Crypto-related investment decline may continue in the second half of the year, predicts KPMG
Attributed to the so-called crypto winter during the first half of the year, the amount of investment in the crypto market has been dragged, attracting over $14 billion in the first half of the year, according to global auditing and consulting firm KPMG.
The feeling of “fear, uncertainty and doubt” (FUD) spread across the crypto space during the first half of the year, subject to unexpected geopolitical events such as the Russian invasion of Ukraine, the fall of g.The global investment in the form of crypto and blockchain-related goods at $14.2 billion during the first half of the year as of the end of June, a significant decrease compared to last year. However, it is still ahead of other years, says the report published by KPMG.
In addition, the collapse of the Terra & Luna crypto ecosystem and the rising inflation globally after interest rate increase from the US Fed was also attributed to the crypto market’s decline.
Within an investment of over $14 billion, the largest deals of investment in the industry came from venture capital funding, including a $1.1 billion raised by Germany-based Trade Republic in June; a $550 million increase from US-based Fireblocks; a $500 million increase from Bahamas-based FTX, and a $450 million increase from ConsenSys, according to the report.
Within less than three months before the end of 2022, Alexandre Stachtchenko, director of blockchain and crypto assets at KPMG France, suggests that the financing activities among crypto companies will continue. Nevertheless, the size scale in terms of valuation will probably be cut down:
“Looking ahead, we’re going to see some cryptos cut their valuations and work to raise money because it’s their only option. They would rather collect money and be capitalized at a lower value rather than not and take the risk of extinction,”
Amidst the downturn in the crypto market, Stachtchenko believes a realignment may occur, citing any crypto, which does not have clear and strong value propositions, that could be wiped out.
“It can actually be quite healthy from an ecosystem point of view because it will remove some of the mess that was created in the euphoria of a bull market. The best companies will be the ones that survive.”
Heading into the second half of the year, the report suggests that a global decline in crypto interest and investment-related activities will continue, particularly retail firms offering coins, tokens and non-fungible tokens (NFT).
However, the topic of investments will increasingly be concentrated on infrastructures and blockchain applications in terms of modernizing the financial market.
Meanwhile, the stronger correlation between traditional market assets and crypto has also changed crypto dynamics, indicating that “the current macroeconomic trend is likely to be an important test for cryptos, especially Bitcoin, in terms of correlation with other assets.”
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