Cryptocurrency VC capital flows in the first half of the year
DR
1. Despite a small bull run from Q4 2023 to Q1 2024, VC funding remains stagnant: Even as BTC reaches its all-time high, VC funding, which peaked in 2021, has not yet recovered to its previous level. Venture capital funding has remained relatively stable since 2022, with only slight signs of recovery in 2024.
2. Winners and losers by industry: • Winners: AI, Ethereum restaking (Eigenlayer and LRT), and Bitcoin have become clear winners in the primary market • Gaining attention: The social and gaming industries continue to attract investor interest • Large funds: L1/L2/modular solutions receive large amounts of funds due to scalability and interoperability • Losers: NFT and Cefi industries continue to lose appeal
3. Venture capital funding as a coincident indicator: Comparing the total market value of cryptocurrencies and venture capital funding over the past five years, it can be found that venture capital capital flows as a coincident indicator of the entire cryptocurrency market, both indicators show similar peaks and troughs, with no obvious leading or lagging relationship. However, the sentiment of VC capital flows has not yet caught up with the mini-bull run in Q4 2023 and Q1 2024, indicating that the risk/return profile of VC investments remains uncertain for investors
4. Open questions: The main value of VC is to provide funding for young startups and support founders to achieve long-term growth. Recently, there has been criticism of crypto VCs and VC tokens that are overcapitalized but not appreciating, characterized by low float/high FDV, and retail investors facing dumping. To avoid a zero-sum game and achieve mutual success, the industry needs to adapt. Otherwise, the golden age of crypto VC may never return, and it may be difficult to win the respect of the community
