Is crypto winter coming to an end in Singapore?

Almost a year after the LUNA/UST crash that sent crypto markets spiraling, there finally seems to be light at the end of the tunnel.

Bitcoin – which makes up almost half of the global crypto market value – has risen 70 percent since the start of 2023. Other blue chips have also fared well, with Ethereum and Binance Coin up 50 and 30 percent respectively.

Although prices are still far from all-time highs, trading volume is picking up and market sentiment has improved.

We believe there are already signs of a thaw this winter, as capital allocation has become more selective. Markets have gradually recovered from last year’s lows, and the industry continues to attract talent from traditional finance, big tech and the public sector.

– Ben Roth, co-founder and CIO, Auros

Here’s what Singapore’s industry experts had to say about the return on investment and consumer interest in the world of cryptocurrency.

Is it time to be safe in crypto?

Although the second half of 2022 was marked by a domino-like collapse of companies, it was still a record year for venture capital (VC) investments in the space. In Singapore, crypto was the most popular at finance and technology events, with conferences such as Token2049 attracting thousands of attendees.

Heading into the second quarter of 2023, the industry is looking to return to form. Crypto Expo Asia – which saw 5,000 attendees and 50 corporate attendees in 2022 – is landing in Singapore for a second year, with expectations to double the number of employees.

“Although we still have a few months before the conference, we have already observed strong interest from the industry, with several new additions to this year’s lineup and attendee list,” said Crypto Expo Asia Director, Michael Xuan.

That said, this year’s key themes are likely to be more grounded, addressing the industry issues that have come to light over the past year.

“As the industry faces a completely different reality this year, we expect a strong desire for new solutions, trust and openness to bring both established as well as emerging builders and projects together,” adds Xuan.

Raising capital for crypto

Given the rapid pace of innovation, crypto has been a hotbed of private finance for quite some time. Crowdfunding methods such as initial coin offerings saw a boom between 2016 and 2019, with around $35 billion raised in that time frame.

When that cooled—due to an increase in fraud and failed projects—VCs took over, delivering over $30 billion in 2021 alone.

“We observed that funding peaked in the second quarter of last year and has been declining ever since,” said Ben Roth, co-founder of Singapore-based crypto trading firm Auros. “That said, despite the current cautious environment, we are starting to see some green shoots in 2023.”

“In many ways, this is a much healthier market state than in 2021 and 2022, where all other projects had received funding, leading to the unfortunate result of misallocation of capital and a general inflation of industrial growth.”

Auros oversaw a US$17 million fundraising round in March with participation from traditional trading firms including Vivienne Court.

Singapore-based DeFi platform DigiFT enjoyed similar success with its US$10.5 million pre-Series A fundraising. “Sophisticated investors continue to be passionate about future-ready solutions that address financial industry pain points, regardless of bullish or bearish markets,” says founder Henry Zhang.

Zhang sheds light on a power shift between investments in decentralized and centralized crypto products. After the failure of a number of centralized crypto companies – including FTX and Voyager Digital – DeFi seems to have a newfound appeal.

In 2023, we have seen an increase in investment of over 190 percent in DeFi compared to the same period last year, while CeFi saw a drop of around 73 percent. While overall crypto sentiment remains bearish, the DeFi industry has seen a 65-fold increase since 2020.

– Henry Zhang, founder of DigiFT

Singapore’s future as a crypto hub

When the Monetary Authority of Singapore (MAS) tightened the reins on crypto regulations in early 2022, some companies were quick to jump ship.

Singapore’s status as a crypto hub was questioned as exchanges were no longer allowed to advertise to the public and Bitcoin ATMs were banned.

Not long after, however, the LUNA/UST crash and FTX collapse would cast MAS’s regulatory stance in a softer light.

Singapore continues to be a bright spot in the crypto and Web3 world due to its unique ability to balance blockchain innovation and risk management in what is clearly a promising market.

– Michael Xuan, Director of Crypto Expo Asia

MAS’ consistent stance – promoting blockchain innovation while discouraging speculative investment – ​​has given companies a sense of stability while operating in the region.

“Singapore as a financial hub has been very supportive of blockchain technology and provides a proper legal framework for upcoming Web3-focused companies,” Zhang explains. “Singaporean regulators have also contributed a lot to improving the blockchain industry as we see it today. They are realizing its potential and providing favorable conditions for investors.”

Featured Image Credit: PYMNTS