Here’s what KPMG said about the decline in crypto investment
KPMG, the global auditing and consulting firm, has presented a report that talks about falling crypto investments.
The highlights of these reports were that globally, interest in crypto along with investments weakened.
The report signaled precisely that there will be a decline in investment for the rest of this year.
Global investments in crypto companies have fallen back to $14.2 billion in the first half of 2022 from close to $32.1 billion the previous year.
This fall will apparently continue for most of 2022, as the report revealed.
According to the report, investments in both liquid cryptocurrencies and blockchain technologies have continued to fall, according to the KPMG analysts.
They also mentioned that the bottom is still not visible. The slow pace of investors when it comes to crypto is keeping the industry on hold as investments are far lower than all-time highs.
Change in the profile of crypto investors
Crypto and blockchain investments were recorded at a total of $14.2 billion. The profile of investors also seems to have undergone a change in recent years.
According to the report,
Before 2018, most crypto investments came from private clients. Since then, the investor profile has changed, with institutional and corporate investors now accounting for a much larger proportion of investments.
The current macroeconomic landscape has also been linked to the broader markets, which is why cryptoassets have been trading more like risk assets in recent months.
It’s been a tough time for crypto this year.
Bitcoin and Ethereum have dropped in their charts by over 50% of their value. Bitcoin is currently trading at a six-week low of $18,900.
Analysts are of the opinion that the crypto market will not experience a rally anytime soon.
Patrick Feeney, former hedge fund trader and founder of Feeney Factor, said that,
Unfortunately, with inflation, bitcoin acts like a technology stock, [Bitcoin is] supposed to be digital gold, but it just hasn’t worked out that way lately.
Shift in investor interests
KPMG says that in the second half of the year, investors may switch and choose other projects in contrast to their current choice of investments.
Investors can choose blockchain infrastructure projects over non-fungible tokens (NFT).
The inclination will be towards projects that will be aimed at the use of blockchain in updating financial technology.
KPMG has noticed a growing interest in compliance and transaction traceability related products and increased corporate interest in stablecoins as they are considered a lower risk investment in the industry.
According to the company, KPMG has predicted that well-managed companies that have sound risk and cost management strategies will see themselves through this significantly extended difficulty.
However, some crypto companies will face tougher times relatively speaking because they will be “tested very hard as some look to recapitalize at lower valuations.”
Featured image from Financial Times, chart from TradingView.com
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