By Medha Singh
(Reuters) – Cryptocurrency startup funding rose for a second straight quarter to hit $2.4 billion in the first three months of 2024, Pitchbook data showed, as expectations for lower interest rates and the debut of the first US bitcoin spot ETF whetted investor appetite.
The financing was distributed across 518 deals and increased 40.3% from the previous quarter, according to data firm PitchBook. Global venture capital investments fell to a nearly five-year low in the same period.
Investor bets on digital asset startups have also fallen from a peak of more than $10 billion in the first quarter of 2022, hit by economic concerns and the closure of key market players. However, the historic US regulatory approval of bitcoin spot ETFs, offered by heavyweights BlackRock (NYSE:) and Fidelity, boosted the legitimacy of the asset class and helped bitcoin reach an all-time high of 73,803. dollars in March.
“The recovery of publicly traded tokens and continued rise in institutional adoption will drive further venture capital funding,” said Pitchbook analyst Robert Le.
According to PitchBook, startups focused on building infrastructure for crypto and blockchain technology led the funding during the quarter.
The largest deal was made by decentralized cloud platform Together AI, which raised $106 million in a seed round led by Salesforce (NYSE 🙂 Ventures that valued the company at $1.1 billion.
“Investment rounds have become highly competitive, especially in the early stages,” said Pitchbook's Le.
“This is compounded by the fact that early-stage deals are commanding higher valuations than late-stage deals, but…we'll see if this trend continues in the coming quarters.”
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However, departures remained low. He expects mergers to pick up later this year, particularly among cryptocurrency exchanges, custodians and infrastructure providers as the market matures.
