Bloomberg: Funding for crypto startups has fallen to an annual low

According to Bloomberg, the interest of venture investors in financing new cryptocurrency startups in the second quarter of this year fell to the lowest level in a year.

The consequences of the pandemic and the global economic storm began to affect the financing of cryptocurrency startups. Previously, due to the investment frenzy in the industry, crypto startups were less susceptible to economic shocks. However, according to the results of the second quarter, funding for private crypto companies fell to the lowest level in a year.

Robert Le, a fintech analyst at PitchBook, believes that the $9.85 billion raised in startups from venture capital funds in the first quarter was the result of previous arrangements.

“The immunity of crypto startups to economic shocks was only a consequence of how long it would take for venture capital deals to complete. Even though the cryptocurrency market began to slow down in November and December, these transactions were already discussed, so they closed in the first quarter. Now they are hesitant to enter into new deals,” Le said.

Confirming Le’s observations, David Pakman, managing partner at cryptocurrency venture capital firm CoinFund, told Bloomberg that the collapse of Terra, the serious financial problems of Celsius and Babel Finance, the spate of layoffs at Coinbase and Gemini all contributed to the uncertainty and declining interest of venture capitalists.

“Startup deals are falling apart as many investors have withdrawn their offers in recent weeks. Start-up funding has fallen by about 20%, Series A secondary investments by about 50%, and Series B and above funding rounds by nearly 70%. This is a long-term downturn in the market and it won’t end in a month,” Packman said.

Earlier, two-thirds of large American crypto investors surveyed by Bloomberg MLIV Pulse analysts said that they were more likely to expect BTC prices to fall to $10,000.