Pantera Capital’s CEO says the crypto market will continue to grow despite economic turmoil

The macroeconomic scenario may look dire at the moment, but it is unlikely to affect the development of the cryptocurrency industry, according to Pantera Capital CEO Dan Morehead. In an interview with Real Vision on Thursday, the venture capitalist said he believes blockchain technology will work on its own merits, regardless of the conditions indicated by traditional risk metrics:

“Like any disruptive technology, like Apple or Amazon stock, there are brief periods of time where the market is correlated with the S&P 500 or any other risk metric you want to use. But for the last 20 years, they’ve followed their own path. And that’s what I think is going to happen with blockchain technology in the next ten years or whatever. It’s going to go its own way based on its own fundamentals.”

During the first half of this year, Pantera Capital raised around $1.3 billion for its blockchain fund, with a particular focus on scalability, DeFi and gaming projects. “We’ve been very focused on DeFi in recent years because the ecosystem is building a parallel financial system. Games are now coming online and we have several hundred million people using blockchains. There are a lot of really cool game projects, and there are still a lot of opportunities.” in the scalability sector,” he added.

However, the long-term optimism is at odds with the actual decline in venture capital inflows into the sector. August saw its fourth consecutive monthly decline to $1.36 billion, according to Cointelegraph Research. Inflows were down 31.3% from July’s $1.98 billion, with 101 deals closed in August, with an average capital investment of $14.3 million – down 10.1% compared to July.

The crypto winter was expected to spur industry consolidation, but recent figures from Crunchbase revealed that only four deals with VC-backed crypto companies closed in the US this quarter – a significant step back from 16 deals in the first quarter of the year .

Sandeep Nailwal, managing partner at Symbolic Capital, explained that the bear market has driven even the major players away from the sector:

“Everyone expected mergers and acquisitions to start in the crypto space as we recently entered the bear market, but we haven’t seen it yet. I think the main reason for this is that the downturn has hit the sector so fast and hard that even the big companies are ready to make aggressive acquisitions were so shocked by the crash that they had to make sure their own balance sheets were in order before looking elsewhere for growth opportunities.”

This problem does not seem to have affected the cryptocurrency exchange FTX. The company is reportedly in talks with investors to raise $1 billion to fund additional acquisitions during the current bear market.

“We’ve seen ratings decline from their pre-summer highs and you’d think there’s a lot of opportunity, especially in the CeFi space. Low ratings on a number of companies lead us to think everything is for sale now. FTX must have sensed that and was extremely prudent to take advantage of these market conditions to drive its growth,” Nailwal said.

The investment arm of FTX announced earlier this month that it had taken a 30% stake in asset management firm SkyBridge Capital for an undisclosed amount, and Canadian cryptocurrency platform Bitvo was acquired by FTX in June.

In the opposite direction, e-commerce company Bolt shelved plans to acquire Wyre, a cryptocurrency and payments infrastructure company, after announcing a $1.5 billion deal in April. Weeks earlier, cryptocurrency investment firm Galaxy Digital pulled out of its acquisition of digital asset custodian BitGo, citing a breach of contract.

BitGo has filed legal action against Glaxy Digital for scrapping its acquisition plans, seeking more than $100 million in damages and accusing Galaxy of “inappropriate dismissal” and “willful breach” of the acquisition agreement.

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