TLDR:
- Bitcoin closed the 7th month with a green candle, marking a successful Q1 for the crypto world
- Venture capital (VC) investments in crypto saw a resurgence in Q1, reaching over $2.5 billion
In Q1 of 2024, the crypto world experienced significant growth and activity in the venture capital landscape. Bitcoin closed the 7th month in a row with a green candle, the most in 13 years. This success was reflected in the increasing institutional involvement with BlackRock’s tokenized fund raising over $250 million. Despite this positive momentum, VC investments in crypto remained relatively low compared to their 2021 highs. Investors allocated over $2.5 billion in Q1, marking a 25% increase compared to the previous quarter. However, this total still fell short of the high benchmarks set in 2021 and 2022.
The lingering effects of events like Terra and FTX may have contributed to muted funding in the space. FTX, Alameda Research, and Three Arrows Capital all saw a decline in their VC activities, impacting the availability of early stage financing in the industry. Limited partners also seem apprehensive about investing in crypto VC funds, as many 2021-originated funds have yet to pay back capital to investors. The shift towards liquid token funds may have diverted some investments, as they offer faster returns and more liquid exposure.
Despite these challenges, there are success stories in the crypto space. Merkle Manufactory, the developers behind Farcaster, are raising more funding with the goal of becoming crypto’s next $1 billion unicorn. Farcaster has seen significant growth in daily active users and has introduced unique features like the token Degen, which has seen a 25x increase in users since the start of 2024. The launch of Degen’s own chain and the rise in its token value highlight the potential for success in the industry. However, challenges remain in retaining users and achieving sustained growth in the upcoming quarters.
