Crypto.com CEO Kris Marszalek has raised concerns about the sustainability of the surging valuations in the cryptocurrency sector.
In a recent interview with Bloomberg, Marszalek expressed skepticism about the generous valuations being thrown around by project teams as the industry experiences a notable increase in billion-dollar funding rounds for early-stage crypto startups.
The CEO’s observations serve as a reminder of the investment frenzy that accompanied the pandemic-era bull run in tokens, which yielded mixed results for investors.
While acknowledging the desire for financial returns, Marszalek emphasized the need for caution in the current market environment.
Crypto.com’s VC Arm Scale Back
Crypto.com Capital, the venture capital arm of Crypto.com, had $500 million allocated for investments in startups in the sector as of January 2022.
However, over the past 18 months, the fund has scaled back its investment activity.
Publicly available information shows that Crypto.com has made only four investments since the start of 2023, compared to 35 investments in the preceding two years.
Despite the resurgence of exuberance in crypto venturing, Marszalek stated that the fund aimed to be reasonable and prudent in its investment approach.
While he did not disclose the exact figure, Marszalek mentioned that the unit has made approximately 70 investments to date, deploying a significant amount of capital.
The industry as a whole has witnessed recent venture capital deals that highlight the soaring valuations.
Blockchain platform Berachain, operated by pseudonymous founders with bear-themed avatars, secured $100 million at a valuation of at least $1 billion.
Additionally, software firm Merkle Manufactory, the creator of decentralized social-media network Farcaster, and blockchain developer Monad Labs have also achieved billion-dollar valuations in recent weeks.
Crypto.com Capital has participated in some of these funding rounds, including Berachain’s raise, as well as investments in staking firm Kiln and gaming startup Arcade2Earn.
The venture arm primarily focuses on seed-stage and Series A rounds.
However, Marszalek acknowledged that limited partners (LPs) providing capital for venture funds share his wariness of the industry’s rekindled hype.
LPs are reluctant to invest additional funds until venture funds demonstrate tangible returns.
Marszalek Bullish on Bitcoin
Marszalek has recently said that Bitcoin may experience some selling pressure in the lead-up to the highly anticipated halving event, but the long-term outlook remains bullish.
While acknowledging the possibility of selling pressure in the near term due to the “buy-the-rumor, sell-the-news” trading phenomenon, he emphasized that the halving will have a significant positive impact on the market in the long run.
“Over a longer period, the halving will make a substantial difference and is a positive development for the market.”
Specifically, Marszalek expressed optimism about the six months following the halving, predicting “pretty decent action” in the Bitcoin market during that period.
Despite short-term uncertainties, he remains bullish on Bitcoin’s future and believes that the halving will ultimately drive the digital asset to new heights.
As of now, Bitcoin is trading at $63,575, largely flat over the past day.
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