- Date : 01/05/2022
- Read: 3 mins
More and more operational organisations have started allocating funds to cryptocurrency. This is a brand new dynamic and a good departure from traditional investing in funds and other items in the same space.
Cryptocurrency investments are at their all-time high at present, and worldwide investors are continually raising stakes in these digital currencies. That's because they believe that this is one sector that will resist the fallout from the current crypto Russia war.
As per research by Fundstrat, VC or venture capital buyers have already invested approximately $4 billion in crypto funds during February's last three weeks. The data also show that VCs invested another $400 million in the startups in the same sector.
As per recent crypto news, VCD investment is quite consistent with broad inflows every week. The data further show that weekly investments in the crypto exchanges are, on an average, between $800 million and $2 billion. New crypto funds have also raised around $3 billion in the last couple of weeks.
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The Effect of the Ukraine-Russia War on the Digital and Financial Economy
The digital and financial economies have become weaponised as a result of the conflict between Russia and Ukraine while accelerating crypto investment at the same time. Chief executive officers and founders of fund investing companies believe that there has been a considerable rise in the demand to invest in their funds.
They are seeing a re-allocation to crypto with investors moving away from bond funds and real estate due to higher interest rates. Data by Refinitive Lipper show that crypto investors were able to make $7.8 billion in the first week of March, with crypto organisations still raising high valuations. In fact, the valuations of crypto startups are the highest in the market.
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Venture Capital Buyers are Investing in Cryptocurrencies: But Why?
Early last week, Bain Capital Ventures, a branch of Bain Capital, a private equity organisation, announced that it is ready to launch a $560 million fund exclusively focussed on the central bank's digital currency investment.
Increasingly, investments are being made in high volatility crypto funds and assets, owing to their outperformance of traditional risk-on assets such as stocks during the Ukraine-Russia conflict.
Crypto investment funds and products witnessed $163 million in the form of new institutional money in the first week of March, with inflows into blockchain equities making a total of $15.6 million.
Ether made a profit of 8.8%, while Bitcoin went up to 12.2% last month. Inflows of around $127 million were probably the largest till date. Since the Russian invasion of Ukraine on February 24, cryptocurrency has gained 13.5% and 14.5%, respectively, while the S&P has gained only 3.2%.
The Takeaway
From January, flows or investments in the crypto sector have turned positive, making more personal finance options available to individuals. There's no panic in the crypto industry even with the present Ukraine-Russia crisis, and this is one of the prime reasons why investments in this sector have increased.
