The year 2023 saw a significant resurgence for the crypto industry, which has now caught the attention of venture investors once again.
According to PitchBook, venture funding for companies related to crypto reached $1.9 billion in the fourth quarter of 2023, marking a 2.5% increase from the previous quarter.
This is the first time since March 2022 that VC investments in crypto startups have shown an upward trend. This is uplifting news for crypto entrepreneurs who have faced challenges raising funds during the “crypto winter” of the past few years.
The sharp decline in venture funding for crypto firms in 2022 resulted from rising interest rates from central banks, causing investors to shy away from high-risk assets like tech stocks and cryptocurrencies.
Moreover, major collapses of crypto companies, including Do Kwon’s controversial algorithmic stablecoin Terra and Sam Bankman-Fried’s FTX, further added to the difficulties faced by crypto ventures.
Prominent venture funds such as Andreessen Horowitz, Sequoia Capital, and Tiger Global also suffered from the downturn in crypto deals, with some even having to write off their entire stake, as seen in the case of FTX.
However, with the rise in crypto asset prices and public market valuations of related companies like Coinbase, Marathon Digital, and MicroStrategy, the worst seems to be over for crypto venture funding.
In the last 12 months, the price of Bitcoin has more than doubled, currently standing at over $52,000. Similarly, the stock of Coinbase has also seen a significant surge, recording a 140% increase year-over-year.
