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Crypto firms engage in aggressive fundraising to boost valuations
Cryptocurrency startups are reportedly engaging in aggressive fundraising as the digital asset space recovers.
As Bloomberg News reported on Saturday (May 4), this approach leads to an indefinite conclusion form of fundraising which keeps the money flowing and speeds up valuations. It’s the opposite of the standard venture capital strategy of low-profile rounds spaced out over years.
“When a deal is oversubscribed, it becomes more and more common to see this type of structure,” he said Michele Enricoco-founder of 0G laboratories, a blockchain startup focused on decentralized artificial intelligence (AI). “Investors are still willing to pay higher prices because this is seen as a sign of success in the market, even if in rapid succession.”
Crypto firms faced an uphill battle to secure funding last year, following the “crypto winter” of 2022, marked by a market downturn on several high profile criminal cases.
Since then, digital asset prices have seen a recovery, with the value of bitcoin – the most popular cryptocurrency – more than doubled in the last year. Bloomberg’s report claims that although last month’s token sell-off shows the volatility of the cryptocurrency sector, the overall market is in a better position than in the recent past.
Against this backdrop, companies are re-embracing the idea of crypto payments, as noted here in separate reports over the past couple of weeks. For example, CoinBase – the largest cryptocurrency exchange in the US – said payments have emerged as a key area of opportunity.
“[We’re] cryptocurrency guide utility,” CEO Brian Armstrong he said on a recent earnings call. “We are doing this through Base, our low-cost Layer 2 solution, and building a better payment experience on crypto rails.”
“Base has helped dramatically reduce transaction fees and confirmation times, bringing us closer to our goal of making the average crypto transaction take less than a second and cost less than $0.01 anywhere in the world,” he added .
And at the end of April, Band announced that it would be re-entering the cryptocurrency payments space after a six-year hiatus.
“Cryptocurrencies are back” John Collisonthe company’s president and co-founder said during a company keynote titled “The Future of Payments.”
“We are thrilled to announce that we are bring back cryptocurrency as a way to accept payments, but this time with a much better experience,” he said.
Collison went on to say that Stripe will begin supporting global stablecoin payments this summer, with transactions settling instantly on-chain and automatically converting to fiat.
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