The economic landscape may seem dire at the moment, but it is unlikely to affect the development of blockchain, according to Pantera Capital CEO Dan Morehead. In an interview for Real Vision on Thursday, the venture capitalist said he believes blockchain technology will work based on its own fundamental principles, regardless of the conditions indicated by traditional risk metrics:
“Like all disruptive things, like Apple or Amazon stocks, there are brief periods where it’s correlated with the S&P 500 or whatever risk metric you want to use. But over the last 20 years, it’s done its own thing. And that is what I think will happen with blockchain over the next ten years or whatever, it’s going to do its own thing based on its own fundamentals.”
In the first half of this year, Pantera Capital raised around $1.3 billion in capital for its blockchain fund, with particular emphasis on scalability, DeFi and gaming projects. “We’ve been very focused on DeFi in the last few years, it’s building a parallel financial system. Gaming is coming online now and we have a couple of hundred million people using blockchain. There are a lot of really cool gaming projects, and there’s still a lot of opportunity in the scalability sector ,” he added.
Long-term optimism contrasts with the actual drop in venture capital in the industry. August saw the fourth consecutive month-on-month decline in capital to $1.36 billion, according to Cointelegraph Research data. The inflows represent a 31.3% drop from July’s $1.98 billion, with 101 deals closed in August, on an average capital investment of $14.3 million – down 10.1% from July.
The crypto winter was expected to spur consolidation in the sector, but recent figures from Crunchbase revealed that only four deals with VC-backed crypto companies were closed in the US this quarter – a setback from the 16 transactions from the first quarter of the year. .
Sandeep Nailwal, managing partner at Symbolic Capital, explained that the bear market has pushed away even major players in the industry:
“Everyone expected M&A to take off in crypto when we entered this bear market, but we haven’t seen it happen yet. I think the main reason for this is that the downturn hit the industry so quickly and so intensely that even large companies that were ready as aggressive acquirers were so shocked by the crash that they had to make sure their own balance sheets were in order before looking elsewhere for growth.”
Crypto exchange FTX does not appear to be affected by this problem. The company has reportedly engaged in talks with investors to raise $1 billion in new financing to fund additional acquisitions during the bear market. “We’ve seen valuations come way down from pre-summer highs and you have to think there are a lot of buyers out there, especially in the CeFi space, who are looking at these low valuations and thinking to themselves everything is for sale right now FTX certainly felt that, and they were extremely cautious about how they leveraged those market conditions to drive growth,” Nailwal said.
FTX’s investment arm announced earlier this month that it had acquired a 30% stake in asset management firm SkyBridge Capital for an undisclosed sum, and Canadian crypto platform Bitvo was acquired by FTX in June.
In the opposite direction, e-commerce company Bolt halted plans to acquire Wyre, a crypto and payments infrastructure company, after announcing a $1.5 billion deal in April. Weeks before, cryptocurrency investment firm Galaxy Digital decided to drop its acquisition of digital asset manager BitGo, citing a breach of contract.
BitGo filed a lawsuit against the crypto investment company for terminating the acquisition, seeking more than $100 million in damages, accusing Galaxy of “improper rejection” and “willful breach” of the acquisition agreement.