A survey by Globes recently revealed that the blockchain firms in Israel are not only affected in recent years, but the founding of new companies has almost completely halted. It is due to the drop in the global cryptocurrency market that happened in late 2018, which is also referred to as crypto-winter. The following has been known to be responsible for reducing investment and trading activity in the sector.
Israel Bitcoin Association and Sphinx research company conducted this survey in collaboration to represent the blockchain companies active in Israel. After the successful completion of the research, it comes into light that only 3% of the 134 companies active in the sector were founded in 2019. The number of companies founded in 2019 is 90% fewer than the companies founded in 2018. Furthermore, according to the collected data, 59% of the companies in the blockchain sector were established in 2017-2018. 2017 and 2018 were known as the most flourishing years in blockchain sector of the decade.
The research also highlights that most of the blockchain companies were young, with only 8 of them founded before 2012. Besides, 28% (38 companies) were founded in 2017 and 30% (41 companies) in 2018.
The Market Has Learned From Its Mistakes
Given the recovery of the crypto sector in 2019 and the value of Bitcoin which rose by 87% during the year, it came as a shock to Meni Rosenfeld, the chairman of Israel Bitcoin Association to which he commented that sometimes the correlation between the founding of companies and the global market comes after a lag.
Rosenfeld further noted that the effect of crypto-winter showed its impact in 2019 and would not continue this year. He added that the recovery of the sector started last year, which indicates that more blockchain companies would be founded in 2020 not only in Israel but worldwide.
According to Rosenfeld, the new companies in the sector are most probably going to survive for a longer period, given the market has already learned from its mistakes.