Almost a year after the LUNA/UST crash which sent crypto markets spiralling, there finally seems to be light at the end of the tunnel.
Bitcoin – which makes up almost half of the global crypto market cap – is up 70 per cent since the start of 2023. Other blue chips have fared well too, with Ethereum and Binance Coin posting gains around 50 and 30 per cent respectively.
Although prices are still far from their all-time-highs, trading volume is on its way up and market sentiment has been improving.
We believe that there are already signs of a thaw in this winter, as capital allocation has become more selective. Markets have gradually picked up from last year’s lows, and the industry continues to attract talent from traditional finance, big tech, and the public sector.
– Ben Roth, co-founder & CIO, Auros
Here’s what Singapore’s industry experts had to say about the return of investments and consumer interest to the world of cryptocurrency.
Is it time to be confident about crypto?
Even though the second half of 2022 was marked by a domino-like collapse of companies, it was still a record year for venture capital (VC) investments in the space. In Singapore, crypto was all the buzz at finance and tech events, with conferences like Token2049 boasting thousands of attendees.
Heading into the second quarter of 2023, the industry is looking at a return to form. Crypto Expo Asia – which saw 5,000 attendees and 50 company participants in 2022 – is landing in Singapore for a second year, with expectations to double its headcount.
“While we still have a few months before the conference, we’ve already observed strong interest from the industry, with several new additions to this year’s lineup and attendee list,” says Crypto Expo Asia Director, Michael Xuan.
That being said, this year’s key themes are likely to be more grounded, addressing the industry issues which have come to light over the past year.
“As the industry is facing an entirely different reality this year, we expect a strong desire for new solutions, trust, and transparency to bring both incumbent as well as nascent builders and projects together,” Xuan adds.
Raising capital for crypto
Given the rapid pace of innovation, crypto has been a hotbed for private funding for quite some time. Crowdfunding methods such as initial coin offerings saw a boom between 2016 and 2019, with around US$35 billion raised in that time frame.
Once that cooled down – owing to a rise in scams and failed projects – VCs took over, supplying over US$30 billion in 2021 alone.
“We observed that funding peaked in the second quarter of last year and has been trending downwards since then,” says Ben Roth, co-founder of Auros, a crypto trading firm with offices in Hong Kong and New York. “With that said, despite the currently cautious environment, we are starting to see some green shoots in 2023.”
“In many ways, this is a much healthier market condition than that of 2021 and 2022, where every other project had received funding, leading to the unfortunate result of capital misallocation and a general inflation of industry growth.”
Auros oversaw a US$17 million fundraising round this March with participation from traditional trading firms including Vivienne Court.
Singapore-based DeFi platform DigiFT enjoyed similar success with its US$10.5 million pre-Series A fundraise. “Sophisticated investors continue to be passionate about future-ready solutions that address pain points in the financial industry, regardless of bullish or bearish markets,” says founder Henry Zhang.
Zhang sheds light on a shift in power between investments in decentralised and centralised crypto products. Following the failure of a number of centralised crypto companies – including FTX and Voyager Digital – it seems DeFi has a newfound appeal.
In 2023, we’ve seen an increase in investments of over 190 per cent into DeFi compared to the same term last year, while CeFi saw a drop of some 73 per cent. While overall crypto sentiments remain bearish, the DeFi industry has seen a 65-fold growth since 2020.
– Henry Zhang, Founder of DigiFT
Singapore’s future as a crypto hub
As the Monetary Authority of Singapore (MAS) tightened its reins around crypto regulations in early 2022, some companies were quick to jump ship.
Singapore’s status as a crypto hub came under question as exchanges were no longer allowed to advertise to the public and Bitcoin ATMs were disallowed.
However, not long after, the LUNA/UST crash and FTX collapse would frame the MAS’ regulatory stance in a softer light.
Singapore continues to be a bright spot in the world of crypto and Web3 because of its unique ability to balance blockchain innovation and risk management in what is clearly a promising market.
– Michael Xuan, Crypto Expo Asia Director
The MAS’ consistent stance – promoting blockchain innovation while dissuading speculative investing – has allowed companies a sense of stability while operating in the region.
“Singapore as a financial hub has been very supportive of blockchain technology and provides a proper legal framework for upcoming Web3 focused companies,” Zhang explains. “Singaporean regulators have also contributed a great deal in enhancing the blockchain industry that we see today. They realise its potential and provide favourable conditions for investors.”
Featured Image Credit: PYMNTS