We note that investors’ faith in digital assets could soon begin to recover. This is due to the changing attitudes towards crypto in China. The day before, it was announced that it will be legal to own and actively trade cryptocurrencies in Hong Kong in the summer of 2023. Well, clear regulations could be the key to popularising crypto and blockchain platforms.

This is especially true given the behaviour of US regulators, who are now actively creating problems for various blockchain companies. The Kraken exchange has been among the latest to do so. Not only has it paid a $30 million fine, but it has also shut down its stacking platform for US citizens.

How much is invested in cryptocurrencies

Investment in the industry peaked in the first quarter of 2022, with institutional investors investing around $11.3 billion during that period. The next three quarters have seen a steady, strong decline: the figure was $7.9, $5.6 and $3.7 billion, respectively.


It is important to note that in early 2022, the fact that a prolonged bear market was not evident, so many big players were indeed investing in digital assets. The assumption at the time was that the market would be in a short-term downturn and then rebound to new records, with the latest one for Bitcoin set in November 2021.

In addition, some prominent crypto-industry representatives continued to insist that no major and prolonged period of collapse should be expected. The argument in favour of this version is that digital assets have developed and become too popular.


For example, Emin Gun Sirer, founder and CEO of Ava Labs, denied the version of the onset of a bearish trend. Back on April 9, 2022, he published the following retort.

I keep saying that the deep bearish trends that traders are used to are not going to happen anytime soon. But that’s OK, keep missing the serious bounces.

According to Cointelegraph sources, the fourth quarter was the worst performance period of the year. During it, there were 481 deals with large investors. By comparison, there were almost 25 per cent more deals in the third quarter.

The all-time record for this indicator was set in the first quarter. It amounted to 692 deals.

Blockdata experts pointed to several factors that led to the downtrend. One is the collapse of the Terra ecosystem last May. Recall that the drop in the value of the LUNC token to nearly zero led to tens of billions of dollars in losses for investors. Because of this, co-founder Do Kwon was sued by the US Securities and Exchange Commission in mid-February.

Another negative development was the bankruptcy of cryptocurrency exchange FTX in November, which made many investors doubt the prospects of digital assets in general. Already after the trial of the platform’s former CEO Sam Bankman-Friede began, it became clear that FTX had lost its financial strength long before the bankruptcy was officially declared.

In addition, the collapse of FTX caused serious reputational damage to the crypto industry – especially among US politicians. Still, Sam actively sponsored both political parties in the US to promote his interests. He also gave a speech in Congress, after which he essentially received special treatment from some officials.

Blockdata notes that the volume of transactions in 2022 will increase by 35 per cent compared to 2021, which is a positive development. The analysts suggest that even though venture capital investment is declining, major market players are still looking for ways to fund blockchain-based technologies, applications and startups.

The report also notes that venture capital investment is shifting towards “nonvolatile innovations” – crosschain bridges, payment systems, decentralised finance, decentralised autonomous organisations, and asset management and digital identity systems.


Over time, we believe investor faith in the digital asset industry will resume. As absurd as it may sound, that will require waiting for coin prices to rise. The ultimate confidence in the future of crypto will be restored when Bitcoin and other popular coins hit their all-time highs. As events in the past have shown, that is what usually makes newbie investors get involved in the market.