Commentary
Is Boom In Crypto News Coverage Sustainable?
- by May 19, 2021
The surging values of cryptocurrencies like Bitcoin and Ether have helped to boost traffic for news sites that cover the mining, trading and acceptance of digital coins. A key question is whether
this heightened interest will be sustainable if cryptocurrencies lose value, perhaps when the Federal Reserve raises interest rates to ward off inflation.
Blockworks, a crypto media company started in 2018, has seen surging revenues this year amid the heightened interest in digital currencies. Its revenue this year will triple to $8 million-$10 million, fueling the growth in its headcount from 17 to about 40, Axios reported this month. Sponsors of Blockworks include a variety of financial services and technology companies, such as Fidelity Investments, IBM, TD Ameritrade and CME Group.
That
expected growth comes as the price of Bitcoin, perhaps the most famous cryptocurrency, has surged in the past year. After hitting a 2020 low of about $5,300 in March, Bitcoin's jumped to more than
$63,000 last month, and now hovers at about $43,000. The current mania reminds me of a smaller run-up in late 2017 that crashed the following year, burning anyone who bought Bitcoin at the top and
sold it a few months later.
Around that time, there also was a bubble in initial coin offerings (ICOs), the cryptocurrency industry's equivalent of an initial public offering
(IPO). The ICO boom spawned a variety of investment scams that drew heightened scrutiny from securities regulators, also dampening enthusiasm for cryptocurrencies.
For a more
in-depth analysis of the current state of crypto media, I recommended reading Jacob Donnelly's A
Media Operator blog. He compares the current crypto craze to what he saw at CoinDesk, the crypto news site experiencing a resurgence like past cycles. CoinDesk's web visits
jumped from about 8.6 million in November to almost 41 million last month, according to SimilarWeb data cited by Donnelly.
He recommends that crypto news sites develop unique
data and value-added content to differentiate their reporting. While price data help to drive web traffic, many of those readers are fickle and likely will disappear when crypto mania fades.
Low interest rates and deficit spending that diminish the value of the U.S. dollar have been good for cryptocurrencies, whose supply is limited by design. However, there are worrying
signs that inflation is rising as the economy continues to recover from the pandemic. The Fed may respond by raising interest rates, making the dollar scarcer and more valuable, compared with
cryptocurrencies and other assets. Another crash in digital currencies could devastate crypto media.
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