In the first half of this year, the encryption field received 17.5 billion US dollars in venture capital investment

This article comes fromReutersReuters

Odaily Translator | Nian Yin Si Tang

, by Tom Wilson & Medha Singh & Lisa Pauline Mattackal

Odaily Translator | Nian Yin Si Tang

It’s not all bad news in the crypto market right now.

Even as the crypto industry shrinks from the winter, venture capitalists are pouring money into digital currency and blockchain startups at a pace expected to beat last year's record.

Venture capital firms bet $17.5 billion on such companies in the first half of this year, according to PitchBook. That puts investment in the sector on track to surpass last year's record $26.9 billion. There is no question that last year was a warmer, happier time for Bitcoin and related companies.

“I don’t think the current market conditions have made investors uneasy,” said Roderik van der Graf, founder of Lemniscap, a Hong Kong-based investment firm focused on cryptocurrencies and blockchain. “The capital available is huge.”

Venture capital funds provide financing to young companies they believe have strong growth prospects. The data shows that investors remain confident in the future of cryptocurrencies and blockchain technology despite the industry's battering over the past six months.

So far this year, macroeconomic headwinds and the collapse of major projects have caused Bitcoin to plummet by about 65% from a high of $69,000 in November last year, and the total market value of the encryption market has also shrunk by two-thirds to $1 trillion.

As the price of cryptocurrencies fell, related companies were also hit. Major U.S. exchange Coinbase Global (COIN.O) and mainstream NFT platform OpenSea announced hundreds of layoffs.

Some VCs, however, shrugged off the pessimism, many of whom have invested heavily because they remain confident in the technology behind cryptocurrencies.

David Siemer, chief executive of California-based cryptocurrency management firm Wave Financial, said there are signs that cryptocurrency company valuations have come down from last year's sky-high prices.

“It’s going to get worse — we’ve been in this cycle for a few months. In the last cycle, those looking for financing were in pain for about 12 months.”

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The U.S. Becomes a Crypto Venture Capital Hotspot

North America has been a hotspot for venture capital deals in the crypto space, with about $11.4 billion in such deals in the region in the six months to June, compared with $15.6 billion for all of last year.

This figure stands in stark contrast to general venture capital activity in the US. As the macro environment and market turbulence affected investment, the scale of venture capital deals in the US fell to US$144.2 billion in the first half of this year from US$158.2 billion in the same period last year.

Rumi Morales, investment director at major U.S. cryptocurrency investor Digital Currency Group, said the figures reflect growing confidence in the cryptocurrency and blockchain industry.

“In the past, there was an existential risk in this space — it meant the whole industry could disappear and nothing would come of it. But that’s no longer the case.”

The adoption of cryptocurrencies as an investment vehicle has mushroomed in the last year, and the use of blockchain has also gained ground — although the revolutionary changes the technology promises to industries such as finance and commodities are still unknown.Large U.S. crypto VC deals in 2022 include:- In January, FTX US, the US subsidiary of cryptocurrency exchange FTX, announced

Completed US$400 million in Series A financing- March, Ethereum infrastructure development company ConsenSys, with a valuation of $7 billion, led by ParaFi Capital, new investments include Temasek, SoftBank Vision Fund II, Microsoft, Anthos Capital, Sound Ventures and C Ventures, and existing investors such as Third Point, Marshall Wace, TRUE Capital Management and UTA VC Investment participation.

Completed $450 million in Series D financing, with a valuation of $7 billion, led by ParaFi Capital, new investments include Temasek, SoftBank Vision Fund II, Microsoft, Anthos Capital, Sound Ventures and C Ventures, and existing investors such as Third Point, Marshall Wace, TRUE Capital Management and UTA VC Investment participation.- In April, Circle, the USDC issuer, announced

Completed a new round of financing of US$400 million

, BlackRock, Fidelity, Marshall Wace and Fin Capital participated in the investment.Crypto venture capital activity in Europe is also buoyant, with $2.2 billion in venture funding in the first half of the year.Lisbon-based Fedi, an app designed to help people receive, hold and spend bitcoin, announced this month that

Completed a $4.2 million seed round