Crypto Venture Capital shows resilience, recovering from a downturn with $872 million invested in February 2023. In general, venture capital firms are targeting web3, gamefi, DeFi and DLT investments during the market recovery.
The report regarding Crypto Venture Capital
According to a recent report, the Crypto Venture Capital market has shown resilience during a recession, signaling a potential comeback for the sector in the near future.
Despite a decline in the second half of 2022, the year became the largest in history for crypto VC funding with over $26.2 billion invested, up from $25.1 billion in 2021.
The top 300 global cryptocurrency companies collectively manage $83.9 billion in capital, with San Francisco emerging as the top city for capital for cryptocurrency companies, followed by New York City, Hong Kong, Singapore, Austin, London, and Shanghai.
While the fourth quarter of 2022 saw a significant 77% drop in new cryptocurrency investments compared to the first quarter of 2022, the market appears to be on the rebound.
In February 2023, $872 million was invested in cryptocurrency and blockchain companies, a 52% increase from $574 million in January 2023. The report went on to say that crypto VC investments continue to exceed 2019 levels.
In fact, comparing January-February 2019 with January-February 2023, there is a 3.1-fold increase in venture capital invested in the sector, indicating that the digital asset industry is maturing and attracting more institutional capital.
The interests of Crypto Capital Venture companies
As the industry prepares for the Bitcoin halving of April 2024 and the likely bullish cryptocurrency market of 2025, the largest cryptocurrency-focused VC firms by fund size include A16Z Crypto, Binance Labs, Multicoin, Pantera, and Paradigm.
Meanwhile, Coinbase Ventures, DCG, NGC, AU21 and Animoca lead the all-time cryptocurrency investment count. The most active cryptocurrency companies in the past 12 months, according to the report, are Big Brain Holdings, Shima Capital, Infinity Ventures, GSR and MH Ventures.
In addition, the report cites data from Pitchbook, which states that the first quarter of 2023 is on track to secure about $1.8 billion in new investment capital, the lowest since the fourth quarter of 2020.
However, the recent increase in investment in February 2023 indicates a positive trajectory toward the second quarter of 2023.
Finally, the report concludes by stating that smart venture companies are betting on Web3, GameFi, DeFi, infrastructure, and distributed ledger technology (DLT), while valuations are discounted.
In fact, these investments are expected to pay off as the market recovers and technologies such as smart contracts, distributed ledgers and tokenized financial assets continue to shape the future of global finance.
Bitcoin’s 2024 halving will be crucial
As anticipated, following gains in early 2023, Bitcoin is at the beginning of a “new regime,” and next year will prove crucial.
Indeed, as the way of investing in Bitcoin aligns with network fundamentals and price action, practitioners and investors are bracing themselves for a period of explosive growth.
It may not yet be clear whether the price of BTC has bottomed, but for long-term investors, the time to invest has just begun.
Looking ahead, the next halving of block subsidy will be particularly important, as Bitcoin will become, arguably, the strongest asset in the world.
If we look at the numbers, we see that in the second half of 2022, Bitcoin spent most of its time in the $16-20,000 region, and during this period it traded in the lower range of NVT, a signal of great long-term value.
Keep in mind that NVT stands for ‘Network Value to Transaction Value.’ It is the ratio of Bitcoin’s dollar market capitalization to the average dollar transaction volume over the past 90 days that transacts on-chain on Bitcoin.
As of February 2023, NVT has exceeded fair value. This may be a sign that we are in a new regime, the early stages of a new bull market.
However, although there are all the typical signs of a turning point on value and sentiment, this does not mean that prices will soar as they did in January.
In fact, the early stages of bull markets typically involve a 6-12 month period of volatility and a generally slow, upward trend.