Ethereum ($ETH) – KPMG says crypto investment will slow in second half of 2022
Accounting firm KPMG believes that a decline in cryptocurrency investment will continue for the rest of the year after it fell to $14.2 billion in the first half of 2022 from a record $32.1 billion in the previous half.
In a study titled “Pulse of Fintech H1’22,” KPMG said that out of 725 deals in the first half of this year, Germany-based crypto trading platform Trade Republic received the most investments ($1.1 billion); followed by Fire blocks, a digital asset custody platform ($550 million); crypto exchange FTX ($500 million) and Ethereum ETH/USD blockchain software company ConsenSys ($450 million).
Various factors responsible for the effect of upward trajectory
The accounting firm stated that the upward trajectory of fintech investment internationally was affected by a number of variables during the first half of 2022, including geopolitical unpredictability, choppy public markets, persistent supply chain disruptions and issues such as high inflation levels and rising interest rates.
“With no end in sight to the levels of uncertainty, fintech investment in H2’22 could be quite muted,” KPMG added.
Some companies may face tough times
KPMG stated that while investment remained extremely strong compared to pre-2021 results, the second half of this year could bring further difficulties for companies in the industry.
The company stated that this is particularly relevant for retail businesses that sell coins, tokens and non-fungible tokens (NFTs).
The report highlighted that despite the crypto market having fallen significantly halfway through 2022 as a result of Russia’s invasion of Ukraine, rising inflation and the demise of the Terra ecosystem, investment held up significantly over each year prior to 2021.
“This highlights the growing maturity of the space and the breadth of technologies and solutions that are attracting investment,” KPMG noted.
The Future of Crypto
KPMG expects that for the remainder of the year, investors will shift their attention to projects dealing with compliance and transaction traceability-related products, as well as blockchain infrastructure projects, particularly those focused on the use of blockchain in modernizing financial markets.
Stablecoins are also attracting more interestaccording to the company, especially from companies eager to take advantage of the cryptocurrency’s operational advantages.
The capacity of certain crypto companies to withstand the bear market will be “extremely tested as some attempt to recapitalize at reduced valuations,” according to KPMG.
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