Venture capital investments in crypto surged to $3.5 billion in Q4 2024, a 46% increase from the prior quarter. Despite a thriving last quarter, 2024 is deemed the worst year for crypto VC fundraising since 2020. The U.S. continues to dominate investments, yet the drop in funding reflects a cautious market approach post-FTX collapse, although hope resurfaces for future growth.
In the last quarter of 2024, venture capital firms invested an impressive $3.5 billion into crypto and blockchain startups, marking a significant 46% rise from the previous quarter. This investment was distributed across 416 deals, bringing the total for the year to a substantial $11.5 billion across 2,153 commitments. The surge in Q4 2024 investment levels is reminiscent of highs since Q4 2022, following the downturn triggered by the FTX collapse, which had sent Bitcoin prices plummeting below $17,000 in late 2022.
While 2024 has been touted as the weakest year for crypto VC fundraising since 2020, with only $5.1 billion raised across 79 new funds, the resurgence in activity post-market downturn offers hope. Despite this growth, the number of new funds remains stagnant, and the allocated capital to these ventures has declined, resulting in the smallest median and average fund sizes since 2017. This hesitation among investors underscores a cautious approach to the recovery of the crypto landscape.
The investment landscape for cryptocurrency and blockchain has dramatically shifted since the collapse of FTX, which significantly dampened VC appetite for the sector. The tumultuous fallout created a chilling effect on funding, highlighting the vulnerabilities within the crypto market. While belief in its future appears to rebound slowly, past high-flying exuberance from 2021-2022 lingers in the memory of investors, making them more cautious when entering new deals.
In summary, Q4 2024 showcased a rekindled interest of VCs in crypto, evidenced by a substantial increase in investments. However, the overall enthusiasm remains tempered due to the scars left by previous market contractions. The U.S. continues to lead in VC investments, although less extensively than before, with international markets starting to gain traction. As this narrative unfolds, the landscape remains one of cautious optimism tinged with learned hesitations.
Original Source: news.bitcoin.com
