Venture-capital names, private equity players and pension funds are driving the rise in prices of cryptocurrencies, Bloomberg reports, citing PwC Crypto Leader, Henri Arslanian.
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According to the expert, smaller venture capital firms do not feel comfort in this situation as large investors can dominate with big sums:
"Let us say they are looking at a deal and they believe it is worth $10 million, and you are seeing large VCs come in and put a bid in for a higher valuation. This is happening a lot with very early-stage companies, say, $5 million to $20 million — the prices are being inflated."
Arslanian emphasized that even though the market cools off, cryptocurrency deals have heated up in recent months. Crypto M&A was about $3 billion in 2020 and a similar amount was raised in the last 2-3 months alone, he added.
Earlier, cryptocurrency exchange FTX raised $900 million in a Series B funding round, which brings the company's valuation at $18 billion. Later, Fireblocks, a cryptocurrency custodian service focused on institutional clients, raised $310 million, bringing the company's valuation at $2 billion.
As iHodl reported, Crypto.com conducted a study according to which the number of cryptocurrency users has grown to more than 200 million by June 2021. Per the study, the market has more than doubled during the first 6 months of the year, to 221 million users.
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