A to Å for why crypto-financing figures fell during H1 2022

As a cryptocurrency winter ravaged the entire cryptocurrency ecosystem in the first half of the year, Crunchbase found in its recently published report that there has been a decline in investment in VC-backed cryptocurrency service providers over the past six months.

According to the report, with only $ 9.3 billion invested in the first six months of this year, a 25% decline was recorded from the $ 12.5 billion invested in the first six months of last year.

Interestingly, despite a decline in the amount of investment in the first half of 2022, Crunbase found that Deal Flow increased by 18%. In H1 (first half of a calendar year) last year, only 456 VC financing agreements were concluded.

Source: Crunchbase

H1 was rough

According to Crunchbase, the main reason for the withdrawal was registered in VC financing in the first half of the year the series of unfortunate events that plagued the cryptocurrency market during this period.

Over the past six months, the price of Bitcoin, and the price of the leading altcoin, Ethereum, have taken more than 70% beating from the peaks in November. The collapse of Terra and its stablecoin, UST, also intensified the bearish cycle, increasing the volatility rates of several cryptocurrencies.

As noted by Crunchbase, the general downturn in the cryptocurrency market and falling stock prices led many cryptocurrency service providers to stop operations in the first half of the year. Crunchbase added,

Major lending platforms Babel Finance and Celsius Network suspended withdrawals and transfers due to market uncertainty and liquidity problems – leading to Celsius filing for bankruptcy this week. To top off the quarter, the notable cryptocurrency hedge fund Three Arrows Capital, also known as 3AC, collapsed that the decline in digital currencies meant that it was unable to meet its obligations. “

Investors are still positive

Despite the general downturn in the cryptocurrency ecosystem over the past year, Crunchbase reported that investors are still not deterred.

Contrary to popular belief that cryptocurrency is hype, Jordan Nof, a co-founder and CEO of Tusk Venture Partners, told Crunchbase that,

‘We’ve seen this story before. If you think this is a fad, you’re probably leaving the market, but we do not hear it (people think so) anymore. “

Nof further noted that although the failure of some stack coins in the first half of the year was a significant driver of the decline in the cryptocurrency market, the resulting increase in regulatory involvement is necessary to protect consumers in space.