Private equity’s foray into cryptocurrency is waning after a tumultuous year for the digital asset class.
PE houses, venture capital firms and institutional investors deployed roughly $13.65bn into decentralized finance (DeFi) and cryptocurrency in 2021, marking almost a five-fold increase on the previous year, according to S&P Global.
However, the ratings agency said that investment hit a peak in the first quarter of 2022, reaching just over $5bn.
The second quarter saw investments slide to $2.94bn, marking a fall of nearly 42% from the previous quarter.
In the third quarter, investment then slipped to just under $1.58bn, and in the fourth quarter-to-date up to 15 December, the volume had fallen to around $918m.
“Investments continued to sink lower in the third quarter, a trend that appeared likely to hold in the fourth quarter,” S&P Global said.
The data comes as the cryptocurrency industry faces fresh uncertainty following the collapse of the crypto exchange FTX in early November.
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Private equity and VC investors including software buyout giant Thoma Bravo were among those that reportedly invested in FTX.
The Wall Street Journal reported that Thoma Bravo invested $130m in FTX Trading Ltd., the owner and operator of cryptocurrency exchange FTX.com, in July 2021, citing a person familiar with the matter.
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