Although the cryptocurrency market has recovered slightly recently, it is undeniable that the crypto industry has been facing huge volatility in the past few months, as the total market capitalization of the industry proves this. dip It increased from US$2.5 trillion to US$1.18 trillion in 45 days earlier this year.
However, after all these ups and downs, 2021 will continue to see more and more capital entering this rapidly developing field.For example, the report shows that in the first half of this year alone, venture capital (VC) funds invested 17 billion U.S. dollars Enter various crypto-related startups and companies.
In the long run, the above figures are the most witnessed figures in any year so far, and are almost equal to the total amount raised in previous years. Johnny Lyu, CEO of KuCoin, a cryptocurrency exchange, told Cointelegraph: “Early investors in cryptocurrencies have achieved profitability and have a deep understanding of the development of the market. This is the key reason why they are willing to invest in a volatile market. .”
Lyu further believes that for traditional investors, the crypto industry can allow them to obtain higher returns in a shorter period of time, citing the volatility of Bitcoin (Bitcoin) As the same example. “When the market fluctuates, it is the best time to invest, and investors will profit from it.”
Take a closer look at the numbers
A large part of the above-mentioned $17 billion figure came from a single transaction, which saw a new cryptocurrency exchange called Bullish withdraw after Block.one’s first injection of $100 million, 164,000 BTC and 20 million EOS tokens $10 billion in cash and digital assets. Block.one led the financing along with Peter Thiel, Alan Howard, Galaxy Digital and other investors.
In fact, this transaction alone is enough to make 2021 the largest year of venture capital in the crypto sector, but if this is not enough, the remaining US$7.2 billion will be the same as the 2018 record of US$7.4 billion in 2021. This is even more impressive considering that there are still five months before the end of the year.
On this issue, Igneus Terrenus, head of communications at the cryptocurrency exchange Bybit, told Cointelegraph that these numbers are not surprising, because VCs are known for their greedy appetite for risk: “VCs are using relatively abundant and fungible Resources—capital—explore more scarce and unique things, namely partners and talents, with whom they can build long-term value.”
More noteworthy venture capital activities
More than a month ago, Andreessen Horowitz, a venture capital firm headquartered in Silicon Valley, announced Launched its $2.2 billion crypto fund, A spokesperson claimed that despite price fluctuations, the company is “very optimistic” in the field. “We believe that the next wave of computing innovation will be driven by encryption,” partners Katie Haun and Chris Dixon were quoted as saying.
In addition, it should be pointed out that Andreessen’s first cryptocurrency-focused fund was launched nearly three years ago, when the market was at its lowest level in history, thus demonstrating the company’s long-term belief in this industry that is still in its infancy.
Similarly, the digital asset infrastructure provider Fireblocks revealed that it has Successfully raised US$310 million In the D round of financing, the company’s total valuation reached a staggering US$2 billion in less than six months. The fundraising activity was jointly led by institutional giants such as Sequoia Capital, Stripes, and the venture capital arm of Thailand’s oldest bank, Siam Commercial Bank.
Solana is a project seeking to provide a high level of scalability and transaction speed. It has recently announced that it has completed a private token sale of US$314.5 million, making the 9-figure fundraising event the fourth largest fundraiser in the history of the crypto industry. Activity. Some of the company’s investors include Polychain Capital, Alameda Research, and Blockchange Ventures.
Cryptocurrency exchange FTX Recently completed a $900 million financingThere are 60 participants, including SoftBank, Sequoia Capital, Coinbase Ventures, Multicoin, VanEck and the Paul Tudor Jones family. As a result, the valuation of the trading platform has increased from US$1.2 billion a year ago to US$18 billion, making it one of the world’s largest cryptocurrency companies.
Finally, Dapper Labs, the team behind CryptoKitties and NBA Top Shot, Received approximately US$305 million in new funding In March of this year, many past and present NBA stars including Michael Jordan, Kevin Durant and Alex Caruso, as well as others including The Chernin Group and Will Smith’s venture capital firm Dreamers VC investor. According to reports, after the latest round of financing, Dapper Labs is now valued at $2.6 billion.
Are there more institutional capital inflows?
To better understand whether more funds will continue to enter the crypto space, Cointelegraph contacted Antoni Trenchev, the managing partner of Nexo, a digital asset service provider. In his view, the crypto financial industry has huge untapped potential, especially digital currency can provide unprecedented tolerance for people with insufficient funds. He added:
“The deals we are seeing now-such as the $310 million acquisition of Fireblocks and the $200 million investment by SoftBank in Brazilian cryptocurrency exchange Mercado Bitcoin-were reached by multi-billion dollar fund managers after months of board discussions. This is the result of long-term strategic decision-making rather than a temporary judgment.”
Not only that, it seems that financial technology companies currently have an unprecedented opportunity to build on their existing customer base by providing modern products and services that users and companies really need, especially those that can hedge against inflation. People are worried about this. Looming on the horizon all over the world.
Simon Kim, CEO of early-stage venture fund Hashed, believes that venture capital is only just beginning to understand the intrinsic value of crypto projects, because it is difficult to justify the price of tokens created by most blockchain projects in the past few years:
“Ethereum is facilitating millions of transactions through numerous DeFi services, Metaverse games and NFT services built on the network. There are now more than 20 million monthly active user accounts using Ethereum. The intrinsic value of DeFi tokens is even greater than Ethereum or Bitcoin is more obvious.”
He further emphasized that, just like the way IT industry leaders such as Amazon and Google grew in the Internet bubble, many encryption projects today have a solid foundation with appropriate business models and data. “This is why venture capital companies are now investing money in crypto projects. They now believe that they can find the next Google, Amazon, and Facebook in this field,” Jin said, ending.
On the more technical side, Lyu emphasized that the increase in venture capital can be largely attributed to the seeming influx of users on various centralized exchanges (CEX) and decentralized exchanges (DEX) in recent months The number continues to increase, adding: “Some popular DEXs such as Uniswap and PancakeSwap have surpassed the traffic figures associated with some leading CEX.”
What kind of future?
Although the COVID-19 pandemic has brought the global economy to a certain degree of stagnation in the past year and a half, the report shows that global venture capital funds in the first half of 2021 have been Broke all previous records, Now the figure is 288 billion US dollars.More than 100 billion U.S. dollars, when Comparison of This is the last six-month cycle record set in the second half of last year.
Jehan Chu, managing partner of Kenetic, a venture capital firm that invests in blockchain companies, told Cointelegraph that continued global capital surplus is forcing investors to take increasing risks to find alpha, despite the continuing uncertainty regarding blockchain institutions sex. In the future of encryption, they have no choice but to invest in this area:
“Fortunately, blockchain technology and cryptocurrency have moved from the weird performance of the carnival to the inevitable future, so confidence in the underlying company has reached the highest level in history. In addition, a generation of cheap money flowing from the US printing press has Concentrated in the hands of investors. There has never been so much capital. The traditional door has been eroded by partisan politics and poor financial management.”
Arul Murugan, founding managing partner of Borderless Capital, believes that as more applications go online, it will be necessary to build a larger-scale infrastructure. As more infrastructure is built, it will attract more applications, which will lead to the beginning of this year. Virtuous circle.
Not only that, he also believes that as more and more people turn to the crypto field, the gap between traditional finance and decentralized finance (DeFi) is narrowing. Murugan believes: “At present, cryptocurrency is less than 1% of traditional finance, and people see huge growth opportunities.”
Therefore, as the increasingly digital future gets closer, the use of encryption technology may continue to grow. Therefore, it is reasonable to believe that more participants from the traditional financial sector will continue to enter this emerging market and help it grow even further.