By CCN.com: Mike Novogratz, a billionaire venture capital and avid cryptocurrency investor, is reportedly raising $250 million to support crypto businesses.
According to a Business Insider exclusive report, sources close to the company have revealed that Galaxy Digital is in the process of securing $250 million to establish a credit fund to finance crypto funds struggling to deal with the long-lasting bear market.
Since January 2018, the valuation of the crypto market has dropped from over $800 billion to $119 billion, by more than 85 percent.
As the valuation of tokens and small market cap projects declined, naturally, it became increasingly difficult for companies in the cryptocurrency space to raise funding from venture capital and individual investors.
To assist struggling companies in the crypto industry to survive the bear market, which is en route to become the longest correction in the ten-year history of the cryptocurrency market, Galaxy Digital established an initiative to raise $250 million to fund cryptocurrency businesses.
The initiative of Galaxy Digital and Mike Novogratz comes in a time during which even the largest and most profitable companies in the cryptocurrency sector are laying off employees to adjust to market conditions.
ConsenSys, Bitmain, Coinbase, and many other companies have laid off employees and executives in the past several months with the intent of focusing on their core businesses.
In November of last year, Novogratz acknowledged in an interview with FT that it is challenging to build a business in the bear market. The past year has been especially hard for startups in the cryptocurrency space that aggressively expanded, assuming the growth rate in the bull market of 2017 to be sustained throughout the years to come.
Novogratz previous said:
2017 was just fun, it was almost stupid. [But] this year has been challenging. It sucks to build a business in a bear market.
If Mike Novogratz and the team at Galaxy Digital completes the $250 million round, it will establish a positive sentiment in the cryptocurrency sector.
Several major financial institutions in the likes of Nasdaq and Fidelity have invested tens of millions of dollars in the last three months with the long-term outlook of the crypto space in mind.
CCN.com reported in December that ErisX, a regulated cryptocurrency futures market-based in the U.S., raised $27.5 million from the venture capital arms of Nasdaq and Fidelity.
At the time, ErisX CEO Thomas Chippas stated that the company has seen increasing financial support from leading companies in the U.S.
“With increasing financial support from leading-edge firms, ErisX stands to provide the most robust, secure and regulated digital asset offering available to both institutional and individual participants. Closing this second round of funding enables us to continue building our modern platform and expand our team,” he said.
Blockchain projects are regularly securing funding rounds from high profile venture capital firms and leading financial institutions are engaging in multi-million dollar deals to finance up-and-coming cryptocurrency businesses.
While the price of major crypto assets including Bitcoin remains down substantially since January of last year, the developments in the cryptocurrency sector could serve as an indicator for the strong long-term trend of the space.
Mike Novogratz image by Evan Agostini/Invision/AP.
Last modified: August 2, 2020 11:04 AM UTC