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KPMG Report: Crypto Investment Slowdown To Continue

KPMG Report: Crypto Investment Slowdown To Continue

According to a new report published by audit and consulting firm, KPMG, global investments in cryptocurrency companies have pulled back to $14.2 billion in the first half of this year from a record $32.1 billion in 2021. The firm expects the slowdown to continue throughout the year.

KPMG says the crypto winter is not over yet. As of the end of June 2022, crypto and blockchain investments have totaled $14.2 billion, and are not on track so far this year to break any records. According to the report, although the crypto space has been declining significantly, investment at midyear remained well above years prior to 2021:

Despite the crypto space collapsing significantly since midway through Q1 22 due to the unexpected Russia-Ukraine conflict, rising inflation, and the challenges experienced by the Terra crypto ecosystem, investment at midyear remained well above all years prior to 2021.

The report indicates that this highlights the growing maturing of the space.

In 2021, investments into the industry were primarily driven by institutional players. Before 2018, most crypto investments came from retail consumers, but since then the investor profile has shifted, with institutional and corporate players now accounting for a much greater share of investments. Cryptocurrencies have been struggling to break through this year, and KPMG has predicted a “slowdown in crypto interest and investment, particularly retail firms offering coins, tokens, and NFTs.” Decentralised finance is however more likely to survive the market downturn according to the report. It added “an increasing interest in the use of cryptocurrencies in order to support crypto sovereignty and move away from the use of existing currencies like the US Dollar.”

The report continued to say:

Crypto and blockchain investments will increasingly focus on infrastructure: While investment in cryptocurrencies is expected to slowdown further, there will likely be a continued focus on the use of blockchain in financial market modernization.

The firm is however confident that “well-managed crypto companies with healthy risk management policies, long-term vision, and strong cost and risk management approaches” are likely to survive through the next six months, while the resilience of other crypto firms will be “tested very hard as some look to recapitalise at lower valuations.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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