Report: Venture capital investment in crypto will reach $11.5 billion in 2024, still below previous bull market levels

PANews, January 17, according to CoinDesk, Galaxy Digital said in a research report on Wednesday that despite the recent rise in digital asset prices, cryptocurrency venture capital (VC) activity is still below previous bull market levels. In 2024, total capital allocation by venture capital funds to the crypto industry will be $11.5 billion, down from 2023. Galaxy noted that during previous bull markets in 2017 and 2021, VC activity was highly correlated with crypto asset prices, “but over the past two years, VC activity has remained subdued despite the rise in cryptocurrencies.”

There are several reasons for the stagnation in the venture capital market. Galaxy said these reasons include a "barbell market" in which Bitcoin and its new spot ETFs take center stage, while meme coins have limited "marginal net new activity." These meme coins are difficult to obtain financial support and have “questionable longevity.” The report states that new projects at the intersection of artificial intelligence (AI) and cryptocurrencies are receiving increasing attention, and upcoming regulatory changes may bring more opportunities for stablecoins, decentralized finance (DeFi) and tokenization. The report noted that some large investors may gain cryptocurrency exposure through spot Bitcoin ETFs “rather than turning to early-stage VC investments.”

Galaxy said the United States completed the most deals and invested the most money in the fourth quarter. Galaxy added that early-stage deals accounted for 60% of total investment in the fourth quarter, with stablecoin companies raising the most funds. The report also states that venture capitalists invested a total of $11.5 billion in cryptocurrency and blockchain-focused startups in 2024. These funds invested $3.5 billion in 416 transactions in the fourth quarter, a 46% increase from the previous quarter.