According to Pantera Capital CEO Dan Morehead, the economic environment may appear dire right now, but it is unlikely to impact blockchain development. The venture capitalist stated that blockchain technology would perform regardless of traditional risk metrics in a Thursday interview with Real Vision.
“Like all disruptive things, such as Amazon stock or Apple stock, there are brief periods where it is correlated with S&P 500, or any other risk metric that you choose. It has done its own thing over the past 20 years. That’s what I believe will happen to blockchain in the next ten or whatever years. It’s going its own way based on its fundamentals.
Pantera Capital raised capital of $1.3 billion for its blockchain fund in the first half this year. This was with a particular emphasis on scaling, DeFi, and gaming projects. “Defi has been a key focus of ours for the past few years. It’s creating a parallel financial system. We have over 100 million blockchain users. Gaming is on the rise. He said that there are many great gaming projects and still many opportunities in the scaling sector.
However, long-term optimism is not in line with the actual fall in venture capital. According to Cointelegraph Research data, August saw a fourth consecutive month of capital decline to $1.36billion. This represents a 31.3% decrease in capital inflows from July’s $1.98billion. 101 deals were closed in August on average capital investments of $14.3m — a 10.1% drop from July.
Although the crypto winter was expected that it would encourage consolidation, Crunchbase’s most recent data revealed that only four deals were made in the United States with VC-backed cryptocurrency companies this quarter. This is a decrease from the 16 transactions in the first quarter.
Sandeep Nailwal is the managing partner of Symbolic Capital. He explained that even the most powerful players in the industry have been pushed aside by the bear market.
Everyone expected M&A in crypto to boom as we entered this bear market. But we haven’t seen that happen yet. The main reason is, I believe, that the industry was so hard hit by the downturn that even large companies that were poised to acquire aggressively were so shaken by it that they had no choice but to check their balance sheets before considering other growth options.
This problem seems to not have affected FTX, a crypto exchange. According to reports, the company is in discussions with investors to raise $1Billion in additional funding to fund further acquisitions in the bear market. “We have seen valuations fall from their pre-summer highs, and you have to believe there are many acquirers, especially in CeFi, who look at these low valuations thinking that everything is for sale now. FTX felt the same and took advantage of market conditions to drive their growth.” Nailwal said.
FTX’s investment arm had announced earlier this month that it had purchased a 30% stake at SkyBridge Capital, an asset management firm, for an undisclosed sum. Bitvo, a Canadian crypto platform, was also bought by FTX in June.
Bolt, an ecommerce company, has canceled plans to acquire Wyre (a cryptocurrency and payment infrastructure company) after it announced a $1.5 million deal in April. The cryptocurrency investment firm Galaxy Digital had already dropped the acquisition of BitGo, the digital asset custodian, weeks before. They cited a breach in contract.
BitGo filed a lawsuit against Galaxy to end the acquisition. It sought more than $100m in damages and accused Galaxy of “improper repudiation and intentional breach” of the acquisition agreement.