A new report by global auditing giant KPMG predicts an upcoming slowdown in crypto investments during the second half of 2022.
According to KPMG’s Pulse of Fintech H1’22 report, the crypto markets will continue to face challenges in the second half of the year, which should decelerate investor sentiment.
“While the crypto space experienced significant challenges during the first half of 2022, crypto-focused companies attracted $14.2 billion during H1’22…
Crypto and blockchain investments will increasingly focus on infrastructure. While investment in cryptocurrencies is expected to slow down further [in H2’22], there will likely be a continued focus on the use of blockchain in financial market modernization.”
The auditing firm says retail firms offering tokens and non-fungible tokens (NFTs) will be affected most.
KMPG goes on to note that despite the troubling events that occurred in the crypto space in the first half of 2022, the year is still strong compared to previous years, other than 2021, in terms of how much money has flowed into the industry.
“Despite the crypto space collapsing significantly since mid-way through Q1’22 due to the unexpected Russia-Ukraine conflict, rising inflation, and the challenges experienced by the Terra crypto ecosystem, investment at mid-year remained well above all years prior to 2021.
This highlights the growing maturity of the space and the breadth of technologies and solutions attracting investment.”
KPMG then highlights one key trend in the crypto markets that emerged in 2018: institutional and corporate players overtaking retail traders as the top investors in digital assets.
“Prior to 2018, most crypto investments came from retail consumers. Since then, the investor profile has changed, with institutional and corporate investors now accounting for a much larger share of investment. This has driven significant changes in the perception of risk related to crypto assets.
While crypto assets historically were considered quite uncorrelated to traditional assets from an investment risk perspective, they are now acting very similarly.”
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