New research from KPMG notes that crypto firms will be forced to lower their valuations to stay afloat in 2022.
What happened: Alexandre StachtchenkoHead of Blockchain and Crypto Assets at KPMG, said in a recent report, “Looking ahead, we will see some cryptos drop their valuations and work to raise money because it’s their only option.”
“They’d rather raise money and be capitalized at a lower valuation than not and risk extinction,” Stachtchenko added.
The consulting firm noted that the value of crypto deals fell to $14.2 billion in 2022, well below the record-breaking $32.1 billion in blockchain and investment activity in 2021.
Still, the level of investment activity in 2022 far exceeds what was seen in 2019 and 2020, underscoring the “growing maturity of the space,” KPMG said.
Crypto companies with healthy risk management policies are more likely to survive in 2022 than others, Stachtchenko noted.
“Of course, some cryptos will die out — particularly those that don’t have clear and strong value propositions. That could actually be quite healthy from an ecosystem perspective, because it will clean up some of the chaos created in the euphoria of a bull market,” he said.
See also: IS BITCOIN A GOOD INVESTMENT?
Price promotion: The crypto market saw a 5% drop in the last 24 hours. At the time of writing, Bitcoin BTC/USD was trading at $18,826, down 6.5% and ether ETH/USD was trading at $1,536, down 8% from the previous day.
