An assessment said the cryptocurrency industry is going through the most severe downturn in its history.

On June 17, local time, blockchain media outlet U.Today reported that Zcash co-founder and StarkWare CEO Eli Ben-Sasson (엘리 벤사손) said startup closures and budget cuts are rising to levels exceeding previous records across the industry.

Ben-Sasson said the current crisis is different from past bear markets. He said he has been in the cryptocurrency industry since 2013, and that previously even relatively weak projects could hold on through a prolonged downturn, but the situation is different now. Startups are burning through funds on a large scale and ultimately going bankrupt or halting operations entirely, he said.

This funding pressure is spreading to industry-leading companies as well. StarkWare also went through budget reductions a few months ago. Ben-Sasson said even firms with sufficient product and team competitiveness are shutting down because they lack financial runway. That means more than just weak businesses being cleared out, and that even teams that had a chance of survival are being pushed out of the market.

He said the market shift is not limited to startup restructuring. Major traditional finance investors that drew expectations until recently are also lowering their interest in the crypto market, and he forecast that the trend will continue at least until U.S. midterm elections. He also said that if the Democratic Party takes a majority of seats, major investors could become more cautious.

Ben-Sasson said he did not view the outflow of funds only negatively. He said cryptocurrency was not created as new infrastructure for the existing banking system but to expand freedom for financial innovation, and that its direction differs from traditional finance, which is subject to strong regulation. This is interpreted as meaning the current trend could, in the long term, become a chance for crypto to regain its direction.

A change in attitudes within the industry was also cited as a problem. Ben-Sasson said, "Every winter is seen as the end of crypto, and every time the narrative changes it is accepted as if it were the last," adding, "There is no patience."

He also said that as the influence of large funds weakens, developers are in a situation where they must find a new foundation for the next technological leap. He said a new flow is emerging within the industry, but that the next overheated phase will not come from artificial intelligence (AI) or enterprise blockchain products.

Ben-Sasson's remarks place more weight on the changing nature of the downturn than on the downturn itself. That is because not only early-stage teams with weak funding but also competitive projects are under survival pressure, and traditional finance money is also turning conservative. As a result, a key variable for the crypto market going forward is expected to depend less on whether prices rebound than on what new support base the developer ecosystem secures.

A glimpse into the future of Crypto, from someone who's been around since 2013. Tl;dr -- institutional adoption and interest will drop, at least till mid-term elections in the US. As we get closer to them, and especially if winds are leaning towards democrats getting more…