- Crypto-related VC funding experiences a 2.5% rise from the previous quarter.
- The launch of the first spot Bitcoin ETFs in the US in January was a major factor that increased the interest.
Crypto-related VC funding increased to $1.9 billion in the fourth quarter of 2023, a 2.5% rise from the previous quarter. This is the first time since March 2022 crypto-related VC funding has increased. This increased interest in crypto funding is due to the launch of the first spot Bitcoin ETFs in the US in January.
The main crypto ventures that received funding in the quarter are in financial and technological sectors. The companies included tokenizing real-world assets on the blockchain, like real estate and stocks, and building decentralized computing infrastructure.
Some notable fundraises in this period involved crypto exchanges Swan Bitcoin and Blockchain.com, which respectively raised $165 million and $100 million.
The biggest deal is secured by Wormhole, an open-source blockchain development platform. It bagged a whopping $225 million investment. Wormhole is backed by Coinbase Ventures, Jump Trading and ParaFi Capital, and has reached a valuation of $2.5 billion.
Crypto-related VC funding trends
The crypto business encountered challenges in 2022, with economic challenges resulting in lower venture capital funding for the blockchain and crypto industries. After hitting a high of $11 billion and 692 transactions in the initial four months of 2022, VC investment fell gradually in the subsequent quarters.
The collapse of the Terra ecosystem in May 2022 has been one of the major factors that contributed to the decline in crypto and blockchain-related VC funding in 2022. This led to the bankruptcy of cryptocurrency lending firms Three Arrows Capital and Celsius.
Subsequently, the collapse of the FTX in November 2022 intensified market volatility. Venture capital investments were also impacted by larger global economic concerns including inflation and increasing interest rates.
In the first quarter of 2023, crypto firms raised $2.6 billion in 353 investment rounds. 11% drop in deal value and a 12.2% drop in total deals from the previous quarter. Moreover, the quarter marked the lowest capital investment in the space since 2020.
However, in subsequent quarters of 2023, the cryptocurrency market took a turn for the better, with widespread acceptance and the entry of significant TradFi institutions like BlackRock.
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