Tepid Flow of Venture Capital Funding Poses Downside Risk for Crypto Industry

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Venture Capital,Funding,Crypto Industry

JPMorgan analysts warn that the relatively low flow of venture capital funding into the crypto industry this year could hinder its sustained recovery. Despite the recent resurgence in the crypto market, VC flows remain subdued compared to previous years, posing a downside risk. While the crypto sector has seen some momentum in VC investment, it still lags behind previous years' levels. However, more venture capital firms are raising new funds amidst the crypto market rebound.

The relative tepid flow of venture capital funding into the crypto industry this year, despite the recent crypto market resurgence, presents a downside risk, according to JPMorgan analysts.

Venture capital funding in the crypto sector has picked up momentum so far this year, yet it continues to lag behind previous years. The Block Pro's Deals Dashboard shows that the crypto industry has attracted $3.2 billion in VC investment year-to-date, compared to over $4 billion in the first four months of last year.

While VC funding appears to be slowly reviving, crypto hedge funds are more active this year, and their assets under management have increased sharply over the past six months, estimated at around $20 billion, the JPMorgan analysts said.The JPMorgan analysts reiterated in Thursday's report that there is no more than a 50% chance of spot Ethereum exchange-traded fund approval in May, but the U.S. Securities and Exchange Commission will eventually approve such funds.

 

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