Global investors are buying crypto funds and firms in order to gain exposure to an industry that people feel can help shield the aftermath of the Russia-Ukraine conflict.
In a previous letter to clients, research company Fundstrat reported that in the past three weeks of February, venture capital (VC) purchasers invested about $4 billion in the cryptocurrency business. According to statistics, VCs spent another $400 million in the industry’s start-ups over the last week.
The Venture Capital investment follows a weekly trend of large inflows. Since the beginning of 2022, weekly investments in the company have ranged from $800 million to approximately $2 billion, according to Fundstrat statistics.
As of Friday, cryptocurrency funds had increased approximately $3 billion since the beginning of March, the biggest so far in 2022.
Paul Hsu, CEO and founder of Decasonic, mentioned that the turmoil in Ukraine weaponized the digital and financial economies, accelerating blockchain adoption. Decasonic is a $50 million hybrid fund that invests in digital assets as well as VC. He also stated that there is a demand for roughly $200 million in his crypto fund.
Tens of millions of cryptocurrency assets have been donated to Ukraine to help in the war effort, and that this is because virtual currency has no borders.
Because of increasing interest rates, they are noticing a shift away from bond funds and real estate and toward blockchain and crypto. Hsu explained that this has happened with his funds, but since he is closed-end, he can’t accept any additional investors or funds.
As per to Refinitiv Lipper information, in the week ending March 9, US investors withdrew $7.8 billion from their bond funds.
Real estate funds saw net withdrawals of $707 million during the same period, a decrease from $1.15 billion the previous week.
Crypto native businesses continue to climb at extraordinarily high values, according to George Melka, CEO of crypto broker SFOX, and numerous investment rounds are still over-accounted for. He also stated that the valuations of crypto startups are the highest he has ever seen.
Bain Capital Ventures, a division of private equity firm Bain Capital, for instance, announced early last week that it’s establishing a $560 million cryptocurrency-focused fund.
Throughout the financial emergency, digital currencies topped traditional risk investments such as stocks. In February, Bitcoin increased 12.2 percent, while Ethereum climbed 8.8 percent. The virtual assets have climbed 14.5 percent and 13.5 percent, respectively, since declining when Russia invaded Ukraine on February 24, while the S&P 500 only increased 3.2 percent.
According to information, cryptocurrency investment funds and products received $163 million in institutional funds in the weeks gaining up to March 4. In the meantime, funds flowing into blockchain equities got to approximately $15.6 million.
Inflows of $127 million were the highest so far this year. After five long weeks of outflows, inflows into the cryptocurrency industry turned positive in late January, according to statistics.
The movement of cryptocurrency funds has reached a stable level.
As per Monday’s stats, the BarclayHedge crypto traders index dropped 1.5 percent in February, reporting 39 funds, or approximately 43 percent of the overall cryptocurrency asset managers it follows. This index dropped just over 13% in January, and it decreased by 10% in December.
The chief executive officer of BitBull Capital, Joe Dipasquale said that even when taking the Russia-Ukraine situation into account, there is no need to panic. This company operates two hedge funds and a cryptocurrency fund of funds.
The two hedge funds of BitBull, which make use of market-neutral techniques, were up on a yearly basis, DiPasquale mentioned, owing to Ethereum and Bitcoin’s bounce-back in February.
Moreover, he also stated that individuals are starting funds as a result of the price growth over the last few years.
Crypto is a form of invention. It is an asset class that people are becoming interested in, and this is where people are seeing many of the exponential returns. It seems to be the asset people are turning to in times of turmoil
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