Source: Zhitong Finance

According to the latest statistics from Pitchbook, a data provider for global venture capital (VC), PE, and mergers and acquisitions, the total financing amount of cryptocurrency startups increased for two consecutive quarters, reaching 2.4 billion US dollars in the first three months of 2024. The main logic is that expectations of falling US interest rates and the impressive scale of the first US Bitcoin spot ETFs have stimulated global investor interest and prompted a sharp rise in the overall market's risk appetite for cryptocurrency startups.

At a time when the Bitcoin transaction price once soared above $73,000 and continued to reach new all-time highs, venture capital funds from cryptocurrency startups are fully returning to the cryptocurrency sector, and venture capitalists around the world are re-entering the cryptocurrency sector. Pitchbook data shows that after a “brutal” year for cryptocurrency and blockchain-related companies, the scale of venture capital investment in the industry grew sequentially for two consecutive quarters. Venture capital funds from around the world are beginning to refocus on the cryptocurrency market, which often means a full recovery in the market's capital risk appetite.

Currently, venture capital institutions' enthusiasm for the cryptocurrency sector has been rekindled, due in part to rising expectations of the Federal Reserve's interest rate cut since December, the SEC approval of the Bitcoin Exchange-Traded Fund (Bitcoin ETF) in January, and people's strong interest in the intersection of cryptocurrency and artificial intelligence. During the downturn in the crypto market at the end of 2023 and 2022, venture capitalists were generally reluctant to use the funds they raised during the previous cryptocurrency bull run. But this year, things are beginning to change markedly.

According to data from data provider Pitchbook, the financing of cryptocurrency startups was basically distributed among 518 transactions, which is a significant increase of about 40.3% over the previous quarter. By contrast, around the same period last year, global venture capital investment fell to its lowest point in nearly five years.

Since the historic peak of more than $10 billion in venture capital in the first quarter of 2022, venture capital institutions' bets on digital asset startups have declined sharply, mainly affected by economic concerns brought about by the Federal Reserve's aggressive interest rate hike cycle and the bankruptcy of some major market players such as FTX due to debt holes.

However, the landmark event is that the US securities regulator approved the first batch of Bitcoin spot ETFs issued by asset management institutions such as BlackRock (BlackRock), the world's largest asset management agency, and US asset management giant Fidelity (Fidelity), improving the relative legitimacy of this high-risk asset class and helping Bitcoin reach a record high of $73,803 in March.

Robert Le, an analyst from Pitchbook, said, “The recovery trend of publicly traded cryptocurrencies and the continued increase in the allocation ratio of investment institutions to cryptocurrencies will drive the scale of venture capital to continue to increase.”

Crypto startups focused on building infrastructure for cryptocurrencies and blockchain technology are leading the way in funding in the latest quarter, according to PitchBook's data.

According to information, the largest deal was completed by Together AI, which focuses on a decentralized cloud platform, and was carried out by a well-known US tech giant$Salesforce (CRM.US)$In an early round of funding led by its venture capital Salesforce Ventures, the company raised about $106 million, and the company's latest valuation was around $1.1 billion.

Robert Le, an analyst at Pitchbook, said: “Investment rounds are very competitive, especially in the early stages.” “What's more complicated is that early deals are valued higher than late deals, and we'll be watching to see if this trend continues over the next few quarters.”

However, capital exit rates are still very low. Robert Le anticipates that as the cryptocurrency market matures, there may be a significant increase in mergers, integrations or full acquisitions later this year, particularly among crypto exchanges, custodians, and cryptocurrency infrastructure providers.