According to a PitchBook analysis, venture funding for businesses involved in the cryptocurrency space reached $1.9 billion in the fourth quarter of 2023, up 2.5% from the previous quarter. For the first time since March 2022, venture capital (VC) investments in cryptocurrency businesses have increased, the main areas of focus for the large cryptocurrency businesses that are able to secure funding are technology and financial solutions. Creating decentralized computer infrastructure and tokenizing physical assets like stocks and real estate on the blockchain are two examples.
Blockchain.com and Swan Bitcoin, two well-known cryptocurrency exchanges, raised $100 million and $165 million in funding during the quarter.
The quarter’s biggest transaction was a $225 million investment in the open-source blockchain development platform Wormhole. With funding from ParaFi Capital, Coinbase Ventures, and Jump Trading, the company was valued at $2.5 billion.The quarter’s biggest transaction was a $225 million investment in the open-source blockchain development platform Wormhole. With funding from ParaFi Capital, Coinbase Ventures, and Jump Trading, the company was valued at $2.5 billion.
According to a PitchBook article, the introduction of the first spot Bitcoin exchange-traded funds (ETFs) in the US in January is what’s responsible for the financial institutions’ growing interest in cryptocurrencies.
According to PitchBook’s Q1 Crypto Report, cryptocurrency companies raised $2.6 billion in 353 financing rounds in the first quarter of 2023. According to the research, there was a 12.2% drop in overall deals and an 11% loss in deal value from the prior quarter. In addition, the quarter saw the least amount of capital investment in the field since 2020.
In 2022, the cryptocurrency sector encountered problems, as seen by a decline in venture capital funding for the blockchain and cryptocurrency industries. After reaching a peak of $11 billion and 692 agreements in the first four months of 2022, venture capital investment fell steadily in the following quarters.The demise of the Terra ecosystem in May 2022, which resulted in the bankruptcy of cryptocurrency loan companies Three Arrows Capital and Celsius, was one of the many reasons that contributed to a decline in VC funding for blockchain and cryptocurrencies in 2022. In addition to broader global economic problems like rising interest rates and inflation, the collapse of the FTX in November 2022 also made markets more volatile. Venture capital investments also declined as a result.
The cryptocurrency market had a resurgence in 2023, with reports of widespread acceptance and the entry of significant traditional financial organizations like BlackRock.