Morgan Stanley notes that the number of investments in the digital asset industry remains high

Analysts at Morgan Stanley have published a report stating that the number of venture capital deals in the crypto market is quite high, despite a serious correction.

The peak of such transactions occurred in December 2021. But experts assume that activity in this direction will fall by 50% by the end of 2022, given the trends in other areas of the venture capital industry.

“Investing in tokens and stocks becomes more problematic during a bear market. A similar pattern was observed in 2018 and 2019,” the experts noted.

In their opinion, the main prerequisite for the growth of venture activity in 2021 was “abundant dollar liquidity” and high rates of digital assets. According to open data, more than 1800 transactions were concluded, which is 160% more than the average value for the same period.

Analysts pointed out that at the beginning of 2020, the bulk of the funds were invested in infrastructure projects and financial platforms. At the end of the same year and until the middle of the previous year, there was a hype around DeFi projects. And since the end of last year, investors have shown interest in NFTs and gaming projects.

Earlier, Morgan Stanley said that the recent collapse of Terra will not have a serious impact on the state of the digital currency industry. Also, analysts are confident that the crypto winter will be short-lived due to the interest of venture investors. They believe that if this trend continues, the prospects for the industry will remain “rosy”.

“After the collapse of Terra, there are no signs of a suspension of venture capital funding. $4 billion of the $25 billion accumulated since the beginning of the year came from this incident. We believe that a repeat of the 2018–2019 crypto winter is only possible if the flow of funding dries up,” the analysts said.

Do you agree with the Morgan Stanley experts’ opinion?