More than 80 per cent of equity funding for UK blockchain startups has taken place since 2017, according to a new report by MMC Ventures, with bitcoin’s recent price rises reflecting increased adoption.
MMC’s newly released report on blockchain and crypto revealed that 60 per cent of UK blockchain companies have raised less than USD2 million in capital so far. Moreover, the UK has five times fewer blockchain companies than the US, and the equity investment has been 10 times lower overall.
“The current COVID-19 pandemic is likely to impact funding activity for all early-stage companies, Asen Kostadinov, the author of the report, commented on how the blockchain ecosystem will be impacted by Covid-19.
“However, the increasingly pragmatic, business-case-first approach of the teams in the blockchain/crypto space makes them relatively well-positioned to weather this downturn, compared to previous periods of weakness in the funding environment,” continued Kostadinov.
In MMC’s view, the current crisis is underscoring the need for digitisation across all industries, as distributed ledger technology, or DLT, makes for a compelling architecture for digital transformation.
In February this year, MMC invested in fintech infrastructure business Copper.co, amid reports that equity funding for blockchain companies surged in 2019.
“The Bitcoin price will hit ‘at least USD10,000’ even before the four-yearly ‘halving’ event taking place in two weeks, predicts Nigel Green, chief executive and founder of deVere Group.
The statement comes as the price of the world’s largest cryptocurrency suddenly soared by more than USD1,500 on Thursday, moving it to its highest value since February. It peaked at USD9,400.
The spike happened ahead of May’s anticipated ‘halving event’. Halving means that less and less bitcoin – which is limited to 21 million units – will be mined, and it occurs every four years.
The next halving event is expected to occur in the week commencing 18 May 2020. “We see the cryptocurrency market already significantly picking up pace ahead of the historic event in May,” said Green.
In 2012, the number of new bitcoins issued every 10 minutes fell from 50 to 25. In 2016, it decreased from 25 to 12.5. In the upcoming halving it will drop from 12.5 to 6.25.
“Investors are now increasing their exposure to bitcoin as the halving – only the third in its 11-year history – will push up prices sharply due to the dramatically lower supply combined with a steady demand and increasing awareness of digital currencies,” he continued.
Previous bitcoin halving events have prompted price spikes – the 2016 halving induced a 300 per cent jump in the digital currency’s value.
In the view of deVere’s CEO, May’s event could signify bitcoin’s coming of age. “It will, of course, drive prices higher – but, in my opinion, the jump could be even more impactful due to these unprecedented times,” he said.
Green continues: “Also, these unusual times have forced central banks to increase monetary supply. By printing never-seen-before amounts of money, traditional currencies are devalued and inflation fears rise.
He believes this will drive investors towards decentralised, non-sovereign digital currencies.
“I believe we can expect it to hit at least USD10,000 before the May event itself. Beyond that, we could see an explosion in the price of bitcoin due to real-world issues it addresses and increasing adoption,” said Green.
