Venture capital investments in cryptocurrency companies have plummeted over 70% over the past 365 days, according to information published by RootData, a crypto data provider. During the month of June 2022, the digital asset space received $1.81 billion in 149 rounds, whereas this year, only 83 projects registered $520 million—the lowest funded month to date.
The RootData numbers show a clear downtrend for VC’s interested in the digital asset space, despite several in-between months that managed increases. September 2022 was the highest on record, for example, with $1.85 billion in funding, investing in a second-best 138 rounds. And June last year had the most recipients, with 149 rounds.
Crypto fundraising trends. Source: RootData
According to the data platform, the infrastructure category leads the way, with $213 million in funding last month for 26 projects. This still represents a nearly 50% drop from the previous month, in which 28 projects received $410 million.
Gensyn AI, a UK based startup was the category’s winner, with a whopping $43 million in a Series A round led by a16z crypto.
CeFi, or centralized finance—which features companies like OPNX and Chiliz—is the second most funded category, receiving $101 million, generating nearly 20% of all financing. Games slid in at third, with $62 million, more than half of which flowed into Mythical Games, which raised $37 million in its Series C1. DeFi and NFT’s round off the list of categories, in that order.
Over the past year, Ethereum had 1,826 projects funded, followed from afar by Polygon (MATIC), with 1,076 funding rounds. Separated by location, the United States received 34% of funding—the most by any single nation on their list–although that appears ripe for a change.
The platform names Coinbase Ventures as the most active VC, having participated in 71 rounds this past year, followed by Hashkey Capital and Shima Capital, funding 54 and 49 projects respectively.
The former high flying crypto asset class has taken a back seat to other investments–namely artificial intelligence.
In a previous interview with Decrypt, Mysten Labs co-founder and CEO Evan Cheng said this shift is due to the ability of AI products and applications to cater to a broader audience while the crypto industry continues to focus on itself.
Diminished interest from venture capitalists in the crypto asset space could be due to a variety of other reasons as well. The dismal actions by companies such as FTX and Terra might be to blame, along with the banking turmoil that took down all four of the “crypto friendly banks.” Adding to the mix is the recent regulatory clampdown occurring in the United States, the country that has nonetheless led the way for crypto investments.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
