Venture capital (VC) firms poured US$14.2bn into cryptocurrency assets, via 725 deals, in the first half of this year, more than double the total in any previous year.
KPMG, which issued the report, said it underlines the growing acceptance of the sector, though it predicts interest will slow in this half-year due to a looming recession, 40-year high inflation, rising interest rates and the ongoing war in Ukraine.
Anton Ruddenklau, KPMG’s global fintech leader, said the inflows “highlight the growing maturity of the space and the breadth of technologies and solutions attracting investment.”
Most crypto investments before 2018 came from retail consumers, he noted.
“Since then, the investor profile has changed, with institutional and corporate investors now accounting for a much larger share of investment.”
Investments for the first half were more than double every year excluding the last – US$5.7bn in 2020 and US$5.3bn in 2019, though KPMG thinks it unlikely that inflows will exceed the record US$32.1bn seen in 2021 when there was a 'crypto summer.'
The biggest deals in the space came from VC raises, with a US$1.1bn raise by German-based crypto trading platform Trade Republic the largest.
Approximately a quarter of the money raised came from Ontario Teachers’ Pension Plan Board, indicating the increasing weight of cryptos in pension funds.
Alexandre Stachtchenko, KPMG France director of blockchain and crypto assets, said: “Well-managed crypto companies with healthy risk management policies, long-term vision, and strong cost and risk management approach will likely do well", even with prices of cryptocurrencies tumbling at present in what is now being described as a 'crypto winter'.
“Of course, some cryptos will die out — particularly those that don’t have clear and strong value propositions.
“That could actually be quite healthy from an ecosystem point of view because it’ll clear away some of the mess that was created in the euphoria of a bull market.”