Cryptovert: what crisis? Venture capitalists are betting a lot on cryptocurrencies

July 26 (Reuters) – Not all is bleak.

Even as the cryptocurrency industry is shaking during the bleak winter, venture capitalists are pumping money into digital currency and blockchain startups at a pace that is expected to surpass last year’s record.

According to data from PitchBook, in the first half of the year, VCs staked $ 17.5 billion on these companies. This has met investments on track to break the record of $ 26.9 billion raised last year, a warmer and happier time for bitcoin and others.

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“Current market conditions: I don’t think they are discouraging investors,” said Roderik van der Graf, founder of the Hong Kong-based investment firm Lemniscap, which focuses on cryptocurrencies and blockchain. “The available capital is enormous”.

Venture capital funds provide finance to young businesses that they believe have strong growth prospects. Responsible data has strong confidence in the future of crypto and blockchain technology, despite six deadly months for the industry.

A double whammy of macro headwinds and outbreaks in big projects this year saw bitcoin plummet about 65% from its all-time high of $ 69,000 in November, with the overall value of the cryptocurrency market falling two-thirds to $. 1 trillion.

Companies have trembled as prices have fallen, with major US exchange Coinbase Global (COIN.O) and NFT OpenSea among those firing hundreds of workers.

However, some VCs ignore the obscurity, with many deploying substantial war chests, as their confidence in the underlying cryptocurrency technology remains strong.

While not all investors are so optimistic about the cryptocurrency carnage, by no means.

David Siemer, CEO of California-based cryptocurrency management firm Wave Financial, said there were signs of a pullback from the skyrocketing ratings of cryptocurrency companies last year.

“It will grow, we have been in this cycle for a few months. In the last cycle, the pain for those seeking funding was about 12 months.

AMERICAN HOTSPOT

North America, long a hotspot for venture capital operations, was again at the heart of the business with around $ 11.4 billion in the six months to June, down from $ 15.6 billion in the year. whole year.

The figures contrast with general venture capital activity in the United States, where business fell to $ 144.2 billion in the first half of the year from $ 158.2 billion in the same period last year. Macroeconomic conditions and market turbulence cooled investment. Read more

Rumi Morales, chief investment officer of Digital Currency Group, a leading US cryptocurrency investor, said the data reflects growing confidence in the cryptocurrency and blockchain industry.

“Before, there was an existential risk in space: that the whole sector was about to disappear, it was all just a dream. This is no longer the case.

The adoption of cryptocurrencies as an investment tool has proliferated over the past year, with even the use of blockchain gaining ground, although revolutionary shifts in technology promise that sectors such as finance and materials, the former remain elusive.

Among the US cryptocurrency mega deals in 2022: $ 400 million raised by the US arm of the cryptocurrency exchange FTX in January; a $ 450 million fundraising round by blockchain developer ConsenSys in March; and $ 400 million raised by stablecoin broadcaster Circle a month later.

Activity is also strong in Europe, with $ 2.2 billion in venture capital investments in the first half.

Lisbon-based Fedi, an app designed to help people receive, hold and top up bitcoins, said this month that it raised $ 4.2 million in initial funding.

“Within seven days, we had all investment commitments,” Obi Nwosu, one of its founders, told Reuters. “And within a month and a half, we had the initial goal of raising funds in the bank. It is done.

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Reporting by Tom Wilson in London and Medha Singh and Lisa Pauline Mattuckal in Bengaluru; Assembly Pravin Char

Our Standards: The Thomson Reuters Trust Principles.

The views expressed are those of the author. They do not reject the views of Reuters News, which, under the principles of trust, is committed to respecting integrity, independence and freedom from prejudice.

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