The economic landscape may seem dire right now, but it is unlikely to affect blockchain development, according to Pantera Capital CEO Dan Morehead. In an interview for Real Vision on Thursday, the venture capitalist said he believes blockchain technology will perform based on its own fundamentals, regardless of the conditions indicated by traditional risk metrics:
“Like any disruptive thing, like Apple or Amazon stocks, there are short periods of time where it’s correlated with the S&P 500 or whatever measure of risk you want to use. But over the last 20 years, it’s done its own thing. And that’s What I think it’s going to happen to blockchain in the next ten years or whatever, it’s going to do its own thing based on its own foundations.”
During the first half of this year, Pantera Capital raised approximately $1.3 billion in capital for its blockchain fund, with a special emphasis on scalability, DeFi and gaming projects. “We’ve been very focused on DeFi for the past few years, it’s building a parallel financial system. Gaming is now coming online and we have a few hundred million people using blockchain. There are a lot of really cool gaming projects, and there are still many opportunities in the scalability sector,” he added.
However, the long-term optimism is in stark contrast to the actual decline in venture capital in the sector. According to TAUT Research data, August marked the fourth consecutive month-on-month decline in capital to $1.36 billion. Inflows represent a 31.3% decrease from July’s $1.98 billion, with 101 deals closed in August, on an average capital investment of $14.3 million – a 10.1% decrease from July.
The crypto winter was expected to spur consolidation in the sector, but recent figures from Crunchbase revealed that only four deals with VC-backed crypto firms were closed in the United States this quarter — a setback from the 16 transactions recorded in the first quarter. of the year .
Sandeep Nailwal, the managing partner at Symbolic Capital, explained that the bear market has driven even major players in the industry away:
“Everyone expected M&A in crypto to kick off when we entered this bear market, but we haven’t seen that happen yet. I think the main reason for this is that the downturn hit the industry so quickly and so intensely that even large Companies poised to be aggressive acquirers were so shocked by the crash that they had to make sure their own balance sheets were in order before looking to grow elsewhere.”
The crypto exchange FTX does not seem to be affected by this problem. The company has reportedly held talks with investors to raise $1 billion in new funding to fund additional acquisitions during the bear market. “We’ve seen valuations much lower than the pre-summer highs and you have to remember that there are a lot of buyers, especially in the CeFi space, looking at these low valuations and thinking to themselves that everything is for sale right now. FTX certainly felt that and they were extremely careful in how they took advantage of these market conditions to drive their growth,” said Nailwal.
FTX’s investment arm announced earlier this month that it had acquired a 30% stake in asset management company SkyBridge Capital for an undisclosed amount, and Canadian crypto platform Bitvo was bought by FTX in June.
In the opposite direction, e-commerce firm Bolt halted plans to acquire Wyre, a crypto and payments infrastructure company, after announcing a $1.5 billion deal in April. Weeks earlier, cryptocurrency investment firm Galaxy Digital decided to close its acquisition of digital asset custodian BitGo, due to breach of contract.
BitGo has filed a lawsuit against the crypto investment firm for terminating the acquisition, demanding more than $100 million in damages and accusing Galaxy of “inappropriate rejection” and “deliberate violation” of its acquisition agreement.