A new report from PricewaterhouseCoopers (PwC) showed that crypto-related fundraising and mergers and acquisitions (M&As) tumbled last year, but that doesn’t mean the crypto market is extinguishing.
Long Awaited Institutional Investors Don’t Come In
It seems that the crypto industry cannot attract investments from institutional investors, as many had hoped. Professional services giant PwC said that the number and value of crypto fundraising and M&As showed a steep decline last year. The value of crypto-related M&As sank 76% to $451 million in 2019, from over $1.9 billion in the previous year. The amount of funds raised fell 40% to $2.24 billion.
The cryptocurrency space couldn’t attract mainstream investment even though Bitcoin surged in the second and third quarters of 2019. It peaked at over $13,500 in July.
The cryptocurrency community has hoped for rapid adoption Bitcoin and the crypto market in general once institutional investors came in.
Crypto Outlook is Gloomy as Well
Given the current COVID pandemic, the report authors argue that the cryptocurrency market will not attract mainstream investment any time soon. The high volatility caused by the coronavirus panic and the economic collapse do not bode well for the emerging space.
Henri Arslanian, PwC’s head of global crypto, was cited by Bloomber as saying:
The crypto industry is not immune to the global headwinds and the number and value of crypto fund-raising and M&A deals may be impacted in 2020.
Cryptocurrency-oriented firms’ main source of funding come from traditional and crypto-oriented venture capital (VC) funds, family offices, and incubators. The authors predict that more investors from Asia and the Middle East would drive the market this year. The report reads:
We expect to see more APAC and EMEA based family offices looking at the market turbulence as a good time to invest in promising crypto companies.
Is It Really that Bad?
Bloomberg’s rhetoric that the crypto space is becoming less relevant because institutional investors don’t rush into the market is a bit misleading. To begin with, Bitcoin was not designed for Wall Street investors in the first place. Secondly, now that the Fed is unleashing its money printing potential at a full scale, the best thing one can do to protect against the imminent economic crisis and devaluing fiat money is to buy genuine safe-haven assets like Bitcoin.
Do you think that the lack of funding from institutional investors is a big problem for the cryptocurrency market? Share your thoughts in the comments section!
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