Crypto Venture Capital Activity Revives in 2024, Signals Renewed Investor Optimism
Summary:
In early 2024, the cryptocurrency sector saw a resurgence of venture capital (VC) activity, hinting at renewed investor optimism. Chainalysis' "The 2024 Crypto Spring Report" revealed Q1 2024 as the first period of increase in crypto investment since early 2023. Several large deals occurred in 2023 and 2024, with blockchain interoperability initiatives Wormhole and Together.ai being noteworthy contributors. The sector also saw Bitcoin reach a record high of $73,600 in mid-March 2024, due in part to the US launch of spot Bitcoin exchange-traded funds.
The cryptocurrency sector has experienced a surge in venture capital activity in the early part of 2024. This has been interpreted as a possible sign of renewed investor enthusiasm after the previous bear market. As revealed in "The 2024 Crypto Spring Report" published by Chainalysis, the first quarter of 2024 saw the first sequential rise in cryptocurrency investments since early 2023. These dynamics could indicate a fluctuation in the crypto industry's investment landscape.
In 2023, we observed a considerable downturn in the capital cryptocurrencies raised, spurring a crypto winter that began in 2022. Cryptocurrency funding volumes, after approaching $10 billion in Q4 2022, plummeted to below $2.0 billion in Q2 2023.
However, in Q1 2024, cryptocurrency venture capital volumes started to inch up for the first time since 2022, just about reaching $2.5 billion. Concurrently, the median transaction size has seen a rebound since a sharp drop in Q4 2022, steadily remaining close to $10 million.
Despite a general downturn in crypto VC activity in 2023, several noteworthy deals exceeded $100 million, including early-stage transactions in Q3 2023 and Q1 2024. Chainalysis reported the largest deals were chalked up to blockchain interoperability initiatives Wormhole and the Decentralized Physical Infrastructure Network (DePIN), known as Together.ai.
In November 2023, Wormhole, the cross-chain protocol, raised $225 million at a $2.5 billion valuation, while Together.ai also collected $225 million, as per the report.
In late 2023, Swan Bitcoin, a platform for crypto asset management and taxes, secured a $165 million investment. Additionally, Blockchain.com, a prominent cryptocurrency exchange service, received $110 million in funding in November 2023.
Totter, an open-source cloud storage platform, and the Ethereum protocol EigenLayer, also emerged on Chainalysis' list of significant VC deals, raising $101 million and $100 million, respectively.
This rise in VC deals in cryptocurrency coincides with the significant rise of the cryptocurrency market in early 2024, with Bitcoin (BTC) reaching a new all-time high of $73,600 in mid-March. This surge was mainly attributed to the launch of spot Bitcoin exchange-traded funds in the United States in January 2024.
Published At
4/25/2024 5:00:13 PM
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