Private Capital Buying The Dip Keeps Crypto Market Afloat

While the markets are struggling, the crypto industry is still receiving big pushes from private capital raised in 2022. Even during this year’s gloomy performance companies are raising large amounts of money in crypto, data records 36 capital raises of over $100 million so far.

Arcane Research’s latest weekly report shows the 10 biggest crypto capital raises in 2022 and wonders “How long will the money keep flowing into this market?”

The Private Capital Pumping The Crypto Market

Luna Foundation Guard (LFG) now holds BTC 42.53K ($1.62 billion) out of its $10 billion total target to backstop the algorithmic stablecoin UST with a large Bitcoin reserve. This positions the organization on top of the largest capital raises in the crypto industry so far in 2022.

LFG is also buying $100 million in AVAX tokens to welcome it as part of the UST reserve, and Terra labs purchased $100M more.

Institutional crypto platform Fireblocks also stands out with a raise of $550 million in Series E funding. Fireblocks’s platform delivers an infrastructure for moving, storing, and issuing digital assets. The network and MPC-based wallet serve over 800 financial institutions including exchanges, lending desks, custodians, banks, trading desks, and hedge funds.

In the official announcement, the company quoted the founder of an investment firm, Dan Sundheim, who claimed that “Fireblocks has become a key driver of crypto market growth around the world, with an estimated 15% of daily crypto transaction volume secured through their infrastructure.”

“This new injection of capital will further enable Fireblocks to onboard the next wave of businesses into the digital asset ecosystem.”

Similarly, Bahamas-based crypto exchange FTX reached a $32 billion valuation in January with a $400 million raise in a Series C funding round. This was their third fundraise in a period of 6 months, bringing the total amount raised to almost $2 billion, FTX explained.

The public announcement also mentions the $400 million Series A funding round by FTX US, FTX’s American arm. The company added that “all investors involved in the Series C raise simultaneously participated” in this funding round, which valued FTX US at $8 billion.”

Arcane Research noted that Circle, the issuer of USD Coin (USDC), made the largest raise in April with a $400 million raise from BlackRock, Inc., Fidelity Management and Research, Marshall Wace LLP, and Fin Capital. This fundraising gave Circle a valuation of $9 billion.

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SPACs and ICOs have seen better days

On the other hand, SPACs and IPOs have slowed down in 2022.

EquityZen Co-Founder Phil Haslett told Yahoo Finance that the IPOs pullback is due to “a number of things”:

“You’ve got instability globally with what’s going on in Ukraine. You’ve got inflation uncertainty. And you’ve also just got a big pullback in valuations kind of across many sectors, mainly in tech. And so when you put those all together, you get a lot of volatility, and volatility is kryptonite to IPOs.”

While SPAC listings raised around $145 billion in 2021, the boom is deflating now that SPAC mergers are expected to face new scrutiny due to the SEC’s latest proposal for SPAC, IPOs and de-SPAC transactions’ new rules and amendments.

The new measures mean that companies would no longer be allowed to be acquired through a SPAC. In 2021, the advantages of SPAC mergers as a way to bring private companies public became very popular, recording a total of 613 SPAC listings in the U.S. This highly contributed to setting a record of IPOs in the year as they represented  59% of the total IPOs listings, a 150% increase year to year for SPACs while IPOs increased by 88%.

This year, some companies are canceling their upcoming public listings, Arcane Research noted. For example, Citigroup paused its SPAC IPO issuance as a response to the SEC’s proposal while they wait for further clarity.

The crypto market is struggling alongside the financial one and Arcane’s report pondered that “it will be interesting to see how long the private capital will continue to flow into the crypto industry.”

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