The Russian-Ukraine war has sent jitters across the equity and the crypto market bringing back strong volatility in play. Furthermore, the sanctions have also exposed that how any country can be at the receiving end of the economic warfare driven by traditional financial systems.
The latest report from Fundstrat shows that global investors have been building up stakes in crypto funds and companies. As per the report, Venture Capital buyers have invested north of USD 4 billion during the last three weeks of February 2022. Besides, VCs poured an additional $400 million into crypto startups last week.
Paul Hsu is the founder and CEO of Decasonic, a $50-million hybrid fund that invests in both crypto and venture capital. He said that there was an open demand for investing up to $200 million in his funds. Hsu added:
“The conflict in Ukraine has weaponized our financial and digital economy and really accelerated blockchain adoption. We are seeing a re-allocation to crypto and blockchain away from real estate and bond funds, for instance, because of higher interest rates. I’ve seen this with my funds but unfortunately, because I’m closed-end, I cannot admit more funds nor investors”.
Money Outflows from Bonds and Real Estate
Another data shows that there have been major outflows from bonds and real estate. Data from Refinitiv Lipper shows that the U.S. investors pulled $7.8 billion out of bonds in the week ending March 9. The outflows from real estate funds during this period stood at $700 million. George Melka, chief executive officer at crypto broker SFOX said:
“Crypto native companies are still raising at very high valuations and many funding rounds are still oversubscribed. In fact, crypto startup valuations are probably the highest I’ve seen.”
Even traditional financial market players are joining the crypto bandwagon. Last week itself, Bain Capital Ventures announced that it will set up a $560 million fund exclusively focused on crypto investments. Bitcoin and other crypto are up 10% after bottoming out on February 24, despite volatility.
Joe DiPasquale, chief executive officer at BitBull Capital, which manages a crypto fund of funds and two hedge funds said:
“There’s really no panic even with the Ukraine conflict. People are starting funds, encouraged by the appreciation in prices over the last couple of years”.