Venture capitalists poured billions of dollars into the digital asset industry in the first quarter of this year, new data from cryptocurrency insight firm Galaxy Research reveals.
Galaxy Research said in a new article that venture capitalists invested $2.49 billion in cryptocurrencies in the first quarter of 2024, an increase of 29% quarter-on-quarter (QoQ).
The analytics platform said the heavy investment in the first quarter of 2024 suggests that the fourth quarter of 2023 may have been the bottom of the market.
“In the first quarter of 2024, venture capitalists invested $2.49 billion (up 29% QoQ) in crypto and blockchain-focused companies in 603 deals (up 68% QoQ). I invested.
This is the first time in three quarters that both invested capital and number of deals have increased, indicating that Q4 2023 is probably the “bottom”, but the quarter-over-quarter increase continues and becomes more meaningful. If there is some increase, we will see that over the next few quarters. ”
Galaxy Research continues that venture capitalists' investments in the cryptocurrency space have traditionally been correlated with the price of Bitcoin (BTC), but the significant rise of the cryptocurrency king in 2024 will lead to a divergence between the two. It is pointed out that this has occurred.
“Venture capital investments in the crypto sector are typically correlated with Bitcoin prices, but this correlation has broken down over the past year, and although Bitcoin has risen significantly since January 2023, VC Activities are almost at a standstill.”
Although BTC has risen significantly and invested capital has increased in Q1 2024, investment activity has yet to reach the levels seen when Bitcoin last traded above $60,000.
A combination of crypto industry-specific factors (new areas such as Bitcoin Exchange Traded Funds, restaking, modularity, and Bitcoin Layer 2) and macro headwinds (rates) contributed to the notable divergence. ”
At the time of writing, Bitcoin was trading at $62,754, up 5.2% in the past 24 hours.
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