Venture capital investments into the realm of crypto recently displayed a stumble as economic uncertainty sent trembles of apprehension through the investor community. According to data taken from the Cointelegraph’s Research Venture Capital Database, June concluded with a steep 29.73% drop in crypto VC deals. Indeed, a relatively meagre $779.32 million was raised across 62 individual deals.
This decline comes amidst halted interest-rate hikes by the United States Federal Reserve. Despite this fiscal measure, a cloud of geopolitical uncertainties and ongoing global campaigns to curtail inflation have maintained an unaltered macroeconomic climate. Consequently, investors remained guarded and risk-averse for the bulk of June, terminating the ascendant trend seen in VC investments over the preceding three-month period.
Nevertheless, this downturn may not necessarily reflect a bearish projection for the future of venture capital cryptocurrency investments. As evidenced by the overall upward trajectory seen thus far in 2023, there may yet be grounds for opportunistic positivity. The recent suite of Bitcoin exchange-traded fund (ETF) applications launched by finance heavyweights such as BlackRock, VanEck, WisdomTree and Fidelity has sparked renewed enthusiasm in the crypto market. Further propelling bullish hopes, Ripple recently claimed a legal victory over the US Securities and Exchange Commission. Thus, while VC investments subtly lag due to an inherent institutional inertia, these positive events incite immediate reactionary spikes in the crypto market.
Despite these fluctuations, blockchain infrastructure maintains a firm hold on the market share. Investor focus remained steadfast in June, with 20 individual deals corresponding to over $493 million in funding targeted at blockchain architecture. Interestingly, Web3 fell from VC favor in June, amassing approximately $107 million across 18 different deal agreements. As per Cointelegraph’s research, VC activity may continue to ebb and flow as it squares off against the overarching uncertainty within the broader global economic landscape.
In conclusion, while the downward tremble in VC funding for crypto could be seen as a cause for concern, it is paramount to appreciate the broader picture. Venture capital activity naturally functions with an inertia that causes subsequent reactions to market events. The broader, continuously rising trend coupled with impactful, prosperous blips such as the recent swath of ETF applications and Ripple’s legal victory may yet offset the prevailing economic uncertainties.
Source: Cointelegraph
