Crypto’s biggest cheerleaders. The price of Bitcoin is down a | Market Ranger
Crypto’s biggest cheerleaders.
The price of Bitcoin is down about 40% from its all-time high of $69,000 in November and the token remains stalled in a range. Hundreds of millions of dollars’ worth of digital-asset hacks are swamping headlines. Coinbase Global Inc.’s stock price is struggling even after the launch of its NFT marketplace. There’s also the looming specter of regulation. Taken together, it feels a lot more like a crypto-winter chill.
None of this has cooled venture capitalists’ enthusiasm for the industry. They poured roughly $5 billion into blockchain-related endeavors in the first quarter, double what they invested during the same period last year, according to data from PitchBook. Startups like blockchain developer Ava Labs Inc. and crypto exchange Blockchain. com are commanding multibillion dollar valuations in their latest funding rounds, with the latter planning an initial public offering as early as this year.
But is the attitude of venture capitalists the best barometer for assessing the industry’s long-term viability? The fact is, many of these firms are “crypto-native,” with nine out of the industry’s top 10 investors based on deal count specializing in crypto, according to an analysis of data from PitchBook. They need to keep believing, because for them it’s the only game in town.
When it comes to firms that raised crypto funds worth more than $1 billion in the last year, Andreessen Horowitz is the only one that doesn’t specialize in crypto. Paradigm, FTX Ventures, Haun Ventures, Hivemind and Electric Capital have all staked their entire reputations and investment strategies on crypto, so their commitment should be taken with a grain of salt.
And even though Andreessen Horowitz isn’t completely crypto-focused, the firm seems to be making changes to better compete with web3-native VC firms that claim they hold greater appeal for founders because of their crypto knowledge. Andreessen Horowitz said Thursday that it is launching a research arm full of crypto experts to assist its portfolio companies.
A public debut from Blockchain. com this year could be a good test of whether the sentiments of the public market match the optimism of venture capitalists. That wasn’t the case when the company’s rival, Coinbase, completed a direct listing a year ago. The crypto exchange went public at a $100 billion valuation, but ended its rocky debut with a market capitalization of $86 billion. Coinbase’s current market value is now less than half that at $30 billion. That’s cold.
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**The views and opinions expressed here are solely those of the author. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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