The venture capitalist predicted that blockchain would perform similarly to Amazon and Apple based on its fundamentals. According to Pantera Capital CEO Dan Morehead, the current economic climate is unlikely to impact blockchain development.
Pantera Capital CEO states that blockchain would perform similarly to Amazon and Apple
The venture capitalist told Real Vision on Thursday that he believes blockchain technology will perform based on its fundamentals, regardless of the conditions indicated by traditional risk metrics:
“Like any disruptive thing, like Apple or Amazon stock, there are short 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’s what I think will happen with blockchain over the next ten years. It’s going to do its own thing based on its fundamentals.”
Pantera Capital raised approximately $1.3 billion in capital for its blockchain fund in the first half of this year, with a focus on scalability, DeFi, and gaming projects. “We’ve spent the last few years focusing on DeFi, which is constructing a parallel financial system. Gaming is becoming more popular, and hundreds of millions of people use blockchain. There are a lot of really cool gaming projects out there, and there are still plenty of opportunities in the scalability sector,” He continued.
Long-term optimism contrasts with the industry’s actual drop in venture capital. According to Cointelegraph Research data, the capital fell for the fourth consecutive month to $1.36 billion in August. The inflows are down 31.3% from July’s $1.98 billion, with 101 deals completed in August on an average capital investment of $14.3 million, a 10.1% decrease from July.
The crypto winter was expected to drive sector consolidation. However, according to Crunchbase, only four deals with VC-backed crypto companies were completed in the United States this quarter, down from 16 in the first quarter of the year.
According to Sandeep Nailwal, managing partner at Symbolic Capital, the bear market has driven away even the industry’s most prominent players:
“Everyone was expecting M&A to take off in crypto as we headed into this bear market, but we haven’t seen that happen yet. I think the main reason for this is that the downturn hit the industry so fast and so intensely that even large companies poised as aggressive acquirers were so shell-shocked by the crash that they had to make sure their balance sheets were in order before looking elsewhere for growth.”
This issue does not appear to be affecting the cryptocurrency exchange FTX.
According to reports, the company is in talks with investors to raise $1 billion in new funding to fund additional acquisitions during the bear market.
“We’ve seen valuations fall significantly from pre-summer highs. So you have to believe that many acquirers, particularly in the DeFi space, are looking at these low valuations and thinking to themselves that everything is on sale right now. FTX felt this way, and they were extremely cautious in how they used market conditions to fuel their growth,” Nailwal stated.
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. FTX purchased the Canadian cryptocurrency platform Bitvo in June.
In the opposite direction, after announcing a $1.5 billion deal in April, e-commerce company Bolt halted plans to acquire Wyre, a crypto and payment infrastructure company. Galaxy Digital, a cryptocurrency investment firm, had decided to cancel its acquisition of digital asset custodian BitGo, citing a breach of contract.
BitGo sued Galaxy for terminating the acquisition, seeking more than $100 million in damages and accusing Galaxy of “improper repudiation” and “intentional breach” of the acquisition agreement.