The cryptocurrency market has experienced a remarkable surge in fundraising, reaching an impressive $2.4 billion in the first quarter of 2024, driven by a shift in market sentiment and fresh capital inflows.
A recent analysis by PitchBook, a leading data provider for private and public market investors, highlights a significant increase in investment activity within the cryptocurrency sector compared to the previous quarter. This surge has been largely fueled by a bullish market, which saw cryptocurrency values rise to levels not seen in months. Institutional investors have been particularly enticed to pour money into the market following the Securities and Exchange Commission’s (SEC) approval of spot Bitcoin exchange-traded funds (ETFs).
VC Funds Participate in Bull Market
Venture capital funds have actively participated in this bullish run. According to the PitchBook report, a total of 518 deals amounting to $2.3 billion were closed in the first quarter of the year within the cryptocurrency industry. This reflects a remarkable 40.3% increase in investments compared to the previous quarter. The heightened on-chain activities observed in Q4 2023 set the stage for this substantial leap forward.
Deal volume, or the number of transactions, also saw a notable rise of 44.7% in the preceding quarter. As asset values increased, market valuations soared throughout the year, creating a promising investment climate. Experts at PitchBook anticipate continued growth in investment activity throughout the remainder of the year.
Noteworthy examples of successful fundraising within the cryptocurrency market include Zama, a firm specializing in fully homomorphic encryption (FHE), which secured $73 million in funding. EigenLayer, another industry player, received $100 million in Series B funding. However, the most significant deal of the quarter was Together AI, which raised $106 million, propelling its valuation to an impressive $1.1 billion.
As more institutions venture into the cryptocurrency sector, a multitude of deals are driving increased valuations for various companies.
VC Funding Surpasses $1 Billion for Second Consecutive Month
For the second consecutive month, crypto venture capital funding has exceeded the $1 billion mark, highlighting continued investor interest in the industry. April witnessed $1.02 billion in funding spread across 161 investment rounds, slightly down from March’s $1.09 billion across 186 rounds. Nonetheless, this marks the first time since October-November 2022 that the crypto sector has seen two consecutive months of funding surpassing $1 billion.
Earlier this year, Balance, a digital asset custodian based in Canada, revealed that it has once again achieved $2 billion in assets under custody (AUC) amid the recent recovery in crypto markets. Similarly, Korea Digital Asset (KODA), the largest institutional crypto custody service in South Korea, has seen remarkable growth in crypto assets under its custody. The company recently disclosed that the value of these assets expanded by nearly 248% in the second half of 2023.
Overall, the cryptocurrency market’s impressive fundraising activity in Q1 2024 underscores the sector’s resilience and growing appeal among institutional investors. As the year progresses, continued investment and innovation within the industry are expected to drive further growth and development.
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