Investors Invest in Crypto Startups Despite Market Crash
2022.12.08 00:30
Investors Invest in Crypto Startups Despite Market Crash
Budrigannews.com – Pitchbook, a research company, stated on Thursday that, despite the fact that the rate of capital deployment is slowing as a series of crypto blowups sapped private equity investment appetite, total funding for crypto startups this year is expected to exceed investments in 2021.
According to Pitchbook data, venture capital (VC) investments in crypto projects increased by 41% in the first nine months of 2022 to $19.9 billion worldwide. Last year brought in a record-breaking total of $21.2 billion.
According to Pitchbook, the amount of capital deployed has, on the other hand, been trending downward throughout this year, with only $4.0 billion invested in the third quarter, which represents a decrease of 38.3% quarter-over-quarter and the lowest amount since the second quarter of 2021.
The most shocking of this year’s closures of important market players, such as Celsius and Voyager, major tokens TerraUSD and Luna, and FTX last month, has shook investor sentiment and wiped out $1.5 trillion in cryptocurrency market capitalization.
According to crypto analyst Robert Le of PitchBook, “the lack of clear regulation and guidance remains one of the crypto industry’s greatest concerns and limiting factors.”
“Until better guardrails in the form of established laws and guidelines are in place, mainstream adoption is unlikely to occur.”
After the cryptocurrency exchange filed for bankruptcy, a number of backers, including Singapore state investor Temasek Holdings, SoftBank Group Corp.’s Vision Fund, and Sequoia Capital, reduced their investments to nothing.
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According to Adam Struck of Struck Capital, a venture capital firm based in Los Angeles, “this bearish sentiment will continue throughout the entire year and you’re going to notice that the pace of investment and the amount of capital deployed is going to get lower and lower on concerns over contagion risk.”
VCs imbued $1.5 billion in the supposed Web3 organizations in second from last quarter, a 44.5% development successively, as per Pitchbook.
According to Le of Pitchbook, the only crypto segment that saw an increase in capital invested for the quarter was Web3, which is a term used to describe a potential next phase of the internet. Web3 is relatively more shielded from the day-to-day price movements of crypto tokens.
