The incessant crypto bear market that has wiped more than half a billion dollars off the total value of all digital currencies may have dented retail punters pockets, but for large-scale investment firms, the numbers tell a different story.
According to Diar Research, a data analytics firm, venture capital and blockchain-related funds have invested $1.6 billion into the crypto-related industry since the beginning of 2018 — the inception of the current bear market.
“2018 may have been a bloodbath for cryptocurrencies, but not so for blockchain-led operations having secured over $1.6 billion for projects that have garnered attention by their very backers,” wrote Diar in a research note to clients.
“The industry as a whole had secured over $3.9 billion up till October 2018, moving the tally upwards of $5 billion accounting for capital raised.”
New York-based Digital Currency Group (DCG) remains the blue-chip investment firm with more than 100 companies in its portfolio. The firm, led by crypto early adopter Barry Silbert, continued to open its wallet over the past 12 months with investments in cryptocurrency exchange Kraken, blockchain-based company Dapper Labs and blockchain data-tracking firm Flipside Crypto, among others, the report said.
Dave Balter, CEO of Flipside Crypto said despite slumping cryptocurrency prices investors still see opportunities in the industry just as they did 12 months ago. “For VCs who are close to the cryptocurrency market, nothing has changed — the opportunity is just as big and early bets still present the opportunity for many multiples of return,” he said. “The prices of cryptocurrencies won’t change that at all.”
“That said, we’re beyond the easy-money-for-any-idea phase, as the regulatory environment is getting clearer and ICO mania is gone,” Balter added.
Furthermore, the flailing crypto asset prices has not curbed investment in the companies where the nascent coins trade with three exchanges — Circle, Coinbase and Kraken — securing a combined $500 million, according to Diar.
“The exchanges have been a critical part of our thesis,” said Travis Scher, vice president of investments at DCG. “For the ecosystem to thrive the market needs robust on-ramps and off-ramps to support the blockchain system.”
However, the capitulation in crypto-asset values can’t be ignored. Since the beginning of 2018, bitcoin,
the signature cryptocurrency, has lost more than 70% of its value and is more than 80% off its all-time high near $20,000.
“We have seen the pretenders disappear,” said Scher, when discussing what the bear market has done to the broader market. “Folks with long-term conviction know things take time. They understand and believe.”
Still, given the extent of the drawdown, the data provided by Diar is a stark contrast to changes in digital currency prices, which is so-often used to measure the underlying health of the industry.
“The startling fact isn’t only how much money has been raised, but the valuations that now run into the billions of dollars for businesses, for the most part, far from commercial grade readiness… and 2019 has already kicked off with upwards of $200 million in capital raised,” the report said.
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