A16z fund pushes 2022 to new crypto record

With Andreessen Horowitz's $4.5 billion crypto fund, announced earlier this week, the amount raised by funds focused on the space has now officially notched a new record, less than halfway through 2022.

Why it matters: Crypto funds have more money than ever at a time when markets are souring on the asset class— meaning investors will have to take a different approach than in 2021, when everything was golden.

VCs now need to figure out "how are you going to deploy that much capital at a measured valuation?" says Pitchbook Analyst Robert Le.

• After the stunning pace of capital investment last year, one trend we may see in coming quarters: VCs slowing down and taking full advantage of the three-to-five years they have to put a fund to work.
• Yes, companies that were strong to begin with will continue to be able to raise. But this all also means more scrutiny for crypto startups with less traction that may have gotten funding much easier in 2021.

Bottom line: Record levels of fundraising doesn't mean crypto won't have to face the music.

• Le sees this crypto fund activity as a lagging indicator that will signal greater investments in the longer term. But a slowdown in the next few years or quarters does seem to be coming.
• The big question now for investors is how long a downturn lasts.