According to Pantera Capital CEO Dan Morehead, the current economic situation may seem dire, but it is unlikely to affect the development of the blockchain. In an interview with Real Vision on Thursday, the venture capitalist said he believes blockchain technology will operate on its own fundamentals, regardless of the conditions indicated by traditional risk metrics:
“Like any breakout thing like Apple stock or Amazon stock, there are short periods of time when it correlates with the S&P 500 or whatever risk metric you want to use. But over the past 20 years, she has done her job. And that’s what. I think what will happen to blockchain over the next ten years or something, it will do its thing based on its own principles.”
In the first half of this year, Pantera Capital raised around $1.3 billion in capital for its blockchain fund, with a focus on scalability, DeFi, and gaming projects. “The last few years we have been very focused on Defi, he is building a parallel financial system. Now the games are going online and we have a couple of hundred million people using the blockchain. There are a lot of really cool game projects out there, and there’s still a lot of room for scalability,” he added.
However, the long-term optimism contrasts with the actual decline in venture capital in the industry. Equity fell for the fourth consecutive month to $1.36 billion in August, according to data from Research. Inflows represent a 31.3% drop from $1.98B in July, with 101 deals closed in August on an average capex of $14.3M – down 10.1% from July .
The crypto winter was expected to spur consolidation in the sector, but the latest data from Crunchbase showed that there were only four deals with VC-backed crypto companies in the United States this quarter — a lag from 16 transactions in the first quarter of the year. .
Sandeep Nailwal, managing partner at Symbolic Capital, explained that the bear market has alienated even the big players in the industry:
“Everyone was expecting 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 recession hit the industry so quickly and so hard that even the big companies, set up as aggressive buyers, were so shocked by the crash that they had to make sure their own balance sheets were in order before look elsewhere for growth opportunities.”
Cryptocurrency exchange FTX does not appear to be affected by this issue. The company is reportedly in talks with investors to raise $1 billion in new funding to fund additional acquisitions during the bear market. “We are seeing valuations come down from pre-year highs and you have to think there are a lot of buyers, especially in the CeFi space, who are looking at these low valuations and thinking to themselves everything is on sale right now. “FTX certainly felt this, and they were extremely cautious in how they took advantage of these market conditions to drive their growth,” Nylewal said.
Earlier this month, FTX’s investment arm announced it was acquiring a 30% stake in asset management firm SkyBridge Capital for an undisclosed amount, and in June, FTX acquired Canadian crypto platform Bitvo.
In the opposite direction, e-commerce company Bolt put on hold plans to acquire Wyre, a cryptocurrency and payments infrastructure company, after announcing a $1.5 billion deal in April. Weeks earlier, cryptocurrency investment firm Galaxy Digital decided to back out of its acquisition of digital asset custodian BitGo, citing a breach of contract.
BitGo has filed a lawsuit against the crypto investment firm for terminating the acquisition, seeking over $100 million in damages and accusing Galaxy of “wrongful denial” and “intentional breach” of its acquisition agreement.