Cryptocurrency investment investing falls to a new low: report


  • Global venture capital investment in crypto fell to $2.6 billion in the first quarter of 2023.
  • This represents the lowest amount of capital invested since the fourth quarter of 2020.
  • However, certain sectors of the markets still attract significant investment.

macroeconomic factors Continue to influence the tech and cryptocurrency sector. Cryptocurrency investment (VC) saw a significant slowdown in the first quarter of 2023.

According to a recent report Pitch bookVenture capital invested a total of $2.6 billion across 353 deals globally, marking the lowest level of investment activity since the fourth quarter of 2020.

Despite the general slowdown, certain areas within the crypto sector have managed to attract notable investment. Layer 2 scaling solutions and encrypted custodial services have emerged as bright spots in a cloudy investment landscape.

Crypto L2s and Custody Services Attract Venture Investments

Despite negative trends in cryptocurrency investments, Layer 2 scaling solutions continued their momentum as of 2022. For example, Bitcoin scaling platform Blockstream raised $125 million to build. Mining infrastructure.

Scroll, Build a Knowledge-Free Ethereum Virtual Machine (zkEVM) Sizing solutionHe also secured a $50 million investment. In fact, the highlight of Pitchbook Proof of zero knowledge As one of the emerging opportunities in the field of cryptography. The report highlights that new technology enables blockchain networks to power private transactions.

Players providing cryptocurrency solutions have also been able to secure significant funding. Since the collapse of FTX, cryptocurrency preservation has been the main concern in the crypto space. Hence, Ledger, who is in self-custodial custody hardware wallet The company, has raised a whopping $493 million in a Series C round. Another player in the janitorial services business, Taurus, pulled $65 million from the second round.

Crypto venture capital has seen subdued project exits

Despite a slowdown in deal activity, valuation trends in the first quarter of 2023 were mixed. Seed rounds were up 33.3% and late-stage rounds saw a whopping 209.2% increase compared to the whole of 2022. However, early-stage rounds saw a 16.7% decrease.

On the other hand, the projects’ exits remained suppressed. The only notable exit was the acquisition of crypto payments streaming platform Streami by Binance.

on the flip side

  • The Pitchbook team suspects that the increase in late-stage ratings may be skewed by selective disclosure practices. They speculate that enterprising firms only reveal rounds or rounds that increase valuations. At the same time, the privacy of the lower rounds is preserved.
  • Currently, the main goal of zkEVMs today is to scale Ethereum, not to enable privacy. However, Pitchbook believes this will change in the near future.

Why should you bother

Venture investing is an important source of capital that fuels innovation in the cryptocurrency space. Less capital means less money for upcoming crypto projects that could shape the industry in the coming decades.

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