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TLDR:
- Venture capital (VC) funding in the cryptocurrency sector has noticeably increased in the first quarter of 2024, ending a two-year downturn.
- According to a report by Crypto Koryo, funds invested shot up by 38%, while the number of projects receiving investments rose by 49% in Q1 2024 compared to Q4 2023.
The cryptocurrency industry has witnessed a significant shift in venture capital funding, marking an end to a two-year period of decline. Crypto Koryo, a data analysis platform, has observed a substantial rise in both the total funds invested and the number of projects that secured venture capital backing in the first quarter of 2024, setting a positive tone for the sector’s investment landscape.
Data from Crypto Koryo revealed a 38% surge in the funds invested during the quarter, while the number of projects that secured funding climbed by 49%, levels that had not been seen since the fourth quarter of 2021. This remarkable increase in funding could potentially signal the beginning of a new growth phase within the crypto space, reminiscent of the patterns observed in the last quarter of 2020, which preluded significant venture capital investments in subsequent periods.
Diving deeper into the specifics of the investment trend, Crypto Koryo’s report pointed out an important shift in the nature of the investing entities. Unlike prior quarters, where banks and non-crypto venture capitalists predominantly facilitated the injections of capital, the early months of 2024 saw crypto-centric venture firms leading the charge. Notably, heavyweight crypto-native venture capitals such as Andreessen Horowitz Crypto, OKX Ventures, Multicoin Capital, Paradigm, and Polychain dominated in terms of funds invested during the quarter.
The month of March was particularly active, with crypto venture capital funds pouring over $1.1 billion into 180 separate investments, marking a 52.5% increase from the month prior. A significant portion of these investments were directed towards projects in infrastructure and decentralized finance (DeFi), signifying investor confidence in these domains. This uptick in venture capital interest aligns with the gentle upswing initiated in Q4 2023 when compared to Q1 2023; this increase represented the first rise in crypto project funding since March 2022.
The 2022 calendar year proved challenging for the cryptocurrency industry, with a downturn in venture capital funding coupled with less-than-favorable market conditions. The continuous quarterly declines in venture capital investments painted a bleak picture. However, the fresh data for Q1 2024 suggests a changing tide and an optimistic outlook for venture capital involvement in the cryptocurrency ecosystem as a whole.
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