Some Cryptos Will Die Out & Investments Will Slow Down, KPMG Reports.
2022 has been a roller coaster ride for many crypto investors around the world. We saw Bitcoin went to the highs of $50,000 to below $19,000. The volatility of the market and also the bear market seems to slow down the investments made in the industry, ‘big four’ accounting firm KPMG reports.
2021 was a great year for blockchain/cryptocurrency investments, $32.1 billion dollars worth of deals was invested in 1,583 deals across the world. In the first half of 2022, only around $14.2 billion dollars was invested in the industry to 725 deals. However, this levels is still higher than in 2019 and 2020 where we saw a total of $11 billion dollars in around 1,323 deals.
Some of the biggest deals done this year were the investments in Fireblocks worth around $550 million, $450 million in ConsenSy and $400 million into FTX.
What does the rest of 2022 will look like?
According to the report made by KPMG, they believe that interest in cryptos and other investments in the industry will slow down. Some impacted sectors will be in tokens and NFT markets.
They believe that the focus will now shift to blockchain infrastructure projects. The report states, “While investment in cryptocurrencies is expected to slowdown further, there will likely be a continued focus on the use of blockchain in financial market modernization.”
Alexandre Stachtchenko, Director, Blockchain & crypto assets of KPMG France, even stated that “some cryptos will die out this year, particularly those that don’t have clear and strong value propositions”.
Even though investments may slow down and we are currently in the bear market, KPMG believes that the industry it maturing this year.
“After a record-shattering 2021, global investment in crypto and blockchain fell to $14.2 billion during H1’22. Despite the crypto space collapsing significantly since mid-way through Q1’22 due to the unexpected Russia-Ukraine conflict, rising inflation, and the challenges experienced by the Terra crypto ecosystem, investment at mid-year remained well above all years prior to 2021. This highlights the growing maturity of the space and the breadth of technologies and solutions attracting investment.” the report states.
KPMG predicts that well-managed crypto companies with healthy risk management policies, long-term vision, and strong cost and risk management will survive the bear market, while others may be gone.