Private equity’s foray into cryptocurrency is waning after a tumultuous year for the digital asset class.
PE houses, venture capital firms and institutional investors deployed roughly $13.65bn into decentralised finance (DeFi) and cryptocurrency in 2021, marking almost a five-fold increase on the previous year, according to S&P Global.
However, the ratings agency said that investment hit a peak in the first quarter of 2022, reaching just over $5bn.
The second quarter saw investments slide to $2.94bn, marking a fall of nearly 42% from the previous quarter.
In the third quarter, investment then slipped to just under $1.58bn, and in the fourth quarter-to-date up to 15 December, the volume had fallen to around $918m.
“Investments continued to sink lower in the third quarter, a trend that appeared likely to hold in the fourth quarter,” S&P Global said.
The data comes as the cryptocurrency industry faces fresh uncertainty following the collapse of the crypto exchange FTX in early November.
Private equity and VC investors including software buyout giant Thoma Bravo were among those that reportedly invested in FTX.
The Wall Street Journal reported that Thoma Bravo invested $130m in FTX Trading Ltd., the owner and operator of cryptocurrency exchange FTX.com, in July 2021, citing a person familiar with the matter.
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