Cryptoverse: What crisis? Venture capitalists bet big on crypto

The figure in this photo, taken on March 13, 2020, shows a stock price graph representing Bitcoin. REUTERS / Dado Ruvic /

July 26 (Reuters)-It’s not all fate and darkness.

Venture capitalists are pouring money into digital and blockchain startups at a faster pace than last year’s record as the crypto sector trembles in the harsh winter.

Earlier this year, VC bet $ 17.5 billion on such companies, according to PitchBook data. This will make investment more than the record $ 26.9 billion raised last year, making Bitcoin and its business partners a warmer and happier time.

“Current market conditions-I don’t think they’ll mislead investors,” said Roderik vander Graf, founder of Hong Kong investment firm Lemniscap, which focuses on cryptocurrencies and blockchain. “The available capital is enormous.”

Venture capital funds fund young companies that believe they can grow. This data suggests a firm belief in the future of cryptocurrencies and blockchain technology, despite a six-month blow to the industry.

The double pain of macroeconomic headwinds and explosions in this year’s major projects plunged Bitcoin by about 65% from the November record of $ 69,000, reducing the overall value of the crypto market by two-thirds. That’s $ 1 trillion.

On the major US exchange Coinbase Global, companies quivered as prices fell (COIN.O) OpenSea, an NFT platform for dismissing hundreds of workers.

Still, many VCs are deploying significant warchests as some VCs avoid the darkness and remain highly confident in the underlying technology behind crypto coins.

Not all investors are so bullish in the face of the cryptocurrency massacre, but by no means.

David Siemer, CEO of California crypto management firm Wave Financial, said there are signs of a step back from last year’s highly acclaimed crypto firm.

“This will get worse. We’ve been in this cycle for a few months. In the last cycle, those looking for money suffered about 12 months.”

American hotspot

North America, a long-time VC trading hotspot, has refocused on activity at about $ 11.4 billion in the six months to June, compared to $ 15.6 billion last year overall.

This number is in contrast to general VC activity in the United States. In the United States, trading fell from $ 158.2 billion in the first half of the year to $ 144.2 billion due to cold investment due to macro conditions and market turmoil. read more

Rumi Morales, investment director of Digital Currency Group, a leading US VC, said the data reflects an increasingly strong confidence in the crypto and blockchain sectors.

“Once there was an existential risk in space. It was that the entire industry would disappear, but that was all a dream. It’s no longer the case.”

With the use of blockchain, the adoption of crypto as an investment tool surged last year, even though the revolutionary changes from technologies promised to industries such as finance and commodities remain elusive.

Some of the 2022 US megacrypt deals were raised by the US Crypto Exchange FTX division in January with $ 400 million. $ 450 million round of funding by blockchain developer ConsenSys in March. A month later, stablecoin issuer Circle raised $ 400 million.

It is also active in Europe, with $ 2.2 billion in VC investment in the first half of this year.

Lisbon-based Fedi said it raised $ 4.2 million in seed finance this month with an app designed to help people receive, hold and use Bitcoin.

“We had all our investment commitments within seven days,” Obi Nwosu, one of the founders, told Reuters. “And in less than a month and a half, we achieved our first funding goal at the bank. It’s done.”

Report by Tom Wilson in London and Meda Singh and Lisa Pauline Matakkar in Bangalore. Edited by Pravin Char

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