Bitcoin or Blockchain: What is causing crypto investments to double

Investor interest in crypto assets has led to a huge surge in overall investments into the blockchain and cryptocurrency industry, a new report by accounting firm KPMG has revealed. It further stated that this investment bracket has already doubled in the first six months of 2020 as compared to all of last year. The report read,

“Investment in blockchain and cryptocurrencies heated up dramatically in H1’21, with investment more than twice the level seen in 2020 and soaring past the previous annual record high set in 2018.”

The study, titled “Pulse of Fintech H1 2021”, covered investment activities in different sectors of financial technology around the world. While it covered overall fintech trends related to investment deals for this year, its findings about crypto investments were noticeably optimistic.

Noting that the year marked an explosive growth in crypto and blockchain investments, the report further predicted that “crypto will be a hot focus for investors” going forward. The first six months saw 548 crypto-related investments, which included activities like venture capitals, mergers, and acquisitions, in the industry.

The total value of these investments came up to around $8.7 billion, which was more than double the total worth of the 580 investment deals that took place in all of 2020, according to the report. Further, the current year also saw a number of seed investments rounds by crypto and blockchain startups, many of whom managed to raise large sums of capital. These included BlockFi, Paxos, Blockchain.com, and Bitso, all of whom raised over $100 million.

The study also noted a growth in not just the number of investors but even the varying kinds that emerged during this time. Highlighting that this maturity in investors is what led to a significant rise in institutional capital flowing into the crypto space, the report further noted that,

“Investor awareness and knowledge of the sector is growing, with investors now having a much better understanding not only about crypto assets, but also the operational and procedural side of crypto from custody and storage to storekeeping and the competitiveness and maturity of service providers.”

The study concluded by predicting that as the crypto space continues to mature, a “stronger separation between cryptocurrencies and the use of blockchain technologies” will be seen. And as new types of assets such as NFTs gain ground among investors, exchanges might increase their focus around this asset class.

Lastly, the study expected a deepening focus on regulatory activity might be a significant part of the industry’s future, particularly noting India as a country could regulate cryptocurrencies as an asset class in the coming months.