Crypto bros on the beach feel a cold wind at their necks

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The irony of entering a cryptocurrency conference through a casino was clearly lost on the organisers of Crypto Bahamas.

But if, last week, you turned left past the slot machines, under the blue glass chandeliers, at the Baha Mar resort in Nassau, down the bright yellow promenade to the convention centre, you found a collection of crypto magnates way past caring about the jibes of critics who see their industry as akin to gambling.

At the beachside gathering, crypto’s self-confidence was on display. The message of the event was that crypto’s disruption of the financial sector can’t be stopped, so it’s time to get with the programme. “This is happening whether you like it or not,” said Anthony Scaramucci, briefly White House communications director in the early days of the Trump administration, whose events business Salt co-hosted the conference with the exchange FTX.

The sheer star power the two companies were able to put on stage attests to crypto’s growing acceptance. FTX founder Sam Bankman-Fried sat alongside Gisele Bündchen, the model with whom he will feature in a Vogue magazine advertising campaign. Bündchen’s husband, NFL quarterback Tom Brady, joined the 30-year-old crypto billionaire for a session entitled, simply, “Winning”. 

That night, in a lofty, whitewashed pavilion, Bankman-Fried and Scaramucci hosted fellow crypto potentates, joined by the pop star Katy Perry and actor Orlando Bloom, at a candlelit private dinner.

The next day, Bankman-Fried was on stage again, this time with former US president Bill Clinton and Tony Blair, the UK’s ex-prime minister. The audience — ranging from a 14-year-old decentralised finance developer to representatives of Wall Street investment banks and public pension funds — heard repeated sermons to the effect that regulators need to catch up with the pace of crypto, and that countries which fail to see the light will watch digital asset innovation flee elsewhere.

Certainly, these crypto wanderers have received a warm welcome in places like the Bahamas. A number of upright Bahamian police officers, their crisp white uniforms incongruous among the flip-flop wearing hackers, testified to the presence of a government delegation, including the prime minister, who opened the event.

“It’s like being pirates back in the day. We’ve always embraced the fringe,” said one experienced Bahamian entrepreneur.

But the event’s bravado easily tipped over into excess. The German billionaire Christian Angermayer joined Scaramucci for an interview entitled “Elevating Crypto Consciousness”, which turned out to be a discussion of how people could use hallucinogens to stop worrying and love crypto. (One Direction singer Liam Payne was booked to interview Angermayer, but he cancelled on the morning of the event.)

Many of the visitors to the Bahamas, who had danced till the small hours at the resort’s nightclub to DJ Steve Aoki, could find themselves with a hangover after last year’s binge of crypto trading and speculation.

Total crypto market capitalisation dipped a further 5 per cent during the four-day gathering, down 40 per cent from its high last autumn.

And in private conversations, on the borders of the palm-fringed lawns, as Kool and the Gang’s “Celebration” pumped from the speakers, participants admitted that leaner times were coming. One executive predicted that the vast majority of extant crypto projects would go to the wall. Among those guests who are old enough to remember, many saw echoes of the dotcom boom.

“There will be a wash out,” said a venture capital partner. He pointed out that most of the ventures that raised funds in the last two years, often at very generous valuations, took in enough capital to sustain themselves for 18-24 months. Soon, they will need to seek new funding in a much tougher environment, especially if they have failed to live up to their ambitions. Even Scaramucci admitted that markets were heading into a “messy period”. 

“Everyone is a long-term investor until they have short-term losses,” he said. But the crypto faithful are convinced that, as happened after the dotcom crash, the most durable projects will survive.

Even so, if the predictions of a downturn are true, the shake-out will be a test for true believers. The gamble they are taking is that enthusiasm for digital assets will survive any market slump, or a prolonged period of lacklustre trading.

Just as delegates to the conference strolled by blackjack tables and slot machines to reach the symposium, millions of people have also entered the crypto world through the casino, during the past 18 months of pandemic-induced trading frenzy. The question now is: if losses begin to mount, will the punters stick around?

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