Crypto Biz: Smart Money is betting big on Web3, layer 2, May 19-25

Despite the apparent bear market in digital assets, venture capital continues to allocate billions to crypto and blockchain startups.

Billions and billions. That’s what venture capitalists are spending to get ahead of the curve in crypto. Their latest fixation is Ethereum layer-2 scaling solutions and Web3, an umbrella term that describes the next stage of the internet’s evolution. So, while the cryptocurrency market is in a state of extreme fear, smart money investors — TradFi folks who invest with expert knowledge — continue to pour countless sums into the space.

This week’s Crypto Biz newsletter gives you the latest funding stories from the world of blockchain and explores interesting developments surrounding Google and Sam Bankman-Fried.

Andreessen Horowitz closes $4.5 billion crypto fund amid market turmoil

The crypto market selloff of 2022 hasn’t deterred Andreessen Horowitz from pledging additional billions to crypto startups. This week, the venture capital giant, which also goes by the name a16z, announced the closing of its fourth cryptocurrency investment fund. Valued at $4.5 billion, a16z’s new fund is focused heavily on Web3 startups. Clearly, Andreessen is getting the money from interested parties who believe blockchain technology will transform the internet. So, you can keep reading doom-and-gloom headlines about the end of crypto as we know it. Or you can simply follow what the smart money is doing.

Announcing our fourth crypto fund, totaling $4.5B, to invest in promising web3 startups at every stage. This brings our total crypto/web3 funds raised to over $7.6B.

General Partner @cdixon shares more on https://t.co/xIezLlyDiC. https://t.co/Xc696Fu8UT

— a16z (@a16z) May 25, 2022

StarkWare nets $100M as investors bank on layer-2 success

Speaking of smart money, venture capital investors have given $100 million to Ethereum layer-2 developer StarkWare. Many crypto observers are excited about Ethereum’s chronically delayed Merge, but investors seem to think the network won’t be able to scale without a lot of support from layer-2 solutions. StarkWare is pushing for rollup technology that could significantly increase Ethereum’s transaction capabilities, which will greatly enhance the network’s functionality. Interest in layer-2s is just heating up and investors will look to back as many front-runners as they can.

Google seeks fresh talent to lead global Web3 team

Bear markets are tough, but don’t let them deter you from considering a career in crypto. Even Google, the data overlords of the internet, is hiring talent for its Web3 ambitions. Basically, the company is forming a Web3 team within its Google Cloud division and believes now is the time to increase support for “crypto-related technologies.” Those were the exact words — allegedly, of course — of Google Cloud vice president Amit Zavery. Web3 is no longer just about crypto, but its connection to the industry appears to be growing stronger by the day.

new: Google Cloud is forming a Web3 product and engineering organization that will build services for developers. new job postings have appeared on Google’s internal Grow tool, Amit Zavery is telling employees in an email today https://t.co/sLC8VlqgBf

— Jordan Novet (@jordannovet) May 6, 2022

Sam Bankman-Fried could spend up to $1B in 2024 to thwart Trump comeback

Just because Bitcoin is trading sideways, it doesn’t mean the crypto market is boring. Far from it, actually. How about this story: FTX founder Sam Bankman-Fried, also known as SBF, is prepared to spend up to $1 billion of his own money to thwart a Donald Trump comeback. I guess this means SBF will donate up to $1 billion to the Democratic Party during the 2024 election cycle. Although Trump hasn’t confirmed whether he will run again in 2024, the chances are high that he’ll take another kick of the can. If he does run, I don’t think anyone in the GOP can compete with him. SBF is taking this very seriously.

Before you go! When will stocks recover?

I’d love to tell you that Bitcoin is a premier inflation hedge that has completely decoupled from stocks and other so-called risk assets. Unfortunately, though, since the March 2020 Covid crash, Bitcoin and crypto have been highly correlated with stocks. If you want to gauge the likelihood of a crypto recovery in the short term, you need to look at what stocks are doing. In the latest edition of The Market Report, I sat down with fellow analysts Benton Yuan, Jordan Finneseth and Marcel Pechman to discuss the likelihood of a stock market recovery and what it means for Bitcoin. You can watch the full replay below.