Silent for a long time, venture capital returns to the cryptocurrency market! The fundraising scale of startups has increased by 32%. Venture capitalists worldwide are re-entering the cryptocurrency field. The total amount of venture capital received by cryptocurrency startups has reached about $2.5 billion, a significant increase of 32% compared to the previous quarter. Cryptocurrency startups are raising more funds, while venture capital firms are simultaneously launching new digital asset funds. Investors' enthusiasm for the cryptocurrency field has been reignited, partly due to the approval of Bitcoin exchange-traded funds by the SEC, and people's strong interest in the intersection of cryptocurrency and artificial intelligence. The scale of cryptocurrency venture capital is rising, and global venture capital activities for cryptocurrency startups are clearly rebounding
According to the Zhitong Finance and Economics APP, as the Bitcoin trading price soared above $73,000, hitting a new all-time high, venture capital in the cryptocurrency field is making a comeback. Global venture capitalists are re-entering the cryptocurrency field. The latest data shows that after a "harsh" year for cryptocurrency and blockchain-related companies, the scale of venture capital investment in the industry has increased by nearly one-third compared to the previous quarter (Q4 2023). Global venture capital is refocusing on the cryptocurrency market, indicating a renewed overall preference for risk in this market.
PitchBook's statistics show that in the first quarter of 2024, the total amount of venture capital received by cryptocurrency startups reached approximately $2.5 billion, a significant increase of 32% from the previous quarter, and roughly the same as the investment scale in the same period last year. At the same time, cryptocurrency startups are raising more funds, and venture capital firms are launching new digital asset funds simultaneously.
"Investors are spending money again," said Robert Le, a cryptocurrency analyst at PitchBook. "For over the past 18 months, they have been holding onto the funds they raised."
Robert Le mentioned that the current enthusiasm of venture capital institutions for the cryptocurrency field is reignited partly due to the approval of Bitcoin Exchange-Traded Funds (ETFs) by the SEC in January, as well as the strong interest in the intersection of cryptocurrency and artificial intelligence. During the cryptocurrency market downturn at the end of 2023 and 2022, venture capital firms were generally reluctant to use the funds they raised during the previous cryptocurrency bull market. However, this situation has significantly changed this year.
Rising Scale of Cryptocurrency Venture Capital - Global Venture Capital Activities of Cryptocurrency Startups
Anand Iyer, Managing Partner of the early-stage venture capital fund Canonical Crypto, stated that he has seen a noticeable increase in financing activities in the cryptocurrency field in recent months. He pointed out that some founders of cryptocurrency startups currently raising funds are not newcomers to the industry. "In fact, they created some unsuccessful things in the previous cycle," Iyer said Some early features of cryptocurrencies performed very well in the last bull market, and now they are back. For example, the recent frenzy around memecoins bears similarities to past frenzies." Websites like pump are interesting enough to allow anyone with an internet connection to create meaningless tokens inspired by animals, pop culture, or almost any other theme." Yell said: "They are interesting, but cryptocurrency is a culture."
Some well-known venture capital firms in the field are also paying attention to signs of maturity in the industry.
John Lo is the Managing Partner responsible for digital asset investments at Recharge Capital. He previously served in a leadership role at the decentralized cryptocurrency exchange Sushi under the pseudonym "Omakase," even using an anime character filter to conceal his identity during a webinar.
While John Lo mentioned that some teams are still raising sufficient funds under pseudonyms, this trend is a nostalgic "remnant faction" of past crypto culture. Instead, he and his team are excited about the impact of globally established financial institutions entering the cryptocurrency space, such as the world's largest asset management firm BlackRock and Fidelity Ventures into the Bitcoin ETF field, with these Bitcoin ETFs receiving SEC approval proving this point.
He stated: "We see a scale of Bitcoin usage and adoption that we have never seen before."
Meanwhile, there is still room for improvement in the cryptocurrency market. Recharge focuses on supporting crypto startups that can build better cryptocurrency infrastructure and make the industry more attractive to investors. "Cryptocurrencies are still in a very early stage," John Lo said.
JMP Securities, a well-known Wall Street investment firm, recently released a research report stating that over the next three years, a spot ETF tracking Bitcoin (BTC) could see inflows of up to $220 billion, which means that if a multiplier is applied to calculate new capital, the price of Bitcoin could double to reach $280,000. The bullish sentiment on Bitcoin from Wall Street has been growing louder recently, with Standard Chartered Bank predicting Bitcoin to reach $100,000 by the end of this year; and hedge fund SkyBridge forecasting Bitcoin to reach $170,000 by April 2025