fbpx

Crypto is winning and blockchain is losing

Crypto is winning and blockchain is losing! That was the dominant narrative in 2019 and early 2020 – the 15 months prior to Covid-19.

Bitcoin had a very good year and rose from about 3.300 dollars to more than 12.000 US dollars while investors continued to fund companies targeting crypto infrastructures. Goldman Sachs named it the best-performing asset in 2019.

- Advertisement -

EARLY AMAZON BLACK FRIDAY BANNER 728 x 90

Established financial institutions also lost a bit more of their shyness and took a close look at expanding their service offerings focusing on areas such as custody and trading.

In the midst of the Covid-19 pandemic, Bitcoin prices took a hit and lost 50 % of its value, only to recover all 2020 losses by the end of October and climbed above 12.000 US dollars again.

Bitcoin is still perceived as a risk-on asset and not a store of value (yet). Numerous companies are active globally to build and launch products that benefit the maturing blockchain ecosystem.

Image Source: Imago Images

Major trends

  1. Deals are moving from West to East. In 2015, more than half of the deals were for US-based companies. China accounted for only 2%. In 2019, the US’ share of total deals fell to less than one third, while China’s share climbed to 22%. Overall funding dollars fell sharply in 2019 but deals were nearly flat. Total deals for the year were down only 2% YoY in 2019 but funding dollars fell over 30% as deal sizes shrank.
  2. Enterprise blockchain funding has lagged. How to reduce back-office costs and how to improve business processes are still the biggest concerns. As a consequence, funding to other applications has been about 700 percent higher than to enterprise blockchain companies in the last five years.
  3. Central banks are getting serious about fiat digital currencies. Most certainly, the future of programmable money will come out of the central banks, and not from a private startup. The central banks of China and England have been active in exploring central bank digital currencies (CBDCs).
  4. “Crypto-corporate” Venture Capitalists were the most active investors in 2019 with NEO Global Capital and Coinbase Ventures the two most active ones by deal count in 2019.
  5. Enterprise blockchain funding has lagged. Efforts to reduce back-office costs and improve business processes are still ongoing. However, funding to other applications has been nearly 7x higher than to enterprise blockchain over the past 5 years.
  6. Lending and stablecoins have driven the growth of decentralized finance (DeFi). There are over $1B in assets on DeFi platforms, up from ~$300M in January 2019. ~60% of assets are on the Maker platform, a stablecoin project collateralized with cryptocurrencies.
  7. Equity funding to crypto and blockchain companies overtook Initial Coin Offering (ICO) funding in 2019. This was largely due to regulatory scrutiny as the ICO boom in 2018 ($7.8B raised) was mostly largely unregulated. In 2019, total funding to ICOs fell to $371M vs. $2.8B in equity funding to crypto and blockchain companies.

 

spot_img

Welcome to Closelooknet Please enjoy your stay and, if not, we are sorry and will try to do better next time you visit us.

© Closelook 2020

Quick Access

Company Info

Social Networks