TLDR:
- Venture capitalists invested nearly $3.2 billion in the crypto sector in Q2 of 2024, according to Galaxy Digital.
- Deal count slightly decreased from Q1, but capital invested rose, indicating significant competition and FOMO among investors.
Venture capitalists pumped nearly $3.2 billion into the crypto sector in the second quarter of 2024, according to Galaxy Digital. The researchers at the crypto firm noted that the digital asset venture capital market rebound that started in the first quarter continued through April, May, and June. The deal count dipped slightly quarter on quarter, decreasing from 603 in Q1 to 577 in Q2, while capital invested rose from $2.5 billion in Q1 to $3.2 billion in Q2. The median deal size increased slightly from $3 million to $3.2 million, with the median pre-money valuation surging dramatically to near all-time highs, rising from $19 million to $37 million. This suggests that despite a lack of available investment capital compared to previous peaks, the resurgence of the crypto market is leading to significant competition and a fear of missing out (FOMO) among investors.
The researchers also note that overall venture capital interest in the sector remains low compared to Bitcoin’s previous trading period above $60,000 in 2021-2022. This has led to a weakening correlation between Bitcoin price and investment in crypto startups. Various crypto-native catalysts and challenges in the industry, including regulatory issues and macroeconomic factors, have contributed to this divergence. However, the researchers suggest that allocators may be preparing to return due to the resurgence of liquid crypto, potentially leading to increased venture capital activity in the latter half of the year.
Overall, the analysis by Galaxy Digital indicates a strong rebound in venture capital investment in the crypto sector in Q2 of 2024, driven by increased capital invested, competition among investors, and a potential uptick in activity in the coming months.
