Connect with us

Crypto

What bear market? Investors throw record cash behind blockchain firms in 2021

VC investments into crypto over the first six months of 2021 have already more than doubled those witnessed in all previous years combined.
Despite the recent slight recovery of the cryptocurrency market, there is no denying the fact.

Published

on

VC investments into crypto over the first six months of 2021 have already more than doubled those witnessed in all previous years combined.

Despite the recent slight recovery of the cryptocurrency market, there is no denying the fact that the crypto industry has been faced with a great deal of volatility over the last few months, made evident by the total market capitalization of the sector that dipped from $2.5 trillion to $1.18 trillion over a 45-day span earlier this year.

Through all these ups and downs, however, 2021 has continued to see an increasing amount of capital enter this fast-evolving space. For example, reports indicate that over the first half of the year alone, venture capital (VC) funds poured in $17 billion into various crypto-related startups and companies.

To put things into perspective, the above-stated figure is by far the most witnessed in any single year and is nearly equal to the total amount raised in all previous years combined. Johnny Lyu, CEO of cryptocurrency exchange KuCoin, told Cointelegraph: “Early-stage investors of cryptocurrency have already achieved profitability and have a deep understanding of the development rules of the market. This is the key reason why they are willing to invest despite market fluctuations.”

Lyu further opined that for traditional investors, the crypto industry allows them to obtain higher returns in a shorter cycle, citing the volatility of Bitcoin (BTC) as an example of the same. “When the market experiences volatility, it is the best time for investing, and investors will profit from it.”

A closer look at the numbers

A hefty chunk of the aforementioned $17 billion figure comes from a single deal that saw a new cryptocurrency exchange called Bullish draw $10 billion in cash and digital assets following an initial injection by Block.one of $100 million, 164,000 BTC, and 20 million EOS tokens. Block.one led the capital raise alongside Peter Thiel, Alan Howard, Galaxy Digital and other investors.

In fact, just this one deal would have been enough to make 2021 the biggest year for venture capital investment in the crypto space, but if that wasn’t enough, the remaining $7.2 billion dollars would have equaled 2021 with 2018’s record of $7.4 billion raised, which is even more impressive considering that there are still five more months to go before the end of the year.

On the subject, Igneus Terrenus, head of communications for cryptocurrency exchange Bybit, told Cointelegraph that these numbers are not really startling since VCs are known for their voracious appetite for risk: “VCs are leveraging a relatively abundant and fungible resource — i.e., capita — to tap into something that is far scarcer and unique, which is partners and talents with whom they can build long-term value together.”

More notable VC activities

A little over a month ago, Silicon Valley-based venture capital firm Andreessen Horowitz announced the launch of its $2.2 billion crypto fund, with a spokesperson claiming that the company was “radically optimistic” about this space despite the price fluctuations. “We believe that the next wave of computing innovation will be driven by crypto,” partners Katie Haun and Chris Dixon were quoted as saying.

Furthermore, it should be pointed out that Andreessen’s first crypto-focused fund went live nearly three years ago, a time when the market was at its lowest levels historically, thereby showcasing the firm’s long-term belief in relation to this yet-nascent industry.

Similarly, Fireblocks, an infrastructure provider for digital assets, revealed that it had been successful in raising $310 million in a Series D round of funding, thus bringing the company’s total valuation to a whopping $2 billion in a period of less than six months. The fundraiser was co-led by institutional giants including Sequoia Capital, Stripes and the venture arm of Thailand’s oldest bank, Siam Commercial Bank.

Solana, a project that seeks to deliver a high level of scalability and transaction speed, also recently announced that it had completed a $314.15 million private token sale, making the nine-figure total the fourth largest fundraising event in the history of the crypto industry. Some of the company’s investors include Polychain Capital, Alameda Research and Blockchange Ventures, among others.

Cryptocurrency exchange FTX too recently closed a $900 million funding round, which saw a total of 60 participants, including Softbank, Sequoia Capital, Coinbase Ventures, Multicoin, VanEck and the Paul Tudor Jones family. As a result, the trading platform’s valuation has grown to $18 billion from $1.2 billion just a year ago, making it one of the largest cryptocurrency companies in the world.

Lastly, Dapper Labs, the team behind CryptoKitties and NBA Top Shot, secured about $305 million in new funding this March from a number of past and present NBA stars including the likes of Michael Jordan, Kevin Durant and Alex Caruso, and other investors including The Chernin Group and Will Smith’s venture capital outfit Dreamers VC. Following the closure of this latest funding round, Dapper Labs now reportedly holds a $2.6 billion valuation.

Is more institutional money incoming?

To gain a better understanding of whether more capital will continue to enter the crypto space, Cointelegraph reached out to Antoni Trenchev, managing partner at Nexo, a digital asset service provider. In his view, the crypto-finance sector possesses enormous untapped potential, especially with digital currencies allowing for an unprecedented level of inclusion for the under-banked. He added:

“The deals we are seeing right now — like Fireblocks snapping up $310M, SoftBank investing $200M in Brazilian crypto exchange Mercado Bitcoin — are being made by billion-dollar money managers after months of boardroom discussions and a result from long-term strategic decisions rather than momentary judgment.”

Not only that, fintech firms currently seem to have an unprecedented opportunity to build upon their existing client bases by offering modern products and services that users and companies really need, especially those that can serve as hedges against inflation — fears of which are looming large on the horizon all over the world.

Simon Kim, CEO at Hashed, an early-stage venture fund, believes that VCs are just now starting to understand the intrinsic value of crypto projects as it was difficult to justify the price of tokens that most blockchain projects had created in the past years:

“Ethereum is facilitating millions of transactions through numerous DeFi services, metaverse games and NFT services built on top of the network. There are now more than 20 million monthly active user accounts using Ethereum. The intrinsic value of DeFi tokens is even more apparent than Ethereum or Bitcoin.”

He further highlighted that much like how the IT industry leaders such as Amazon and Google grew amid the dot-com bubble, many crypto projects today have a solid foundation with a suitable business model and data. “This is why VCs are now pouring their money into crypto projects. They now believe that the next Google, Amazon and Facebook could be found in the space”, said Kim, closing out.

Related: COIN price fails to impress as more crypto firms are eager to go public

On a more technical note, Lyu highlighted that the increasing VC investments can, in large part, be attributed to the growing number of users that have seemingly flooded into various centralized exchanges (CEXs) and decentralized exchanges (DEXs) in recent months, adding: “Some popular DEXs such as Uniswap and PancakeSwap have exceeded traffic numbers related to some leading CEXs.”

What lies ahead?

Despite the COVID-19 pandemic that has had the global economy in a sort of standstill over the last year and a half, reports suggest that global venture capital funding over the first half of 2021 has shattered all previous records, with the figure now standing at $288 billion. That’s more than $100 billion when compared with the last six-month cycle record that was set during the second half of last year.

Jehan Chu, Managing Partner for Kenetic, a venture capital firm investing in blockchain companies, told Cointelegraph that the ongoing glut of capital sloshing around the world is forcing investors to take greater and greater risk in search of alpha, and despite ongoing institutional uncertainty about the future of crypto, they have no choice but to invest in the space:

“Fortunately, blockchain technology and crypto have graduated from a carnival freakshow to an inevitable future, so confidence in the underlying companies is at an all-time high. Additionally, a generation of cheap money flowing from the U.S. printing press has concentrated into the hands of investors. There has never been so much capital and the traditional gates have been eroded by partisan politics and poor financial management.”

Founding managing partner at Borderless Capital Arul Murugan believes that as more applications go live, greater infrastructure will be required to be built and as more infrastructure is built, it will attract even more applications, creating a virtuous cycle that started happening this year.

Not only that, he is of the opinion that the gap between traditional finance and decentralized finance (DeFi) is closing up with more people steering towards the crypto spectrum. Murugan opined: “Right now, crypto is less than 1% of traditional finance and people are seeing huge growth opportunities.”

Therefore, as an increasingly digitized future draws closer, the use of crypto tech will likely continue to grow, so it stands to reason that more players from the traditional finance space will continue to make their way into this burgeoning market, helping it to grow even further.

Read More

Continue Reading

Stocks

Bitcoin Back Below $30,000 After A Record 8 Weeks In The Red

Bitcoin decoupled from equity markets to the downside on Monday after ending last week as the eighth consecutive weekly loss.

Published

on

By

Bitcoin decoupled from equity markets to the downside on Monday after ending last week as the eighth consecutive weekly loss.

Bitcoin has failed to hold the $30,000 level on Monday after scoring its eighth consecutive week in the red for the first time ever.

During these eight weeks, which began in late March and ended on Sunday, bitcoin has lost over 35% of its U.S. dollar value according to TradingView data. Before the beginning of the losing streak, BTC was trading at around $46,800.

Bitcoin has scored losses for eight consecutive weeks for the first time in its history and it is starting the ninth with yet another red candle. Image source: TradingView.

Bitcoin is changing hands slightly below $30,000 at the time of writing. The peer-to-peer currency climbed as high as $30,600 earlier on Monday to trade at around $29,400 as the trading in equity markets nears its end in New York.

While bitcoin turns south, major U.S. stock indices have been in the green. The Nasdaq, which is said to be highly correlated with bitcoin, decoupled from the digital money along with the S&P 500 to denote modest gains near market close on Monday, per TradingView data.

While bitcoin, Nasdaq and S&P 500 were trading in tandem for some time on Monday, the P2P currency saw a sharp sell-off decouple it from the two indices and take it to a more than 3% loss for the day. Image source: TradingView.

A Tough Year For Bitcoin

Despite making two new all-time highs in 2021, bitcoin already erased nearly all of those gains in 2022.

Bitcoin’s choppy trading year so far can be partly attributed to a broader sentiment of economic uncertainty as the Federal Reserve tightens the U.S. economy, withdrawing liquidity from the market after almost two years of quantitative easing.

The central bank has already raised its basic interest rates two times this year, the last of which was double the magnitude of the previous one and represented the largest hike in two decades: While the Fed increased interest rates by 0.25% in March, it raised them by 0.50% earlier this month.

Image source: Federal Reserve Economic Data (FRED).

When the Fed raises or lowers interest rates through its Federal Open Markets Committee (FOMC), what it is actually doing is setting a target range. The graph above depicts the lower and upper bounds of that target range in red and blue, respectively.

While the U.S. central bank system sets the target, it cannot mandate that commercial banks use it — rather, it serves as a recommendation. Therefore, what banks end up using for lending and borrowing excess cash between them overnight is called the effective rate. This is shown by the green line in the graph above.

The Fed previously hiked interest rates consistently from 2016 to 2019, until plunging it near zero in the aftermath of the COVID-19 pandemic outbreak, as noted in the graph.

Bitcoin’s higher sensitivity to liquidity and therefore interest rates can be explained by a greater participation of institutional investors in the market, whose allocations are based on the availability of capital and broader economic conditions, Morgan Stanley reportedly said.

Therefore, while Bitcoin was able to sustain a bull market in the midst of the Fed increasing interest rates in 2017, raising nearly 2,000% from January to December that year, the odds aren’t on the side of the bulls this year.

For two weeks, bitcoin has now closed below a level of weekly support it formed over a year ago and had respected since, indicating it might be turning into a zone of resistance. Image source: TradingView.

Read More

Continue Reading

Crypto

WEF 2022: Terra were offering unsustainable yields; DeFi can support financial inclusion

Industry experts share insights and commentary with Cointelegraph on the first day of the Blockchain Hub 2022 conference in Davos, Switzerland.

Published

on

Industry experts share insights and commentary with Cointelegraph on the first day of the Blockchain Hub 2022 conference in Davos, Switzerland.

Reporting from the inaugural day of the Blockchain Hub Davos 2022 conference, Cointelegraph’s editor-in-chief, Kristina Lucrezia Cornèr hosted a panel discussion centred around decentralized finance (DeFi) titled ‘Programmable Money is Here — and It’s Changing the World as We Know It’.

Panelists included Chief Partnership Officer of SwissBorg, Alexander Fazel; Global Markets Lead of Kraken Europe, Lucian Aguilar; Co-founder and CEO of CasperLabs, Mrinal Monahar; and Managing Partner of Coral Capital, Patrick Horsman.

In the opening remarks of the conversation, Aguilar reflected upon his attendance of the event two years ago, assessing the differences in receptiveness and attitude to crypto. He also noted how the prevailing narrative has evolved, stating: “Last time [there were] a lot of projects here that were trying to sell and present. This time when I look around it’s more talking about building, adopting, and innovating.”

All of his fellow panelists concurred with this viewpoint. Horsman shared that DeFi’s total value locked (TVL) was $1 billion in May 2020, but has since grown 150 times — a healthy barometer of success for the industry by his account.

Engaging the audience in a hand-raising exercise to determine their entry-point into the space, SwissBorg’s Fazel stated that “in TradiFi people are thinking [that] I don’t want to lose money — how can you help me keep my wealth regardless of markets? So, it’s very risk-management orientated. While in DeFi, the degens are like ‘gimme those triple-digit yields wooo!’”

He argued that protocols within the space should adopt higher transparency standards for the risk associated with annual percentage yields (APYs), advocating that additional education could also support in balancing the expectations of investors.

Advancing that thesis, Coral Capital’s Horsman shared that the Terra (LUNA) crisis partly occurred because “they were essentially offering yields that were unsustainable, and [that] there were venture capital firms that were bootstrapping those yields in order to bootstrap an ecosystem.” He noted that his firm decided to withdraw funds from the project in Nov-Dec 2021 after their reserve modelling data predicted worrying calculations for the future.

Related: Why did Terra LUNA and UST crash? | Find out on The Market Report

In response to that anecdote, Aguilar shared his belief that protocols with vastly significant APYs in the triple-digit range are mostly likely seeking to mitigate their own high risk factor, stating:

“A lot of these APYs, I see them as a risk premium because the underlying is so underpredicted and unstable that it’s needed to offset the risk for a traditional investor.”

Transitioning to the World Economic Forum’s (WEFs) ambitions in tackling modern global challenges — climate change and the pandemic being some of the most prominent examples of recent times — Cornèr asked the panelists how they assess the status of financial inclusion, and how DeFi can empower communities to reduce the prejudicial disparity in the current system.

Monahar stated that “I think DeFi has a huge potential to create financial inclusion”, but that to achieve visions of decentralization there needs to be “interoperability at a true fundamental algorithmic level.” This, he argued, will cultivate a frictionless experience which promotes commonality and fosters incentives for inclusion.

He recognized the recent convergence of developers to the programming language Rust as a positive signal, as well as its similarities to the software synonymous with the internet, HTTPS.

Furthering the conversation around financial inclusion, Fazel stated that "there's no better way to earn wealth than in DeFi" and that data monetization services such as Brave Browser, play-to-earn games such as Axie Infinity, and play-to-move platforms such as Sweatcoin and the soaring trend of STEPN, are granting the opportunity to "generate wealth without necessarily having wealth in the beginning."

The airdrop incentives that some of these platforms provide can support inclusion of wealth across less developed country's argued Fazel, disclosing a personal story of his father — a resident of Iran where the monthly salary averages $250 — immensely benefitting from the 300 Uniswap (UNI) airdrop.

Related: WEF 2022, May 23: Latest updates from the Cointelegraph Davos team

Cointelegraph representatives are extensively reporting on the World Economic Forum (WEF) and the Blockchain Hub 2022 this week. Read our live action blog to follow along with all the highlights and best moments of the global events!

Readers of this article can watch the full interview of 'Programmable Money is Here — and It’s Changing the World as We Know It’ on Youtube via this link.

Read More

Continue Reading

Stocks

Best Penny Stocks To Buy According To 4 Analysts & Targets Up To $8

Best penny stocks to buy according to analysts.
The post Best Penny Stocks To Buy According To 4 Analysts & Targets Up To $8 appeared first on Penny…

Published

on

Want to buy penny stocks? You might have thought about starting by following analysts. Today we look at 4 penny stocks to buy according to a few Wall Street analysts with bullish price targets to go with them.

The thing to remember about analyst ratings is that they usually have an outlook beyond “today.” These firms will dig into things like recent financials, development or product pipelines, and the current industry or market conditions that could contribute to the success or failure of the companies.

Penny Stocks To Buy [According To Analysts]

  1. EOS Energy Enterprises Inc. (NASDAQ: EOSE)
  2. Porch Group Inc. (NASDAQ: PRCH)
  3. FTC Solar Inc. (NASDAQ: FTCI)
  4. Ginkgo Bioworks Holdings Inc.(NYSE: DNA)

1. EOS Energy Enterprises Inc. (NASDAQ: EOSE): +498%

Energy stocks have recharged bullish traders looking for pockets of opportunity. Even with the stock market crash this year, shares of oil & gas and even alternative energy stocks have jumped. EOS Energy focuses on clean energy systems using its Znyth aqueous zinc battery platform. It is being designed to compete with traditional lithium-ion batteries already in the market.

EOS reported first-quarter earnings and worse than expected EPS and sales results earlier this month. However, based on comments from company CEO Joe Mastrangelo, it appears that EOS is looking at just a simple bump in the road. Mastrangelo explained in a May update that, “We are building a company ready to deliver safe, scalable, flexible, and affordable energy storage. Our manufacturing capacity expansion is on plan, we are seeing improved first-pass production yields, and we are proud to be working towards a cleaner, brighter energy future.”

Penny Stocks To Buy Now? 4 To Watch Under $1

Though analysts have lowered price targets, firms including B. Riley appear to remain bullish based on price targets. Its analysts have a Buy on EOSE stock and a $7 price target. Despite this being much lower than the previous $13 target, the new outlook is still nearly 500% higher than current price levels.

2. Porch Group Inc. (NASDAQ: PRCH): + 74%

penny stocks to buy Porch Group Inc. PRCH stock chart

Shares of Porch Group continued trading higher on Monday. This extended a move that began earlier this month after the company announced earnings. Porch’s specialty is software development for the home services and insurance industries.

Total revenue for the first quarter reached $62.6 million, equating to a jump of over $35 million compared to the first quarter of last year. “Porch is off to a strong start in 2022…Our vertical software and insurance segments are performing very well and reported substantial revenue increases. This strong performance early in the year gives us confidence in affirming our previously disclosed guidance and highlights why the team is excited about the remainder of the year,” said Matt Ehrlichman, founder and Chief Executive Officer of Porch Group, Inc.

With new approvals in Arizona, Georgia, and Virginia, the company is also on track to leverage particular insights from its current data into its underwriting models. Adding to this, JP Morgan analysts recently initiated coverage of the company. The firm set its rating at Overweight and gave a price target o $8. Based on current trading levels, this target sits roughly 74% higher.

3. FTC Solar Inc. (NASDAQ: FTCI): +80%

penny stocks to buy FTC Solar Inc. FTCI stock chart

Like EOS, FTC is also focused on alternative energy applications. In this case, as the name suggests, the company is part of the solar industry. In particular, FTC provides solar tracking systems and solutions, including engineering and software.

Shares slipped earlier this month after the company reported its latest round of earnings. In addition to headwinds from the broader stock market sell-off, FTC also missed estimates and gave a revenue forecast that reflected delays by solar developers. Regardless, FTCI stock has made some headway going into the end of May. Shares have made a rebound from lows of $2.12 to over $4 at the end of last week.

What to Know About Buying Penny Stocks on May 23rd

What do analysts think about FTC right now? Missed earnings aside, many analysts have remained bullish on the stock. The most recent firm, Northland Securities, initiated coverage on the stock this week. It started FTCI with an Outperform rating and a $7 price target. Considering the penny stock sits just under $3.90, this target is 80% higher right now.

4. Ginkgo Bioworks Holdings Inc.(NYSE: DNA): +200%

penny stocks to buy Ginkgo Bioworks DNA stock chart

Shares of Ginkgo Bioworks have been channel-bound for weeks, but that hasn’t stopped traders from taking advantage of the volatility. Earlier this month, the cell programming company announced plans to develop global biosecurity capabilities in Qatar alongside First Serv. This new partnership aims to build Doha as a critical access point for a pathogen monitoring network.

Considering the uncertainty surrounding numerous viruses, including COVID and now, monkeypox, this news seems to have come at a reasonable time. “Biosecurity in this new era is about applying the cutting edge tools of the biotech age to prevent the next pandemic or infectious disease threat. Proactive pathogen monitoring is an essential part of this effort—we need a robust global weather map to identify and track emerging biological threats,” said Matt McKnight, General Manager, Biosecurity at Ginkgo Bioworks.

What do analysts think about DNA stock? If you look at KeyCorp’s rating, it appears to have taken a bullish stance on the beaten-down biotech stock. The firm has an Overweight rating on the penny stock and a price target 200% higher at $8.

Penny Stocks To Buy

Starting with analyst coverage may be an interesting first step if you’re looking for penny stocks to buy. These firms make a point to dive into company specifics beyond market hype. But, it’s important to remember that they are not always the final say in what the market or stocks will (or won’t) do. With that in mind, it’s always a good idea to have a plan in place and a strategy perfected. According to analysts, these are just a few of the penny stocks to buy right now. Do you agree? Drop a comment if any of these are on your list of penny stocks right now.

The post Best Penny Stocks To Buy According To 4 Analysts & Targets Up To $8 appeared first on Penny Stocks to Buy, Picks, News and Information | PennyStocks.com.

Read More

Continue Reading

Trending