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Traditional VC Firms Flock into the Crypto Market: The Investment Potential of Cryptos

2022-04-12 02:57:35

In March 2022, Coindesk reported that Bridgewater Associates, which manages $150 billion in assets, plans to invest in a crypto investment fund and venture into the crypto space. 

Established in 1975, Bridgewater Associates is a distinguished VC fund. Its high-profile foray into the crypto space seems to be an investment signal. In fact, institutional investors including Grayscale, Sequoia Capital, a16z, Three Arrows Capital, and ViaBTC Capital have already ventured into the crypto market. These institutions are a bridge through which funds directly flow into the crypto industry.

According to Global Insights, global fintech investments totaled $210 billion in 2021. In particular, investments in blockchain, a fintech subsector, saw rapid growth. Surging from $5.4 billion in 2020 to $30 billion in 2021, the total amount of blockchain investment ranks second among all fintech subsectors. Blockchain is way ahead of InsurTech, RegTech, cybersecurity, and WealthTech in terms of the investment amount. From an investment perspective, the crypto space finally gained market value in 2021. Meanwhile, countless companies are striving for crypto breakthroughs.

 Source: Pulse of Fintech H2’21, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook), *as of December 31, 2021.

What makes the crypto sector favored by institutional investors?

When it comes to conventional investments, the 2021 IPO class is up only about 1.6% in 2021, according to data provided by Bloomberg. Meanwhile, the 347 companies listed in the US in 2020 are now up 46% from their offer prices. Credit Suisse’s Global Investment Returns Yearbook 2021 shows that in the 122 years since 1900, global equities have provided an annualized real return of 5.3% versus 2.0% for bonds and 0.7% for bills. Since 1900, the US stock market, the best performing stock market with the least volatility, has recorded an annualized real return of merely 6.7%.

In the crypto space, on the other hand, the leading GameFi project AXS, launched in 2021, has achieved a growth of 20,240% in just one year. AXS is followed by SOL and MATIC, two projects that have also grown by over 10,000% (see the below picture).

 Source: 98KDAO

In addition to AXS, STEPN, which has soared soon after its launch, is also one of the most successful crypto projects. In January 2022, STEPN announced the completion of a $5 million seed round led by Sequoia Capital and Folius Ventures, with involvement from institutional investors that include ViaBTC Capital and Solana. STEPN has achieved steady growth since its inception in late March. So far, its ROI stands at 29,000%. STEPN’s success was by no means a coincidence. Refer to ViaBTC Capital’s report (ViaBTC Capital|STEPN: A great example of gamification Web 3.0 application) on STEPN for more information about the project. ViaBTC Capital, a wholly-owned investment brand under ViaBTC Group, focuses on Web 3.0 and Layer 2 projects as well as DApps that feature DeFi, NFT, or DAO elements. Although ViaBTC Capital was only established last year, it has identified many promising projects (including STEPN), with an investment portfolio covering multiple crypto subsectors.

It is undeniable that the crypto market boasts incredible investment potential, and a growing number of institutional investors may decide to march into the field in the future.

Cryptocurrency’s potential for market investment

In 2021, many institutional investors saw the potential and possibilities of blockchain. Meanwhile, the crypto boom also accelerated the emergence of many new investment institutions. ViaBTC Capital, which focuses on crypto investment, is an outstanding player among emerging investment institutions. Soon after its inception, the institution set up a $50 million investment fund to vigorously support the development of blockchain infrastructure and applications.

On April 6, 2022, at Bitcoin 2022 conference in Miami, the big-name investor Kevin O’Leary mentioned the forthcoming boom of crypto investment: “The spigots of capital are going to flood into this sector like you’ve never seen.” In the future, blockchain technology will be applied in a wide range of fields, covering global finance and the world economy, and institutional investors moving into the crypto market will be an irresistible trend.

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