Cryptoverse: which crisis? Venture capitalists bet big on crypto

July 26 (Reuters) – Not all is gloomy.

Even as the crypto sector shivers through the bleak winter, venture capitalists are pumping money into digital currencies and blockchain startups at a pace expected to surpass last year’s record.

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

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

Venture capital funds provide financing to young companies 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 from macroeconomic headwinds and outbursts in major projects this year has caused bitcoin to fall about 65% from its all-time high of $69,000 in November, with total crypto market value dropping two-thirds to $1. trillion.

Companies are shaken by the falling prices, with the major US exchange Coinbase Global (COIN.O) and the NFT platform OpenSea laying off hundreds of employees.

Still, some VCs are ignoring the gloom, with many deploying significant war chests as their confidence in the underlying cryptocurrency technology remains strong.

While not all investors are so optimistic about the crypto carnage, certainly not.

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

“It will get worse – we’ve been in this cycle for a few months now. In the last cycle, the pain for those seeking funding was about 12 months.

AMERICAN HOTSPOT

North America, long the hotspot for venture capital deals, was once again at the center of activity with about $11.4 billion in the six months to June, down from $15.6 billion for all of last year. .

The numbers stand in stark contrast to overall venture capital activity in the United States, where transactions 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 turmoil scared investment. read more

Rumi Morales, chief investment officer at Digital Currency Group, a major US crypto investor, said the data reflects growing confidence in the crypto and blockchain industries.

“There used to be an existential risk in space – that the whole industry would just disappear, it was all just a dream. This is no longer the case.

The adoption of crypto as an investment tool has skyrocketed in the past year, with blockchain use also gaining ground – even as revolutionary changes in technology promise promising industries such as finance and materials, the former remain elusive.

Among the US crypto mega-deals in 2022: $400 million raised by the US branch of crypto exchange FTX in January; a $450 million fundraising round by blockchain developer ConsenSys in March; and $400 million raised by stablecoin issuer 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 bitcoin, said this month it had raised $4.2 million in seed funding.

“Within seven days, we had all investment commitments,” Obi Nwosu, one of the founders, told Reuters. “And within a month and a half we had the first fundraising goal in the bank. It has happened.

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

Our Standards: The Thomson Reuters Trust Principles.

The opinions 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 bias.

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