While major crypto coins such as bitcoin (BTC) and ethereum (ETH) have risen sharply from the beginning of this year, investments in crypto companies have not. According to a new report, the amount invested in crypto companies like startups decrease sharply.
Decline in crypto investments
The price of bitcoin has already risen sharply in 2023. While bitcoin started the year around $16,500, the course recently at $ 31,500. Also the total market capitalization of crypto has risen. The total size of all cryptos together was $795 billion at the beginning of this year and is now more than $1.26 trillion.
However, it goes according to one report from Galaxy Research with investments in the companies of the crypto industry a lot worse. In the second quarter of this year, from the beginning of April to the end of June, a total of $2.3 billion was invested by investment firms and venture capitalists.
The volume of investment in the second quarter is a fraction of what it was in the same period was last year. In the second quarter of 2022, a total of $8 billion was invested by venture capitalists. However, that was also a lot less than the previous quarter, when $13 billion was still invested.
VC Firms Healthy for Crypto Market
With this, the investments of VC firms continue a declining trend. Due to an increasingly challenging market, and higher interest rates, the river of investment has already turned into a mountain stream. According to the report, “crypto investments have not hit the bottom of the pit yet.”
Investments from venture capitalists are crucial for many companies in the crypto industry because of the additional market competition they create. Because of the investments, novices can crypto exchanges grow and thus form a healthy alternative to the giants on the market. Security in the market also benefits. Much of the initial revenue of crypto security firms comes from such investment firms.
