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Investors turn to crypto funds, companies as Russia-Ukraine crisis escalates -Breaking

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© Reuters. In this March 4th, 2022 illustration, a representation of cryptocurrency can be seen behind the Russian flag. REUTERS/Dado Ruvic/Illustration

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters), Global investors seek to gain exposure in the cryptocurrency sector, which many think can withstand the fallout of the Russia-Ukraine war.

Fundstrat’s latest client note stated that venture capital buyers have invested approximately $4 billion into crypto in the past three weeks. According to data, VCs also contributed another $400 million last week to support start-ups within the sector.

A consistent weekly flow of VC capital is a sign that the VC investment has been successful. Fundstrat data revealed that weekly industry investments have ranged from $800 million up to $2 billion since the start of the year.

As of Friday, new crypto funds have raised almost $3 billion in the past two weeks. This is the highest amount so far this fiscal year.

Paul Hsu (founder and chief executive officer at Decasonic), a hybrid fund that invests in venture capital as well digital assets, said, “The conflict with Ukraine has weaponized the financial and digital economies and really accelerated Blockchain adoption.” His fund could be able to attract up to $200m in investment, he said.

Due to higher interest rates, we are witnessing a shift away from bond and real estate funds towards crypto and blockchain. I’ve seen this with my funds but unfortunately, because I’m closed-end, I cannot admit more funds nor investors,” Hsu said.

Refinitiv Lipper data revealed that U.S. bond fund investors pulled out a net $7.8 trillion in week ending March 9.

Net outflows from real estate funds were $707 million during the same time period. This is after outflows that totaled $1.15 trillion the previous week.

George Melka is chief executive officer for crypto broker SFOX. “Crypto native businesses are still raising very high valuations. Many funding rounds are still undersubscribed.” “In actuality, crypto startup values are likely to be the highest that I have seen.”

Bain Capital Ventures is an affiliate of Bain Capital and announced that it would launch a new $560m fund exclusively for crypto-related investments.

During the crisis, crypto assets outperformed stocks and other traditional risk-on assets. The ether saw an 8.8% increase and rose 12.2%, respectively. The digital currencies gained 13.5% and 14.5% respectively since the Russian invasion of Ukraine on February 24, while the rose only 3.2%

CAPITAL INFLOWS, HEDGE FUND RETURNS

According to CoinShares data, $163 million was spent on new institutional money for crypto investment funds in the week ending March 4. Inflows to blockchain equities totaled $15.6 million.

This year’s largest inflows were $127 millions. CoinShares data revealed that after five weeks of negative outflows in the sector, flows into crypto have turned around in January.

Returns on Crypto Funds have stabilized.

According to Monday’s data, the BarclayHedge crypto traders index fell 1.5% in February. There were 39 funds that reported, or 43%, of all the cryptocurrency asset managers it monitors. The index dropped nearly 13% in January and 10% in December.

Joe DiPasquale is the chief executive officer of BitBull Capital. He manages two hedge funds as well as a crypto fund.

BitBull’s two market-neutral hedge funds were up over the year, DiPasquale claimed. They had benefited from the rebound in bitcoin and Ethereum during February.

“People are setting up funds to help themselves, an encouragement by the recent price appreciation,” he stated.

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