Private Equity firms have seen a sharp downturn in investments in the cryptocurrency sector over the past few months.
According to S&P, institutional investors, venture capital firms, and equity houses poured in approximately $13.65 Billion into Decentralized Finance (DeFi) in 2021, which was almost five times more than the year before.
The rating agency reported that investment levels peaked during the first quarter of 2022 at $5 billion, but then quickly began to decline in the second quarter to $2.94 Billion, almost 42% lower than the previous quarter.
In the third quarter, the figure was just under $1.58 trillion and in the fourth quarter it dropped to an all-time low of $1.58 trillion. By December 15, the volume of investment had decreased to around $918 million.
“Investment continued to fall in the third quarter, a trend that is likely to continue into the fourth quarter,” S&P Global said.
The cryptocurrency industry is currently in a state of flux following the collapse and restructuring of crypto exchange FTX in the beginning of the year. In November, Wall Street Journal reported that venture capital investors and equity investors, including software giant Thoma Bravo, had invested around $130 million into FTX Trading Ltd., the company which operates the FTX.com cryptocurrency exchange. July 2021, citing someone familiar with the situation.
By Sebastian McCarthy
