Crypto venture funding has increased for the first time in nearly two years, following the strong rally in bitcoin prices. According to a report by PitchBook, venture funding for crypto-related companies in the fourth quarter of 2023 reached $1.9 billion, a 2.5% increase from the previous quarter. This marks the first rise in VC investments in crypto startups since the first quarter of 2022.
The increase in funding is a positive development for crypto entrepreneurs who have faced difficulties raising capital during the “crypto winter.” Venture funding for crypto firms declined significantly in 2022 due to a flight of investors from riskier assets and major collapses of crypto companies.
Notable fundraises during the fourth quarter included crypto exchanges Swan Bitcoin and Blockchain.com, which raised $165 million and $100 million respectively. The largest deal of the quarter was a $225 million investment in Wormhole, an open-source blockchain development platform, at a valuation of $2.5 billion.
The increase in venture funding can be attributed to the rise in crypto asset prices and public market valuations of crypto-related companies, such as Coinbase, Marathon Digital, and MicroStrategy. The rally in bitcoin prices, which doubled in the past 12 months, has also attracted interest from financial institutions.
PitchBook noted that the number of deals declined slightly in the fourth quarter, indicating a concentration of capital going into fewer companies in the crypto space. However, the overall increase in funding suggests a growing confidence in the crypto market and its potential for future growth.
