International investors are piling into cryptocurrency funds and corporations searching for exposure to a sector that many believe will be impacted by the Russia-Ukraine conflict. As of Friday, new crypto funds had raised nearly $3 billion in the previous two weeks, the most this year.
Crypto native companies keep on growing
The conflict in Ukraine has weaponized the financial and digital economies, hastening blockchain adoption, according to Paul Hsu, founder and CEO of Decasonic. This $50 million hybrid fund invests in digital assets and venture capital. He also stated that there is a demand for up to $200 million in investment in his fund.
According to Refinitiv Lipper data, US investors withdrew a net $7.8 billion from bond funds in the week ending March 9. Real estate funds saw net outflows of $707 million during the same period, following $1.15 billion in outflows the previous week, according to MSN.
According to George Melka, chief executive officer of crypto broker SFOX, crypto native companies are still rising at very high valuations, and many funding rounds are still oversubscribed. Indeed, crypto startup valuations are likely to be the highest he has seen.
Cryptocurrency is fixed as a hard asset like gold
Following a drop in the value of Russia’s currency earlier this week, the price of bitcoin and other cryptocurrencies has risen. Bitcoin rose to $44,188 on Wednesday after falling as low as $36,370 the previous week. Other leading cryptocurrencies, such as ethereum, ripple, and solana, were flat or gained at least 2%.
According to Schei, under the current market conditions, he is not surprised to see investors, particularly those in Russia, looking for stablecoins. Stablecoins are considered less volatile than cryptocurrencies because the underlying crypto’s worth is fixed to a traditional currency such as the US dollar or a hard asset such as gold.
Another component that may be driving up crypto prices is growing skepticism among younger investors about government activities that affect currency prices, such as the economic sanctions imposed on Russia this week, CBS posted.