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Venture funding for crypto-related companies totaled $1.9 billion in the fourth quarter of 2023 — a 2.5% increase from the third quarter — according to a report from PitchBook. It marks the first time venture capital (VC) investments in crypto startups have risen since March 2022.
PitchBook <a href="https://pitchbook.com/news/reports/q4-2023-crypto-report" target="_blank" rel="noopener nofollow">highlighted</a> that the major crypto ventures securing funding primarily center around financial and technological solutions. These include tokenizing real-world assets on the blockchain, such as real estate and stocks, and building decentralized computing infrastructure.
Some <a href="https://cointelegraph.com/news/blockchaincom-series-e-round-halves-valuation">prominent fundraises in the quarter</a> involved crypto exchanges Swan Bitcoin and Blockchain.com, which secured $165 million and $100 million, respectively. 
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 Screenshot of crypto early-stage VC deals in Q4 2023. Source: PitchBook
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The most significant deal of the quarter involved a <a href="https://cointelegraph.com/news/wormhole-raises-225-million-2-5-billion-valuation#:~:text=Cross%2Dchain%20protocol%20Wormhole%20has,Borderless%20Capital%20and%20Arrington%20Capital.">$225 million investment in Wormhole</a>, an open-source blockchain development platform. Supported by Coinbase Ventures, Jump Trading and ParaFi Capital, the company acquired a valuation of $2.5 billion.
The increased interest in crypto from financial institutions can be attributed to the launch of the first spot Bitcoin exchange-traded funds (ETFs) in the United States in January, according to PitchBook’s report. 
In the first quarter of 2023, <a href="https://cointelegraph.com/news/crypto-venture-capital-investment-q1-2023-report-pitchbook">crypto firms secured $2.6 billion in 353 investment rounds</a>, according to PitchBook’s Q1 Crypto Report. The report showed an 11% decline in deal value from the previous quarter and a 12.2% decrease in total deals. Furthermore, the quarter marked the lowest capital investment in the space since 2020.
Related: <a href="https://cointelegraph.com/news/gofundme-tornado-cash-defense-crowdfunding">GoFundMe shuts down Tornado Cash legal defense crowdfunding</a>
The <a href="https://cointelegraph.com/news/vc-blockchain-and-crypto-funding-drops-off-in-q4-2022-report">crypto industry faced challenges in 2022</a>, with market difficulties reflected in reduced venture capital funding for blockchain and crypto sectors. Following the peak at $11 billion and 692 deals in the initial four months of 2022, VC investment steadily declined in subsequent quarters.
Various factors led to decreased crypto and blockchain-related VC funding in 2022, including the <a href="https://cointelegraph.com/news/what-happened-terra-debacle-exposes-flaws-plaguing-the-crypto-industry">collapse of the Terra ecosystem</a> in May 2022, resulting in the bankruptcy of cryptocurrency lending firms <a href="https://cointelegraph.com/news/3ac-a-10b-hedge-fund-gone-bust-with-founders-on-the-run">Three Arrows Capital</a> and Celsius. 
The <a href="https://cointelegraph.com/news/ftx-collapse-the-crypto-industry-s-lehman-brothers-moment">FTX collapse in November</a> 2022 intensified market volatility, and broader global economic factors, such as increased interest rates and inflation, also contributed to the decline in venture capital investments.
In 2023, the <a href="https://cointelegraph.com/news/crypto-adoption-2023-investing-ventures">crypto industry saw a turnaround</a>, with stories of adoption worldwide and major TradFi institutions like BlackRock entering the crypto space.
Magazine: <a href="https://cointelegraph.com/magazine/okx-token-flash-crash-crypto-exec-mr-bang-on-the-run-asia-express/">OKX token’s $6.5B flash crash, crypto exec ‘Mr Bang’ on the run: Asia Express</a>

VC blockchain and crypto funding rises in Q4 2023: Report

Cointelegraph

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