The prolonged stagnation in the cryptocurrency market, heralded by the advent of the ‘crypto winter’ in 2022, is yet to witness its belated spring. Recent data by FundStrat, a renowned analytics company, points out a consistent contraction in venture capital funding for crypto companies, with the latest quarter (Q3 2023) managing to gather only $1.4 billion. The decline has followed the trend for six consecutive quarters with approximately 30% fewer deals, a 90% shrink from Q1 2022, the period just after some cryptocurrencies reached record figures.
On the sunnier side, despite the shrink in past 18 months, the numbers are still higher in comparison to the period from 2018-2020. A fact that indicates that the initial interest in the crypto market witnessed in the recent cycles isn’t entirely fizzled out. Speaking of potential tailwinds for the dying fire, FundStrat suggests favorable chances for spot Bitcoin ETF approval along with expected monetary loosening in the US could reignite interest in 2023.
In the declining market, crypto infrastructure companies formed the bulk of the investment garnered, with $586 million raised in 79 deals. However, the dominance faded from the previous two quarters. Some market experts believe the big-ticket funding round, such as the one which helped Flashbots achieve unicorn status, seem to increasingly rely on only a select few potential backers.
On another front, the sector of Web3 and NFTs raised an impressive $325 million over 55 deals. The growth trajectory, especially for social apps like friend.tech, seems to provide an optimistic trend. As newer content creation formats arise, content creators’ intellectual property becomes a significant player. Player rehabilitation firms like Sound.xyz, who managed to raise $20 million led by Andreessen Horowitz, are bridging this apparent gap by creating newer ways to capitalize content.
The first half of 2023 was a struggle for CeFi, following the notorious failure of the centralized cryptocurrency exchange FTX. However, VC interest in CeFi saw a revival trend in Q3, making it the market’s third most funded category. A significant chunk of this revival can be attributed to the $100 million investments secured by crypto custody firm BitGo.
On an ending note, investors seeking to diversify their crypto portfolios are advised to look beyond regular players like Bitcoin (BTC) and Ether (ETH). Opportunities in crypto presales, where tokens from innovative crypto initiatives are bought can offer high-risk-high-reward strategies. Cryptonews, a popular information hub, has provided thirteen potential presales for consideration.
Although readers need to bear in mind, investment in any form is risky, but crypto, in particular, carries considerably high risks. This article is for information, not investment advice. The high risk in crypto asset class could lead to a total loss of your capital.
Source: Cryptonews
