The UK crypto and fintech industries saw investment dry up in the second half of 2022 amid a combination of turbulent macroeconomic conditions and record inflation.
Companies in the region completed a total of 591 fintech deals in 2022, compared to 724 in 2021.
The fintech trajectory
According to Bloomberg, the data It comes from a report published Wednesday by the Big Four accounting firm, KPMG. Their numbers show a drop of $22 billion in fintech investment in 2022 to just $17 billion, a 60% decline.
“The move highlights the shift in investor sentiment in the face of growing geopolitical challenges leading to a lack of IPO exits, downward pressure on valuations and market turbulence,” it said.
The drop reflects the roughly equivalent drop in total cryptocurrency market capitalization within that time, from more than $3 trillion in November 2021 to less than $800 billion in December 2022.
Fintech investment also seemed to dry up just as cryptocurrencies went into free fall last year. Karim Haji, a partner at KPMG, said the first half of the year saw many more investment deals than the second half.
“The move highlights the shift in investor sentiment in the face of growing geopolitical challenges leading to a lack of IPO exits, downward pressure on valuations and market turbulence,” it said.
Meanwhile, many of the biggest crypto blasts like CelsiusVoyager and Terra emerged in the middle of the year, leading to the infamous FTX crash in November.
The biggest draw among the UK’s fintech subsectors were payment firms, which soaked up $3.6bn of investment last year.
Worldwide, fintech companies raised $164.1 billion in more than 6,000 investment deals last year, up from $238.9 billion in 2021.
Crypto and Defi trajectory
Naturally, investments in specific crypto and blockchain companies have also fallen, from $30 billion in 2021 to $23.1 billion in 2022. Meanwhile, the value locked within Defi protocols has plummeted to $50 billion, below $50 billion. $180 billion at its highest point.
TO report of Pantera Capital published last month shows that VC investment in crypto companies fell more than 75% between the fourth quarter of 2021 and the fourth quarter of 2022.
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