In comparison to 2018, investments in blockchain technology could decrease about 60%. Meanwhile, Bitcoin has doubled its price in the last six months.
As the general prices of cryptocurrencies such as Bitcoin were falling last year, venture capitalists turned their attention to the promise of the underlying technology, the record book known as Blockchain. Many people said that this was the smartest bet of all, but now the situation is completely different.
Investment in Blockchain Startups
Whilst the price of Bitcoin has had a rebound this year, a new set of data shows that the inflow of money into startups in the blockchain-related technology has fallen dramatically. Until now, traditional venture capital investments in blockchain companies have reached a capital of US $ 784 million through 227 negotiations, according to CB Insights. At that pace, companies that are focused on that technology could only get US $ 1.6 billion this year. That situation, compared to the record of US $ 4.1 billion in 2018, would mean a reduction of approximately 60%, says the research company.
The money coming from corporations is “in an even steeper decline” despite the interest of companies like Facebook Inc. in creating their own cryptocurrency, says CB Insights. They indicate that enterprises in the phase of maturation are receiving less support, whereas new ones are in a better situation.
According to CB Insight, these trends have significant implications for Silicon Valley and Wall Street as blockchain initiatives have been the largest recipients of venture capital in the United States since 2014.
The Fluctuating Price of Bitcoin
The price of Bitcoin fell by more than 70% last year, during what is known as “the winter of cryptocurrencies” or crypto winter. However, since then it has recovered a great part of the ground, increasing its price by more than three times in 2019 to almost US $ 13,000 by the end of June, before falling back below US $ 10,000 on the week of July 18th, 2019.
In recent days, both Facebook’s plans and cryptocurrencies were criticized by President Donald Trump, the members of his administration and the Congress, who expressed concerns that they could be used by criminals or terrorists. Some cryptocurrency supporters argued that fiduciary money is the most widely used in unlawful activities such as drug dealing and smuggling.
The Fading Interest in Blockchain
Nicholas Pappageorge, a senior analyst at CB Insight, stated that a company’s investment in blockchains may have been so slow that it has not been possible to track last year’s fading yet. He considers that investors’ initial enthusiasm “took a little while to disappear.”
It is worth remembering that Bitcoin has always proved that it is a very stable cryptocurrency since its birth on October 31st, 2008. It has suffered dramatic falls that would have meant the end of any other currency but it has been able to climb again to surpass its previous maximum highs. Obviously, that makes it the most attractive investment option for both experienced investors and novices that want to get their foot in the door of cryptocurrency trading.
By Willmen Blanco