Crypto companies raised a record $30 billion of venture capital (VC) last year, and the number of deals in the sector remains elevated despite the recent fall in cryptocurrency markets, Morgan Stanley (MS) said in a report Tuesday.
The number of VC cryptocurrency investments peaked in December. If the crypto industry matches other sectors, the level could slide as much as 50% by the end of the year, the bank said.
A slowdown is expected as “activity across eight of the most important VC bellwether markets over the past 12 months has reset 50% from peak; worsening performance of some of the largest tech/crypto investors who are prioritizing existing holdings over deploying further dry powder, and the exit of ‘tourist capital’ as both token and equity investments become more challenging during a crypto bear market - a similar pattern seen during 2018/19,” it added.
Venture capital is a form of private equity investing where financing is given to startup companies and small businesses...
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