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As Bitcoin's trading price surged to new historical highs, venture capital investments in the cryptocurrency sector are making a comprehensive comeback, with venture capitalists worldwide re-entering the cryptocurrency arena. The latest data shows that after a "brutal" year for cryptocurrency and blockchain-related companies, venture capital investment in the industry increased by nearly one-third compared to the previous quarter (Q4 2023). Global venture capital funds are refocusing on the cryptocurrency market, often signaling a comprehensive return of risk appetite for this market.
Statistics from PitchBook reveal that in the first quarter of 2024, the total venture capital investment received by cryptocurrency startups reached approximately $2.5 billion, marking a significant 32% increase from the previous quarter and remaining largely consistent with the investment volume from the same period last year. Meanwhile, cryptocurrency startups are raising more funds, and venture capital firms are simultaneously launching new digital asset funds.
"Investors are spending money again," says Robert Le, a cryptocurrency analyst at PitchBook. "For over a year, or about 18 months, they've been in a holding pattern with the funds they've raised."
Le indicates that the current resurgence of enthusiasm from venture capital firms for the cryptocurrency sector is partly due to the approval of Bitcoin exchange-traded funds (ETFs) by the SEC in January, as well as a growing interest in the intersection of cryptocurrency and artificial intelligence. During the downturn in the cryptocurrency market at the end of 2023 and in 2022, venture capital firms were generally hesitant to tap into the funds they had raised during the previous cryptocurrency bull market. However, this situation has noticeably changed this year.
The surge in cryptocurrency venture capital is accompanied by the global risk-taking activities of cryptocurrency startups.
Anand Iyer, managing partner of the early-stage venture capital fund Canonical Crypto, notes a significant uptick in financing activities in the cryptocurrency sector over the past few months. He points out that some founders of cryptocurrency startups currently raising funds are not newcomers to the industry. "In fact, they've created some unsuccessful things in the last cycle," says Iyer.
Some early features of cryptocurrencies that were prominent in the previous bull market are also making a comeback. "For example, the recent memecoin frenzy bears similarities to past waves of excitement," says Iyer. "Sites like Pump. It's interesting enough that anyone with internet access can create tokens inspired by animals, pop culture, or almost any other theme." "They're fun, but cryptocurrency is a culture."
Meanwhile, some well-known investment firms in the venture capital field are focusing on signs of maturity in the industry.
John Lo, managing partner responsible for digital asset investments at Recharge Capital, who previously held leadership positions at the decentralized cryptocurrency exchange Sushi under the pseudonym "Omakase" and even used anime character filters to disguise his identity during a webinar. While Lo acknowledges that some teams are still raising enough funds anonymously, he considers this trend a nostalgic "remnant faction" of past crypto cultures. Instead, he and his team are excited about the impact of global traditional financial institutions diving deeper into the cryptocurrency sector, such as the world's largest asset management firm, BlackRock, and Fidelity entering the Bitcoin ETF space, with these Bitcoin ETFs receiving SEC approval as proof of this trend. "We're seeing levels of Bitcoin use and adoption that we've never seen before."
Meanwhile, there is still room for improvement in the cryptocurrency market. Recharge focuses on supporting cryptocurrency startups that can build better cryptocurrency infrastructure and make the industry more attractive to investors. "Cryptocurrency is still in a very early stage," says John Lo.
In a recent research report released by JMP Securities, a well-known Wall Street investment firm, it is estimated that over the next three years, Bitcoin spot ETFs could see inflows of up to $220 billion. This implies that if the multiplier is applied to new capital calculations, the price of Bitcoin could double to $280,000. Bullish sentiment towards Bitcoin on Wall Street has been growing louder recently, with Standard Chartered Bank forecasting Bitcoin to reach $100,000 by the end of this year, and hedge fund SkyBridge predicting Bitcoin to reach $170,000 by April 2025. |
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Post time 18-4-2024 12:14:28