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.
However, deal activity is likely to drop, mirroring trends in other VC categories, the report said.
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...
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