Public release and immediate use means that some crypto companies are virtually testing in production.

Anchorage, on the other hand, takes a more traditional approach with lots of backend testing to ensure it can meet the security needs of the institution.

what lies ahead

Monica still expects a lot of turbulence in the cryptocurrency industry as the bear market continues. Angel investments in early-stage cryptocurrency startups are similar to venture capital in traditional markets, with similar return expectations. “9 out of 10 companies fail in the early stages, and you can very much expect 9 out of 10 tokens to be the same type of investment,” said Monica.

And in a recession, less capital is injected into the space, increasing the failure rate of traditional virtual startups that fail to get funding. Or at least get bought out for intellectual property, he says.

Where the cipher differs is the emergence of what Monica calls the Zombie Project. Market makers will continue to buy and sell tokens after listing. This ensures that even if the company behind the token goes bankrupt, a minimal amount will be maintained. The project never actually shuts down, making it more difficult to see when the project fails.

what about bitcoin?

Meanwhile, the narrative around Bitcoin is already changing. “Bitcoin has been trading flat for the past three months and the market has crashed, which is why there is currently an anti-correlation between cryptocurrencies, especially Bitcoin, and other assets,” Monica said. Said. Many of the Bitcoins scheduled for sale have already been liquidated. As such, he sees the world’s largest cryptocurrency price support.

Whether it’s a hedge against inflation or a need for sovereign resistance to become more important during geopolitical conflicts, there are many reasons why bitcoin continues to trade in ways that are uncorrelated with traditional markets. Monica says.

Follow Harrison Miller on Twitter for stock news and updates. @IBD_Harrison

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