Global audit and consulting firm KPMG publishes a report highlighting that there will be a slowdown in crypto interest and investment to watch out for the rest of 2022.
According to the Pulse of Fintech H1’2022, KPMG analysts noted that there would be a slowdown, especially in retail firms offering coins, tokens, and NFTs.
The report states that infrastructure will receive more attention from cryptocurrency and blockchain investments this year. Additionally “While investment in cryptocurrencies is expected to slow down further, there will likely be a continued focus on the use of blockchain in financial market modernization.”
Global investment in cryptocurrencies and blockchain declined to $14.2 billion during H1’22 after a record-breaking 2021, the KPMG report emphasized.
Despite the unexpected Russia-Ukraine conflict, rising inflation, and difficulties faced by Terra being the leading causes of the crypto space’s collapse, investment levels at the halfway point of the year were still significantly higher than those of all years prior to 2021.
Also Read: Crypto Market Sees $260M in Liquidation as Bitcoin Loses Momentum
The major deals in the crypto sector during H1’22 were funded by VCs including a $1.1 billion fundraising by the Trade Republic in Germany, a $550 million raise by Fireblocks in the US, a $500 million investment by FTX in the Bahamas, and a $450 million raise by ConsenSys.
The report noted investors’ evolving investment risk profile as one of the key highlights due to the fact that while formerly thought of as being uncorrelated to traditional assets, crypto assets are now behaving very similarly.’
Following the adoption of Bitcoin as a legal tender in El Salvador and the Central Republic, there has been a rise in interest in using crypto to support crypto sovereignty and transition away from the usage of conventional currencies. More developing countries may decide to follow these countries.
Crypto regulation is also unavoidable as “regulators in a number of other jurisdictions have continued to focus on finding ways to protect consumers while also fostering the evolution and growth of competitive and attractive crypto markets.”
For the rest of 2022, the community can watch out for the resilience of crypto-focused companies being tested very hard “as some look to recapitalize at lower valuations.”
As per KPMG “well-managed crypto companies with healthy risk management policies, long-term vision and strong cost and risk management approach” will survive the next half of the year, while others do not.
The report adds that there will be rising interest in stablecoins for the rest of the year, especially from corporates looking to gain the operational advantages of crypto.
“Innovative partnerships between crypto firms and companies in other industries in order to address ESG concerns” is also anticipated for the rest of 2022.
Alexandre Stachtchenko, Director of blockchain & crypto assets, KPMG France, states “Of course, some cryptos will die out —particularly those that don’t have clear and strong value propositions. That could actually be quite healthy from an ecosystem point of view because it’ll clear away some of the mess that was created in the euphoria of a bull market. The best companies will be the ones that survive”.
Also Read: 10 Tips to Survive Crypto Bear Market
