Cryptocurrency investment plunges by 68% in 2023!

Ritu77

According to TheBlock data, in 2023, venture capital firms invested only $10.7 billion in cryptocurrency and blockchain startups, a drastic 68% drop from 2022's $33.3 billion. Despite this, 2023 still ranks as the third-highest year for venture capital investment, following the previous year, which was the highest. The investment in 2023 also surpassed the combined investment of $6.4 billion in the bear market years 2019 and 2020. Most investments in 2023 occurred in the first half, with a slight increase in November, but an overall decline in the second half.

Abhishek Saxena, the CEO of Polygon Ventures, stated that the sharp decline in investment in 2023 was not surprising, considering factors such as the macroeconomic environment, regulatory uncertainty, and industry company defaults. However, many investors and company founders were still surprised by the force of the fund withdrawal. Nevertheless, this is seen as a healthy and necessary adjustment, allowing the industry to self-assess and refocus on critical priorities.

The number of transactions in cryptocurrency venture capital decreased in 2023, totaling 1,819 transactions, a 32% reduction from 2,671 transactions in 2022. Overall, the number of transactions in 2023 remained higher than the monthly transaction volumes in 2020, and it was close to the levels seen in 2021.

Regarding investment stages, the majority of funds in 2023 flowed into seed and pre-Series A funding for early-stage startups, with relatively lower investment activity in mid and late-stage startups, aligning with the trend observed in 2022.

In terms of investment areas, 2023 witnessed robust investment in NFTs and the gaming sector, with significant attention also directed towards infrastructure and the Web3 sector. Compared to previous years, venture capital investment in the cryptocurrency industry seems more diversified.

Looking ahead, cryptocurrency venture capital anticipates a substantial increase in financing and transactions in 2024, aligning with recent trends in the cryptocurrency market and the bullish outlook for the future market.

Ritu13

If it's strong, that's the best.

Kahn332

What should we do after such a significant reduction in just one year?

Jafar224

There always has to be a peak in investment amounts, right?