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​The Dislocation Between Public & Private Web3 Markets​

With the rise of AI, web3 has become a quieter part of the venture ecosystem. I was curious about the current state of affairs.

The launch of the Bitcoin ETF has amassed roughly $58b. Meanwhile, the Ethereum ETFs has about $500m, two orders of magnitude smaller.

The some major Web3 tokens have done pretty well in 2024 ; others have underperformed the Nasdaq (+19% YTD).

Series A valuations have increased through 2022 and since have seen a much higher variance, with both meaningfully higher & lower prices than the trend line.

Year-to-date, the correlation of the public & private web3 markets has been weak, around 0.2, which means they move independently of each other. This is most true for DOGE coin, a meme coin, & less true for Bitcoin.

With Bitcoin in particular, the correlation should begin to dissociate because most of the fund flows will be public market investors. Solana & Ethereum, with their smart contract platforms should have a higher correlation, since activity there is more closely tied to private market startups building new software.

The Series A financing market is volatile driven by larger transactions & at a steady pace of about $500m per quarter.

One of the major questions for web3 exists in the US where the regulatory regime isn’t clear.

Overall, web3 continues to see activity but most of the interest exists in the public markets as the market awaits next-generation of infrastructure & applications & regulatory clarity.

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