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Post original content on Gate Square related to WXTM or its
2024 Encryption Venture Capital Review: Infrastructure Projects in High Demand, Fundraising Hits Record Low
2024 Review of the Encryption Venture Capital Market: Active Infrastructure Project Financing, Weak Fundraising
The cryptocurrency market experienced significant growth in 2024, primarily benefiting from key factors such as the launch of the spot Bitcoin ETF in January and the pro-cryptocurrency political environment in the United States in November. The market capitalization of liquid cryptocurrencies grew by 88%, reaching $3.4 trillion, with Bitcoin's market cap nearing $2 trillion. Bitcoin's increase accounted for 62% of the total market growth, while the memecoin and AI token craze also played a boosting role.
Despite the market recovery, the encryption venture capital sector still faces challenges. Major trends such as Bitcoin, memecoin, and AI tokens offer limited venture capital opportunities. Once-popular areas like DeFi, gaming, metaverse, and NFTs have seen a decline in attractiveness. Infrastructure companies face competitive pressure from traditional financial institutions.
Emerging trends such as stablecoins, tokenization, DeFi-TradFi integration, and the convergence of encryption AI show promise, but are still in the early stages. Macroeconomic pressures have hindered high-risk allocations, disproportionately impacting the encryption venture capital industry. After the collapse of the encryption market in 2022, comprehensive VC firms have generally maintained a cautious stance.
According to the data, in the fourth quarter of 2024, venture capitalists invested $3.5 billion in encryption and blockchain startups, a quarter-on-quarter increase of 46%. The total investment for the year was $11.5 billion, with a total of 2,153 transactions.
Annual investments in the crypto market are expected to exceed $18 billion by 2025, but they are still below the levels of 2021 and 2022. The institutionalization of Bitcoin, the rise of stablecoins, and regulatory advances in DeFi-TradFi integration will be key areas of focus for future innovation.
Since January 2023, the correlation between Bitcoin prices and investments in encryption startups has significantly weakened. Possible reasons include institutional investors' concerns about regulatory uncertainty, market narrative favoring Bitcoin, and a broader downturn in the venture capital market.
In 2024, the infrastructure sector dominated crypto venture capital, attracting more than 610 deals to $5.5 billion. The investment is focused on scaling the blockchain network with L2 solutions. NFT and gaming startup raises $2.5 billion. Corporate blockchain financing fell sharply by 69%. Web3 fundraising has shown resilience, and DeFi has experienced a strong recovery.
The encryption industry is still highly concentrated in the early financing stage, with early trading accounting for 60% of capital investment.
The most active investors in 2024 include Animoca Brands, OKX Ventures, Cogigent Ventures, and others. Among angel investors, Sandeep Nailwal, Paul Taylor and DCF God are the most active.
In 2024, the fundraising amount for venture capital funds dropped to the lowest level in six years. The encryption risk financing continues to face pressure from macroeconomic influences, with 79 new funds raising $5.1 billion, marking the lowest annual total since 2020.
Medium-sized funds ( ranging from 100 million to 500 million USD ) show a clear trend. Large funds ( of 1 billion USD or more ) did not appear in 2023 and 2024. The largest closed-end fund in 2024 is Fund III managed by Paradigm.
Investment projects worth paying attention to in 2024 include Monad, Farcaster, Berachain, Story Protocol, 0G Labs, etc. Key trends include AI integration, DeFi on Bitcoin, and dedicated blockchains.
Overall, the landscape of encryption venture capital in 2024 shows a cautiously optimistic attitude, with a rebound in financing activities and growing institutional interest. The shift towards medium-sized funds and the continued dominance of emerging funds indicate that the industry is maturing. Despite a decline in the short term, the ongoing attention to early-stage venture capital and emerging trends highlights the potential for future growth in the encryption industry.
! Panorama Review of Crypto Venture Capital in 2024: Infrastructure Project Financing is Active, Fund Fundraising is Weak