2020 hasn’t been such a bad year for crypto startups. Despite a tough start to the year, fundraising deals to launch new blockchain projects grew 33 percent from 2019, according to a new report by analysts from PricewaterhouseCoopers (PwC), reaching more than $ 3 billion in venture capital.
What’s more, researchers at the Big Four accounting firm predict that 2021 will be the year in which more giant tech companies like PayPal start buying smaller firms focused on providing services in the cryptocurrency space. Let’s talk about the point of view in more detail.
By tradition, let’s start with an explanation. The first half of the previous year was difficult not only for new projects in the field of cryptocurrencies, but for the entire niche as a whole. As a reminder, March 12, 2020 saw the largest drop in the coin industry in percentage terms. For example, Bitcoin fell by 40-50 percent in a day, reaching 4-5 thousand dollars.
The reason for the shock was fears amid the spread of the coronavirus and the introduction of massive lockdowns in different countries. However, the collapse affected not only the cryptocurrency niche, but also other areas of the economy. The shares on that day showed a similar dynamics, that is, in fact, no one was insured from the event.
Here is a graph of Bitcoin’s behavior during that time period. The downtrend is obvious.
Bitcoin Down More Than 50 Percent Between March 9-12
The collapse was followed by a recovery that continues to this day. Bitcoin’s growth has allowed it to hit its previous all-time high from December 2017 and more than tripled it.
And with this in mind, developers are interested in creating new blockchain projects. PricewaterhouseCoopers representatives are confident that their number will continue to grow.
What will happen to the cryptocurrency industry
Venture capital raising in the first half of 2020 was hit hard by the coronavirus pandemic and the economic turmoil it caused. When the pandemic began to take its toll on the economy, venture funding for cryptocurrency projects plummeted by 50 percent.
However, now the trend has gone up again, and this is largely due to large professional investors and the impressive growth of Bitcoin. According to PwC, the average fundraising amount for crypto startups has grown by 68 percent since 2019, Decrypt reports.
In addition, the total volume of M&A in the cryptocurrency space more than doubled last year to $ 1.1 billion from 2019.
As a reminder, mergers and acquisitions are a process when companies and their assets are consolidated through different types of financial transactions.
The largest mergers and acquisitions in the cryptocurrency industry last year happened when the CoinMarketCap analytics platform was bought by Binance for $ 400 million.
According to PwC experts, most of the deals take place in North and South America, but already now the increase in activity is observed in Europe and Asia. The average transaction size for financing crypto startups in 2019 was $ 19.2 million, but in 2020 this figure rose to $ 52.7 million.
Since the trend is generally positive, experts predict the activation of startup founders. Indeed, now the market has all the conditions for earning not only thanks to new ideas for a niche, but also the sale of the company.
We believe that the results of the research of the world famous company confirm the confident start of bull run – that is, the stage of growth of the cryptocurrency market. Overall, PricewaterhouseCoopers’ attention to the blockchain asset industry also confirms their growing popularity.
Obviously, after the opportunity to purchase Tesla for BTC, which will spread to other countries besides the United States by the end of the year, it will definitely not work to ignore cryptocurrencies and consider them a fraud. This means that further development awaits us with less skepticism on the part of critics.
As you can see, the popularity of innovations in the field of cryptocurrencies testifies to the healthy development of the industry as a whole. This means that the bull market is far from over.