Crypto is one of the tech sectors hardest hit by this year’s economic downturn.
But the current instability of the market – including massive layoffs at European companies such as Blockchain.com and Bitpanda, and the collapse of several cryptocurrencies such as Terra USD – has not stopped VCs from investing. They still believe it will eventually lead to a financial revolution – or at least tasty returns.
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But what about the people who actually buy cryptocurrencies?
App Radar analyzed the number of downloads major European crypto apps drew in the first half of 2022, compared to the first half of 2021 (using Google Play Store data).
The results below show that these ten apps were downloaded 4.1 million times in the first half of 2022, a decrease of 45% from the first half of 2021, when they had 7.5 million downloads.
Only three crypto apps – crypto exchanges Bitstamp, Change and Coinmetro – saw a marginal increase in downloads compared to last year.
It may not be a coincidence that the apps that have seen the biggest drop in popularity are also struggling with broader business issues.
Bitcoin mobile wallet BRD saw the biggest drop in user downloads since last year, dropping 97% from 1.6 million in the first half of 2021 to 48,000 in the second half of 2022. According to market analysts, digital asset token BRD – “Pain ” — is among the top 14% of the most volatile cryptocurrencies on the market.
The beleaguered Austrian crypto trading platform Bitpanda saw app downloads drop by 65%, from 563,000 in the first half of 2021 to 197,000 in the first half of 2022. fired a third of its employees, admitted it had hired too quickly and had to cut back during the crypto market crisis.
Blockchain.com in the UK saw its app downloads drop 51% year-over-year. The company recently made layoffs equal to 25% of its global workforce and suffered the fallout from the collapse of crypto hedge fund Three Arrows Capital in July.
The split between professional investors
VCs tell Sifted that the cooler economic climate means they are scrutinizing the performance of their portfolio companies even more than usual.
Metrics like user downloads are one of the key metrics they’ll be watching as a barometer of growth. Of course, an app download doesn’t necessarily translate into engagement and thus transactions and revenue. But if the number of potential transactions from new users starts to decline, it will create problems for revenue growth, which in turn will affect a company’s valuation.
However, all this does not appear to have hurt overall venture capital investment in the sector.
Last year, according to data from Dealroom, VCs poured $2.9 billion into European crypto startups, which was a big increase from the $431 million invested in 2020. year can be the investment in line with last year’s figurebolstered by a broader market downturn from some fairly large late-stage fundraising from traditional VCs.
Retail investors will understandably be shocked by the collapse of top-tier cryptocurrencies like Terra USD, or the insolvencies of lenders they relied on for crypto-like Nouri from Germany and Celsius in the United States. While venture capitalists may argue that they are in “for the long term” and that declines are part of a cycle, it can be harder for ordinary investors who put their hard-earned money on the line to maintain confidence.
Amy O’Brien is a reporter at Sifted. She tweets from @Amy_EOBrien and writes our fintech newsletter — You can register here.