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Weakness in Venture Capital Flows
Approval of Ethereum ETF in Spot Market
According to The Block, a team of analysts led by Nikolaos Panigirtzoglou at JPMorgan wrote in a report last Thursday that despite the strengthening momentum in venture capital financing in the cryptocurrency space this year, it still falls short compared to previous years. According to The Block’s data dashboard, the cryptocurrency industry has attracted $3.2 billion in venture capital investments so far this year, compared to over $4 billion in the same period last year.
However, with the rebound of the cryptocurrency market this year, more and more venture capital firms are raising or have raised new funds. For example, 1kx raised $75 million earlier this month to support the early development of cryptocurrency startups. It is reported that Paradigm is raising $7.5 million to $8.5 million for a new fund. Galaxy Digital, Hack VC, and Hivemind Capital have raised $100 million, $100 million, and $50 million respectively for their new funds. In addition, accelerator Alliance completed the initial fundraising for its third fund in February, receiving $10 million each from Brevan Howard Digital and Galaxy Digital, and plans to raise an additional $80 million by July.
Although venture capital funding seems to be gradually recovering, compared to that, cryptocurrency hedge funds appear to be more active this year, with the assets they manage sharply increasing over the past six months and estimated to have reached $20 billion.
JPMorgan analysts reiterated in their report on Thursday that the probability of approving a spot Ethereum ETF in May is not more than 50%, but they expect the U.S. Securities and Exchange Commission to eventually approve such funds. The analysts pointed out:
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