A new report from PwC has revealed that attracting mainstream investment continued to be a struggle for the cryptocurrency industry last year as both global fund raising and deals dried up.
According to data seen by Bloomberg, the number and value of cryptocurrency-related fund raising and mergers and acquisitions sank last year to $451m from almost $1.9bn in 2018. At the same time, the amount of funds raised fell by 40 percent to $2.24bn.
Cryptocurrency enthusiasts have predicted for some time now that Bitcoin would experience explosive growth once mainstream investment started to pour in. However, that did not happen last year even when Bitcoin came out of its “crypto winter” to briefly trade around $13,000.
In its report, PwC explained that coming out of its “crypto winter” didn’t have the effect that Bitcoin enthusiasts thought it would, saying:
“The rise in the price of Bitcoin in Q2 and Q3 2019, and the associated interest in crypto assets did not yet materialize by way of increased new capital into the industry.”
PwC’s report also revealed that the cryptocurrency market will be affected by volatility from the coronavirus outbreak and other macroeconomic events this year.
PwC global crypto leader and one of the authors of its 2nd Global Crypto M&A Fundraising report, Henri Arslanian explained that the cryptocurrency industry is not immune to recent global events, saying:
“The crypto industry is not immune to the global headwinds and the number and value of crypto fund-raising and M&A deals may be impacted in 2020.”
The report also pointed out the fact that traditional and crypto-focused venture capital funds, incubators and family offices are the main source of funding for the cryptocurrency industry. However, consolidation is the biggest driver of mergers and acquisitions in the industry with nine out of the top 10 deals strategic in nature and driven by crypto companies or digital currency-focused funds.