- Venture capital funding for cryptocurrency startups surged to $2.4 billion in Q1 2024, driven by the debut of the first U.S. Bitcoin spot ETF and positive market sentiment.
- Approval and licensing of spot Bitcoin ETFs by firms like BlackRock and Fidelity boosted credibility and investor confidence in the cryptocurrency market, leading to Bitcoin’s value reaching a record high.
- Early-stage deals in the competitive landscape are commanding higher valuations, with the increased focus on crypto exchanges, wallet providers, and infrastructure facilitators expected to drive future deal activities.
In the first quarter of 2024, venture capital funding for cryptocurrency startups soared to $2.4 billion, marking a notable 40.3% increase from the previous quarter. This surge was primarily fuelled by the introduction of the first U.S. Bitcoin spot ETF.
Surge in venture capital funding drives cryptocurrency startups
According to data from Pitchbook (via Reuters), funding for cryptocurrency startups witnessed a significant upswing for the second consecutive quarter in the initial three months of 2024, reaching a substantial sum of $2.4 billion. This influx of capital was propelled by the debut of the first U.S. Bitcoin spot ETF and optimistic expectations of reduced interest rates. The volume of funding allocated to 518 transactions surged by 40.3% compared to the prior quarter, coinciding with a global surge in venture capital investments, marking a level not witnessed in nearly 5 years.
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Bitcoin ETFs’ role in market growth and investor confidence
As reported by CNA, notwithstanding prevailing economic concerns and the exit of major market players, the approval and licensing of spot Bitcoin ETFs by prominent firms such as BlackRock and Fidelity in the United States significantly bolstered the credibility and attractiveness of this asset class. Consequently, this development contributed significantly to the escalation in Bitcoin’s value, which peaked at a record high of $73,803 in March. This notable rise underscores the resilience and robustness of the cryptocurrency market. Pitchbook analyst Robert Le remarked, “The recovery in publicly traded tokens and the ongoing surge in institutional adoption will continue to drive heightened VC funding.”
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Early-stage deals command higher valuations in competitive landscape
Highlighting the competitive landscape, Le added, “Investment rounds, particularly at early stages, have become fiercely competitive, resulting in higher valuations compared to late-stage deals. However, the sustainability of this trend remains to be seen in the forthcoming quarters.” Despite some exits, the maturing market landscape is expected to witness increased deal activities later this year, especially among crypto exchanges, wallet providers, and infrastructure facilitators.
