After a prolonged slump, venture capital investment in cryptocurrency companies is showing signs of resurgence. According to PitchBook data, investments reached $2.4 billion in the first quarter of 2023, a significant increase from the $1.7 billion invested in the last quarter of 2023.
This upswing suggests that venture capital investors are regaining confidence in the crypto sector, which experienced a downturn in 2022 following a series of high-profile bankruptcies. However, with the approval of bitcoin exchange-traded funds (ETFs) by the US Securities and Exchange Commission earlier this year, investor interest has begun to revive.
Robert Le, senior analyst at PitchBook, notes that the crypto industry is still in its early stages, with ample room for growth and innovation. “Barring any major market downturns, we expect the volume and pace of investments to continue increasing throughout the year,” he adds.
Despite this positive trend, the crypto sector still faces challenges. Cryptocurrency spot trading cooled in April for the first time in seven months, with spot market volume on exchanges like Coinbase, Binance, and Kraken dropping by 32.6% to $2.01 trillion. Monthly derivatives trading volume also fell by 24.1% to $4.57 trillion, its first decrease in three months.
However, crypto custody firm Bakkt remains optimistic, citing the SEC’s approval of bitcoin ETFs as a catalyst for increased institutional investment in the cryptocurrency trading market. “We’ve begun to see positive green shoots in the market, with more industry activity, higher coin prices, and overall higher retail trading volume,” said Andy Main, president and CEO of Bakkt.
As the crypto sector continues to evolve, it remains to be seen whether this resurgence in investment will lead to sustained growth and mainstream adoption.
