The chilly winds of the crypto winter are proving that bitcoin is not, as some hoped, a haven. The downturn in cryptocurrency prices is running in parallel with the sell-off in tech stocks. The 60-day correlation between bitcoin and the Nasdaq Composite index is at an all-time high, according to Arcane Research. Yet crypto start-ups are in line for more funding.
Rising interest rates and fears of recession have hammered demand for digital assets. Collectively, the crypto market has halved in value since the high point last November, according to figures from data aggregator CoinGecko. Scams and the collapse of supposedly stablecoin Terra have lowered investor confidence too. Crypto remains difficult to use, despite payment companies like PayPal offering it as an option.
However, private fundraisers are still looking to invest. There are now 62 crypto-focused unicorns worth $1bn or more, up from 49 at the end of 2021, according to CB Insights. This week, famed Silicon Valley venture capital firm Andreessen Horowitz announced that it had closed a new $4.5bn crypto fund. Money can be used for start-ups or tokens. Never mind that prices are crashing, a16z (as Andreessen is known) says downturns breed innovation.