Venture capital firms invested $14.2 billion in crypto in 725 trades during the first half of 2022, but the accounting firm KPMG predicts that investments will likely slow down for the rest of the year.
According to a KPMG report released Tuesday, the largest investments in the first half of 2022 came from Germany-based cryptocurrency trading platform Trade Republic ($1.1 billion), digital asset custody platform Fireblocks ($550 million), cryptocurrency exchange FTX ($ 500 million) and Ethereum software company ConsenSys ($450 million).
The report’s authors, including KPMG global fintech leader Anton Ruddenklau, noted that investment figures in the first half of 2022 alone are already double all those for years prior to 2021, “highlighting the growing maturity of the space and the breadth of technologies and solutions attracting investment.”
However, Ruddenklau pointed out that excess investment during record 2021 and the first half of 2022, along with a possible looming recession, rising inflation, interest rates and the conflict between Russia and Ukraine, will cause investment to decline this year .
KPMG’s prediction of a slowdown in cryptocurrency investment appears to be confirmed already in July data; the monthly entries in the blockchain venture capital market decreased 43% in the monthaccording to Cointelegraph Research.
Ruddenklau hopes that The slowdown in interest and investment in cryptocurrencies is being felt especially by retail companies that offer coins, tokens, and non-fungible tokens (NFTs).
Alexandre Stachtchenko, Head of Blockchain and Crypto Assets at KPMG France, stated in the report that “well-managed cryptocurrency companies with healthy risk management policies, long-term vision, and a strong cost and risk management approach” will be best positioned to survive the current bear market:
“Of course, some cryptocurrencies will disappear, especially those that do not have clear and strong value propositions. That could be quite healthy from an ecosystem standpoint, because it will clear up some of the mess that was created in the euphoria of a bull market. The best companies will be the ones that survive.”
Stachtchenko added that Financial institutions have become increasingly interested in blockchain infrastructure solutions and stablecoins to take advantage of the operational advantages of distributed ledger technology.
KPMG also expects more investment efforts to be made in underdeveloped fintech markets, especially in Africa.
Efforts on this front have been made by crypto exchange Binance, which has recently entered talks with the Nigerian government to build a crypto-friendly economic zone. with the aim of generating long-term economic growth through digital innovation.
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