Will the crypto bubble burst? JP Morgan: Web3 market venture capital investment is weak, not even as good as last year

Analysts at JP Morgan issued a latest research report on Thursday warning that venture capital funds flowing into the cryptocurrency industry so far this year have been flat compared with past years, posing potential downside risks to the currency market.

JPMorgan analysts led by Nikolaos Panigirtzoglou issued a research report on Thursday stating that despite the recent recovery in the cryptocurrency market, venture capital funds flowing into the cryptocurrency industry this year have been relatively tepid, posing downside risks to the cryptocurrency market. : Our various measures of cryptocurrency venture capital flows are looking quite weak so far this year compared to previous years. We have previously argued that a resurgence in crypto VC inflows is necessary for a sustainable recovery in the cryptocurrency market, so weak VC inflows so far this year pose potential downside risks in our view.

Venture capital is slowly recovering

Data from The Block Pro shows that the cryptocurrency industry has attracted $3.2 billion in venture capital this year, compared with more than $4 billion in the same period last year.

JPMorgan analysts noted that although venture capital firm financing momentum in the cryptocurrency space has picked up so far this year, it still lags behind previous years. However, he also added: As the currency market rebounds this year, more and more venture capital companies are raising or have raised new funds. Earlier this month, 1kx raised $75 million to establish a new fund to support early-stage cryptocurrency startups.

Paradigm also reported this month that it is raising US$750 million to US$850 million for a new fund, and Galaxy Digital, Hack VC and Hivemind Capital have also raised US$100 million, US$100 million and US$50 million respectively for their new funds.

Cryptocurrency incubator Alliance completed the first fundraising of its third fund in February, raising US$10 million from Brevan Howard Digital and Galaxy Digital respectively, and plans to raise an additional US$80 million by July.

There are various signs that venture capital funds seem to be slowly recovering. In addition, JPMorgan Chase also pointed out that cryptocurrency hedge funds have been more active this year, and their assets under management have increased significantly in the past six months, estimated to be approximately US$20 billion.

Ethereum spot ETF will finally be approved

In addition, JPMorgan analysts also reiterated in a report on Thursday that the probability of the U.S. Securities and Exchange Commission (SEC) approving the listing of Ethereum spot ETFs in May is no more than 50%: After the SEC investigated the Ethereum Foundation, the market Optimism for the approval of an Ethereum spot ETF by May 23 appears to have faded in pricing, as evidenced by the Grayscale Ethereum Trust's (ETHE) discount to net asset value, which has ranged from 8% over the past month expanded to 22%.

But overall, analysts believe the SEC will eventually approve such ETFs.