What Crypto Winter? Institutional Investors Pour Billions Into Digital Asset Companies
‘Crypto winter’ is a term that gets thrown around a lot in the crypto space. Some may not know the exact meaning of this phrase but may infer a strong negative connotation just from the words themselves. But it refers to a long and prolonged fiat trading period that follows a crash in the crypto market. Hence, all of the speculations that have abounded in recent times following the last crash.
Most investors had remained wary of the market thinking that the dreaded crypto winter was finally here. However, it seems no one told venture capitalists that the crypto winter had arrived as they had continued to pour money into companies focused on the digital asset space. The investments from these VCs have run into the billions, suggesting that they do not subscribe to the school of thought that the period of prolonged low momentum is here.
Venture Capitalists Throw Billions At Crypto Companies
It is barely two months into the year 2022 and already, venture capitalists have been hard at work trying to place their bets on the next big thing. This has led to billions of dollars being thrown at crypto companies even though the year has barely taken off. When looking at what the institutional investors are up to, it is about doubling down on their investments in digital asset companies.
A recent report from Business Insider shows that venture capitalists are still very bullish on the crypto space. Instead of cowering and shying away from the market following the crash, they have been pushing against the narrative. Companies like FTX and Fireblocks have each seen hundreds of millions of dollars thrown at the companies at billion-dollar valuations.
This points to the bullish sentiment among the big players, despite the uncertainty that still clouds regulatory framework across the space. A piece which concerns FX strategist, James Malcolm, telling Insider that “My specific VC concern, however, would be more nitty-gritty: that most allocators vastly underappreciate the regulatory risks, specifically to DeFi projects.”
$2 Billion For Digital Asset Companies
In total so far in 2022, venture capitalists have poured about $2 billion into the industry. Some of these went into smaller companies, but the majority had gone to the big brand names that were already known. One of those was the FTX exchange. The crypto exchange that was founded three years ago had grown rapidly in such a short time and this year, raised another $400 million at a $32 billion valuation.
Fireblocks also saw significant money flowing in, valued at $8 billion after raising $550 million. The crypto company is one of the highest recipients of funding so far this year.
Another significant funding round was carried out by Reddit co-founder Alexis Ohanian. His VC firm had raised $500 million, which he planned on using to invest in companies in the digital assets space. Another crypto company Blockdaemon, which offers industrial-grade blockchain security, had raised $155 million. Combined, all of these funding rounds in big and small companies alike had pushed the total over $2 billion.
As for the crypto market, it seems the VCs were right to pitch their tent with it. Over the weekend, it had made an incredible recovery that saw bitcoin recover over $40,000 once more, adding more than $200 billion to the market cap.