J.P. Morgan analyst issued a new research report on Thursday, warning that the inflow of venture capital funds into the cryptocurrency industry has been relatively flat compared to previous years, posing potential downside risks to the currency market.
(Previous Summary:
J.P. Morgan: Decrease in Lido’s pledge ratio “saved Ethereum”! Being recognized as a security by the SEC may reduce it
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(Background Supplement:
J.P. Morgan: Bitcoin may plummet to $42,000 after halving, current BTC still in oversold territory and downtrend not over
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The report, released on Thursday by J.P. Morgan analyst Nikolaos Panigirtzoglou, pointed out that despite the recent recovery in the cryptocurrency market, the inflow of venture capital funds into the cryptocurrency industry this year has been relatively tepid, posing downside risks to the cryptocurrency market:
Venture capital funds slow to recover
Data from The Block Pro shows that the cryptocurrency industry has attracted $3.2 billion in venture capital funds this year, compared to over $4 billion during the same period last year.
J.P. Morgan analysts pointed out that although the financing momentum of venture capital firms in the cryptocurrency field has rebounded somewhat so far this year, it still lags behind previous years. However, they also added that with the rebound of the currency market this year, an increasing number of venture capital firms are raising or have raised new funds. Earlier this month, 1kx raised $75 million to establish a new fund to support early-stage cryptocurrency startups.
Paradigm is also rumored to be raising $750 million to $850 million for a new fund, while Galaxy Digital, Hack VC, and Hivemind Capital are raising $100 million, $100 million, and $50 million respectively for their new funds.
Further reading:
Paradigm rumored to raise £850 million, launching “largest” cryptocurrency venture capital fund in two years
Cryptocurrency incubator Alliance completed the first round of fundraising for its third fund in February, raising $10 million from Brevan Howard Digital and Galaxy Digital, and plans to raise $80 million by July.
Various signs indicate that venture capital funding seems to be slowly recovering. Additionally, J.P. Morgan also noted that cryptocurrency hedge funds have been more active this year, with their managed assets increasing significantly over the past six months, estimated to be around $20 billion.
Ether spot ETF will eventually be approved
Furthermore, J.P. Morgan analysts reiterated in their report on Thursday that the probability of the U.S. Securities and Exchange Commission (SEC) approving an Ether spot ETF in May is not over 50%:
But overall, analysts believe that the SEC will ultimately approve such ETFs.
The discount of the Grayscale Ethereum Trust Fund (ETHE) has widened. Image source: The Block
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