According to data provided by Crunchbase, venture capital investments in cryptocurrency companies are down 26 percent in the first half of this year compared to the same period last year. In the first half of 2022, venture capital investment in cryptocurrency companies ran into a total of $9.3 billion and is down from the $12.5 billion that was recorded in the first half of 2021.
The drop in venture capital investments reflects the happenings in the crypto market which have caused investors to take steps back from investing in cryptocurrencies and crypto companies. In the first of the year, cryptocurrencies experienced continuous price drops. Flagship cryptocurrency Bitcoin which started the year trading above $45,000 has continued to drop and is currently trading at $22,087.90, as of the time of this draft. The crypto market also dropped below the trillion-dollar mark and over 70 percent of the biggest cryptocurrency companies by market capitalization have seen their value drop astronomically.
Venture capital investments have also dropped in other areas asides from the cryptocurrency sector. Generally, venture capital funding fell 26 percent quarter-over-quarter from $162 billion recorded in the first quarter of 2022, according to data from Crunchbase. It was also down 27 percent year-over-year from the $165 billion recorded in the second quarter of 2021.
Other lows recorded in the first half include stablecoins losing their fiat money-pegged value. Some cryptocurrency companies such as Celsius and Babel Finance halted transactions such as withdrawals, deposits, transfers, and swaps, due to the ongoing crypto market uncertainty among other challenges. Crypto lender Celsius last week filed for bankruptcy. According to a court filing, Celsius made in the US Bankruptcy Court for Southern District of New York, the company listed estimated assets and liabilities on a consolidated basis in the range of $1 billion to $10 billion. Crypto hedge fund Three Arrows Capital also made it to the news for collapsing after the downturns the market experienced. Three Arrows Capital, shortened to 3AC, was unable to fulfill its obligations.
Away from the bad things that have happened, Andreessen Horowitz (a16z) launched a $4.5 billion crypto fund in May, raising its total funding to $7.6 billion.
Some crypto investors are of the opinion that the market will make a great recovery suggesting that it is a great time to buy the dip. Other concerned people think that cryptocurrencies will continue to dip and that investors should pull out while they still can. Hopefully, the second half of the year will see the crypto market recover from some of its losses.