Zcash Co-Founder Declares This the Worst Period in Crypto History

Eli Ben-Sasson, one of the founding figures behind Zcash, has just issued an unprecedented warning about the state of the crypto market. His statement stands in sharp contrast to the usual narrative pushed by industry insiders, who are often quick to downplay turbulence.

As blockchain startups shut down one after another and venture capital dries up, this renowned mathematician and cryptographer paints a bleak picture — though not one entirely without hope. Here is why his words deserve to be taken seriously.

Caught between structural collapse and the need for a full reset, Ben-Sasson’s diagnosis raises fundamental questions about the true maturity of the industry.

A blunt verdict: crypto has never been this fragile

Eli Ben-Sasson pulls no punches. In his view, the current period represents the worst phase in the history of cryptocurrencies, surpassing even the collapses of 2018 and 2022. He is not describing a simple market correction, but a structural crisis affecting the entire ecosystem: funding, adoption, and institutional confidence.

The Zcash co-founder specifically highlights the wave of mass crypto startup closures, a symptom of drying liquidity and the withdrawal of traditional investors. Venture capital funds that had poured heavily into Web3 between 2020 and 2022 have drastically cut their allocations. The result: promising projects are disappearing for lack of runway, and innovation is slowing down.

This assessment aligns with data observed across the market. According to multiple crypto venture capital tracking reports, investment in the sector has fallen by more than 60% from its 2021 to 2022 peaks. Market sentiment remains depressed, and on-chain volumes across many DeFi protocols are struggling to recover their former levels.

Why this reset is necessary, according to Ben-Sasson

Despite this grim picture, Eli Ben-Sasson puts forward a nuanced thesis: this purge is necessary. In his view, the bull market years allowed projects with no solid fundamentals to raise millions, creating a speculative bubble completely detached from real value. The ongoing cleanup, as painful as it is, is the prerequisite for a healthy rebuild.

This reading is not an isolated one. Several on-chain analysts, notably through CryptoQuant and Glassnode, have documented a similar phenomenon: bear cycles eliminate opportunistic players and strengthen protocols with genuine utility. Bitcoin, for example, went through several similar purges before establishing itself as a reference asset. The question now is which projects from the current generation will survive this natural selection.

Ben-Sasson, who currently leads StarkWare — a pioneer in scaling solutions built on zero-knowledge proofs (ZK-proofs) — remains convinced that the underlying technology is sound. It is the poorly designed economic models and tokenomics that are collapsing, not blockchain itself.

What this alarm signal means for investors and builders

For market participants, Ben-Sasson‘s message serves as both a call for caution and a dose of hard-nosed clarity. The projects that will survive this period will be those capable of demonstrating concrete utility, organic adoption, and disciplined treasury management. The era of raising funds on a whitepaper alone is over.

For retail investors, this environment calls for greater selectivity. Altcoins with no defined use case remain exposed to sustained selling pressure. Conversely, protocols anchored in high-growth sectors — ZK-proofs, DeFi infrastructure, and real-world asset (RWA) tokenization — could form the foundations of the next bull cycle.

Ben-Sasson’s statement is not a call to panic, but a stark reminder: crypto markets are not immune to the fundamental laws of economics. Survival belongs to the projects that build, not to those that speculate.