Crypto Fundraising Could Bounce Back in 2024 After Deal Slowdown in Q4 2023

•  The crypto sector reportedly witnessed a 12% rise in venture capital in January 2024.
• A potential market rebound could be in H1 despite a slowdown in Q3 2023. 
• Can January’s figures be a promising sign of the market’s ability to rebound?

Crypto industry optimism, fueled by new deals and the approval of spot bitcoin ETFs, has set a positive tone for the year ahead.

The cryptocurrency market is showing promise in early 2024, with a notable increase in venture capital investment. According to PitchBook  data, the final quarter of 2023 saw a modest recovery in crypto fundraising, with startups securing $1.9 billion across 326 deals.

The January increase, coming after a slowdown in deal activity, prompts speculation on whether this optimistic start to the year can continue its pace and herald a rebound in the market.

Recovery in Crypto VC Activity

Crypto fundraising reportedly experienced a boost in January 2024, as evidenced by a surge in venture capital investments. VC Jan Report by WuBlockchain notes that there were 113 publicly disclosed investment projects in January. The growth comes on the heels of a modest yet encouraging turnaround in Q4 2023, where the industry managed to raise $1.9 billion.

But the deal activity slowdown was evident on the back of negative sentiment surrounding centralized exchanges like Binance and FTX, noted Pitchbook. Based on the report, the resilience of centralized finance (CeFi) providers is noteworthy.

Meanwhile, mega-rounds raised by platforms like Swan Bitcoin, Blockchain.com, and the cross-chain bridging protocol Wormhole marked investor optimism in the sector’s potential.

Key Investments and Trends

January noted  a month-on-month fundraising dip from December’s $910 million to $650 million. However, a year-on-year increase of 3.2% reflects cautious optimism.

Investments in January 2024 ranged across infrastructure, DeFi, CeFi, NFT/GameFi, and L1/L2 sectors. In the month, HashKey Group’s Series A funding stood out, securing nearly $100 million.

Meanwhile, the largest deal of Q4 2023 went to Wormhole, with a $2500 million post-money valuation. Pitchbook sees the development in decentralized physical infrastructure networks (DePIN) as a promising sector in 2024.

Meanwhile, the broader anticipation around the approval of spot bitcoin ETFs has contributed to a more optimistic outlook for 2024. Therefore, it is suggestive that Bitcoin and DePIN will be key drivers of crypto growth in the coming months.

Optimism for Rebound After Bitcoin ETF

2023 was a tumultuous year marked by weakness across major crypto players. VC activity points to the early signs of recovery in crypto fundraising heading into 2024.

In addition to the increase in venture capital in January, the rebound in investments since Q4 2023 points to a positive trajectory for the crypto market. Meanwhile, investor confidence continues to mend with cautious optimism.