TLDR:
- Crypto startup funding rose to $2.4 billion in the first quarter of 2024.
- Investor appetite was boosted by lower interest rates and the U.S. debut of a bitcoin spot ETF.
According to Pitchbook data, venture capital funding in the crypto industry increased to $2.4 billion in the first quarter of 2024. This marks a 40.3% rise from the previous quarter and follows a second consecutive quarter of growth. The rise in funding was fueled by lower interest rates and the launch of the first U.S. bitcoin spot ETF, which garnered significant investor interest.
Global venture capital investments, on the other hand, hit a near five-year low during the same period. Despite this, the funding for digital asset startups has been steadily increasing, albeit at a slower pace compared to previous years due to economic concerns and market player shutdowns. However, the approval of spot bitcoin ETFs in the U.S. by BlackRock and Fidelity provided a boost to the legitimacy of the asset class, resulting in bitcoin reaching a record high of $73,803 in March.
Startups focusing on developing infrastructure for crypto and blockchain technology received the most funding during the quarter. Notably, the largest deal was made by decentralized cloud platform Together AI, which secured $106 million in funding. Pitchbook analyst Robert Le mentioned that investment rounds are becoming highly competitive, especially at early stages, with early-stage deals receiving higher valuations than late-stage deals.
While exits in the crypto space remained relatively low, Le anticipates that mergers will increase later in the year, particularly among crypto exchanges, custodians, and infrastructure providers as the market matures.
