Large investment firms are getting heavily involved in the crypto investment market, which is driving up prices according to PricewaterhouseCoopers.
Investment firms continue to pour capital into the crypto market, with fundraising reaching new highs in 2021. This has triggered the increase in prices, according to multinational professional services PricewaterhouseCoopers (PWC).
According to PwC Crypto Leader, Henri Arslanian, large venture-capital firms are investing heavily into the market. This is apparently upsetting smaller firms.
Arslanian admits that smaller firms cannot compete with larger firms due to price inflation. “Let’s say they’re looking at a deal and they believe it’s worth $10 million, and you’re seeing large VCs come in and put a bid in for a higher valuation,” he stated. Arslanian admits that “this is happening a lot with very early-stage companies.”
Arslanian also admits that lack of investment options within the space, currently, make it difficult for large investors such as pension funds to invest. “If your minimum ticket size is around $50 million, there aren’t that many companies that have that status yet,” he said. “If you’re a large pension fund and you decided to make a crypto allocation, there are no more than two dozen companies around the world that are investible, looking for capital and could absorb $100 million.”
Venture capital raises in 2021 hit record
2021 has seen a record amount of venture capital being invested into the crypto and blockchain sectors. $17 billion in crypto investments had been conducted in 2021 by mid-June 2021. The previous yearly record for investments in the industry was 2018, which saw $7.4 billion.
No sign of slowing down
Investment firms don’t appear to be losing their appetite for the current market. Most recently, FTX exchange announced a staggering $900 million Series B funding round, led by big players such as SoftBank, Coinbase Ventures, and Sequoia Capital. The funding round makes it the largest raise in crypto-exchange history.
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