Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Crypto funds are seeing renewed inflows once again with millions of dollars pouring into new crypto funds over the last two weeks despite the Russia-Ukraine conflict.
The Russia-Ukraine war has sent the global market into severe correction and volatility, we have seen the ripple effect of the same in the crypto market as well.
Crypto Investments amid Russia-Ukraine War
However, the latest report shows that global investors are buying stakes in crypto funds and companies. Many of these investors believe that the sector has the potential to withstand geopolitical uncertainty.
In the latest report, blockchain research firm Fundstrat said that VC buyers invested somewhere around $4 billion in crypto funds during the last three weeks of February. Besides, VCs also invested $400 million in crypto startups during the last three weeks of February. The Fundstrat data also shows that VC investments remain consistent with broad weekly inflows.
Furthermore, newly launched crypto funds have also managed to garner a lot of attention. These funds have raised more than $3 billion in the last two weeks. Paul Hsu, founder and chief executive officer of Decasonic, said:
“The conflict in Ukraine has weaponized our financial and digital economy and really accelerated blockchain adoption. We are seeing a re-allocation to crypto and blockchain away from real estate and bond funds, for instance, because of higher interest rates. I’ve seen this with my funds but unfortunately, because I’m closed-end, I cannot admit more funds nor investors”.
He also added that there was a demand of allocating $200 million to his fund, a hybrid fund investing in crypto and venture capital.
Investors Pulling out of Bonds and Real Estate
Data shows that investors have been pulling money out of bonds and real estate in massive quantities. As per data from Refinitiv Lipper, the US investors pulled out a net $7.8 billion out of bonds in the week ending March 9.
During the same period, real estate funds saw a net outflow of $707 million. Speaking about it, George Melka, chief executive officer at crypto broker SFOX said:
“Crypto native companies are still raising at very high valuations and many funding rounds are still oversubscribed. In fact, crypto startup valuations are probably the highest I’ve seen.”
Private equity firm Bain Capital Ventures said that it will also be launching a USD 560 million fund focused entirely on crypto-related investments.
After hitting a new bottom on February 24, Bitcoin and the crypto market have jumped higher by 10% since that time. Of course, there’s been strong volatility seen over the last few weeks. Moreover, some analysts believe that the fears of the Russia-Ukraine war are now fading away.
“There’s really no panic even with the Ukraine conflict. People are starting funds, encouraged by the appreciation in prices over the last couple of years,” said Joe DiPasquale, chief executive officer at BitBull Capital.