Despite War and Inflation, Crypto Markets Continue to Mature (KPMG)

The leading global accounting firm – KPMG International – claimed in one of its recent reports that the cryptocurrency market has shown increasing maturity in recent months. This comes despite the ongoing military conflict between Russia and Ukraine and the spread of record high inflation in some countries.

It’s also worth noting that most digital assets are trading well below their all-time highs in 2021, but that hasn’t stopped investment in the space. Prominent entities such as Trade Republic, Fireblocks, and FTX have committed billions of dollars to support startups that are part of the ecosystem.

The shocking truth

The health disaster of the Coronavirus, high inflation, the military conflict between Russia and Ukraine, and the energy crisis, among others, are all factors that have directly or indirectly affected a large part of the world.

In addition to taking millions of lives, the coronavirus pandemic has severely affected the global financial system. Stay-at-home rules, as well as the controversial mass printing of fiat currency by some central banks, were a prerequisite for a future monetary crunch simply because the increased amount of money in circulation did not respond to disrupted production.

As a result, inflation rates reached their highest levels in a decade, Turkey, the United Kingdom, and the United States, among others.

The energy crisis, which began to affect some regions in 2021, has intensified in recent months due to the military conflict between Russia and Ukraine, another factor driving the economy into decline.

The world’s largest country has suspended some of its gas supplies to many countries that had previously imposed sanctions on the country. With winter approaching in Europe, uncertainty increases as some countries risk being left without enough energy during the colder months.

Unsurprisingly, negative trends affected almost all financial markets, including the cryptocurrency sector. Today, the global market capitalization of cryptocurrencies is about $1 trillion, while last November it exceeded $3 trillion. Bitcoin is currently about 70% lower than the ATH of less than a year ago.

Despite this, the cryptocurrency market is maturing

Contrary to the obvious decline, KPMG International has Think The digital asset market continues to mature. The consultancy said many investors focused on the industry in the first half of the year due to uncertainty in traditional financing, driving out billions of dollars.

German online broker – Trade Republic – has raised $1.1 billion to support institutions in the field of digital assets. Fireblocks Crypto Custodian secured $550 million in fundraising and received an $8 billion valuation. The flagship Sam Bankman-Fried exchange – FTX – has closed a Series E venture capital round of $400 million and is currently valued at more than $32 billion.

In total, investments in the field of cryptocurrencies since the beginning of 2022 correspond to $14.2 billion. That’s significantly less than $32.1 billion in 2021 but more than 2019 and 2020 combined.

Total global investment in the crypto industry annually, Source: KPMG

However, it should be noted that the interest in the cryptocurrency industry was not impressive in 2019 and 2020. Speaking of record investments in 2021, it can be explained by the sudden rise when Bitcoin and many digital currencies reached all time. heights.

In addition, giant institutions such as Tesla have bought billions of dollars in BTC, while notable companies such as Expedia, PayPal, Rakuten, and Etsy have started accepting payments in cryptocurrency.

The hype peaked in September 2021 when El Salvador became the first country to adopt bitcoin as a legal currency within its borders.

KPMG’s Cryptographic Efforts

The entity began interacting with the cryptocurrency industry in 2020. It then introduced a project called KPMG Chain Fusion, which helps traditional financial firms provide well-managed digital asset services.

In February of this year, the Canadian subsidiary of KPMG made its first investments in cryptocurrency by adding Bitcoin (BTC) and Ether (ETH) to its corporate coffers.

A few months later, I hired Ian Taylor to lead the company’s UK crypto team and direct the Web3 effort. Since he is also the Managing Director of CryptoUK, he has a lot of experience in this field.

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