Over the last two weeks, the value of cryptocurrency, NFTs, and associated investment values have taken a hit for a plethora of reasons. Bitcoin seems to have bounced back off of its lows, but it is still considerably lower than it has been trading of late. I have not participated in these markets, but I believe a falling crypto market is bad for domain investors and the domain name industry as a whole.
If you have a look at some of the top domain name sales from the last five years, you will see quite a few domain names were sold to cryptocurrency related companies or were bought for crypto/Web3 related projects. Even more high value domain names were acquired by these types of companies in private. Public.com, Crypto.com, Circle.com, Republic.com, Gemini.com, Candy.com, Galaxy.com, and countless other domain names were sold in private for substantial amounts of money.
I would guess nine figures worth of domain names have been sold to crypto-related businesses in the last several years. I would not be surprised to learn the number is actually higher. It is an impossible to know given the amount of sales transacted privately on platforms like GoDaddy, Dan.com, Sedo, BrandBucket, and others, in addition to privately transacted off-platform sales.
Companies flush with cash are willing and able to spend money on great domain names. High growth industries, like cryptocurrency and associated businesses, have received substantial funding to grow exponentially. They also earn considerable revenue from sales and services. Some of this money trickles down to domain industry companies and domain investors. As the crypto market goes, so goes the domain name aftermarket.
With a softening crypto market, less money will be spent on domain name registrations, acquisitions, and upgrades. Companies would be reluctant to lay off staff while spending a substantial amount of money on a domain name upgrade. People may be less inclined to start a business, particularly as interest rates increase and the amount of funding available dries up. In my view, this means there will be less money spent on domain names.
In addition to the falling crypto markets, many companies on the NYSE and NASDAQ have also taken some hits. Stocks have fallen off of their recent highs. I have also been reading about startup layoffs and difficulty with fundraising. These factors will also impact the domain name aftermarket.
It’s not all doom and gloom on the horizon. There will also be plenty of opportunities for domain investors that pop-up. Companies that don’t survive may have valuable domain names that could be sold. Projects may get abandoned and associated domain names may be put up for sale to raise capital. There may be less money spent on domain auctions, giving investors a better opportunity to acquire investment-grade domain names at a lower cost.
I am sure there are some people who are happy about crypto investors losing some of their investment. As a domain investor though, if the crypto markets continue to fall, I think the ripple effects on the domain name ecosysyem will be pretty strong.