Cryptocurrency Coverage: What Crisis? Venture capitalists bet on cryptocurrency

July 26 (Reuters) – It’s not all gloomy and gloomy.

Despite the crypto sector rebounding in the gloomy winter, venture capitalists are pumping money into digital currencies and blockchain startups at a pace set to surpass last year’s record.

In the first half of the year, venture capital bet $17.5 billion on such companies, according to data from PitchBook. This investment puts it on track to surpass last year’s record of $26.9 billion, a much warmer and happier time for Bitcoin and its partners.

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“The current market conditions – I don’t think they are bothering investors,” said Rodrik van der Graaf, founder of Hong Kong-based investment firm Lemniscap, which focuses on cryptocurrency and blockchain. “The available capital is huge.”

Venture capital funds provide financing to startups that they believe have strong growth prospects. The data points to a firm belief in the future of crypto and blockchain technology, despite six months of bruising for the industry.

The double whammy of macroeconomic headwinds and explosions in major projects this year has sent bitcoin down nearly 65% ​​from its $69,000 record in November, with the total value of the crypto market dropping by two-thirds to $1 trillion.

Companies shuddered as prices fell, as Coinbase Global (COIN.O) and the NFT OpenSea platform laid off hundreds of workers.

However, some VCs shrug off the gloom, with many deploying large war funds because their belief in the underlying technology behind cryptocurrencies remains strong.

Although not all investors are very optimistic in the face of the cryptocurrency carnage, not by any means.

David Semmer, CEO of California-based cryptocurrency management firm Wave Financial, said there are signs of a reversal from the extremely high valuations of crypto companies last year.

“This is only going to get worse – we’re two months into this cycle. In the last cycle it was a pain for those looking for funding about 12 months away.”

American hot spot

North America, long the hotspot for venture capital deals, was again the focus of activity with about $11.4 billion in the six months to June, versus $15.6 billion in the whole of last year.

The numbers contrast with general venture capital activity in the United States, where deals fell to $144.2 billion in the first half from $158.2 billion in the same period last year, as macro conditions and market turmoil dragged down investment. Read more

Romy Morales, chief investment officer at Digital Currency Group, a major US cryptocurrency investor, said the data reflects an increasingly strong belief in the crypto and blockchain sector.

“There was an existential danger in space – that the whole industry was going to disappear, it was all a dream. That’s not the case anymore.”

Cryptocurrency adoption as an investment vehicle has mushroomed in the past year, with blockchain use also gaining — even if the revolutionary changes from technology promised in industries like finance and commodities remain elusive.

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

Activity is strong in Europe as well, with venture capital investment reaching $2.2 billion in the first half of the year.

Lisbon-based app Fedi, which is designed to help people acquire, hold and spend bitcoin, said this month that it raised $4.2 million in seed funding.

“Within seven days, we got all the investment commitments,” Obi Noso, one of the company’s founders, told Reuters. “And in less than a month and a half we had our initial fundraising goal in the bank. It was done.”

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Additional reporting by Tom Wilson in London, Medha Singh and Lisa Pauline Matakal in Bengaluru; Edited by Praveen Shar

Our Standards: Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed under the Trust Principles to impartiality, independence, and freedom from bias.

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