Venture capital investment in cryptocurrencies is rising after a long decline

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Elizabeth Howcroft

LONDON (Reuters) – Global venture capital investment in crypto companies rose to $2.4 billion in the first three months of 2024, data showed on Monday, a tentative sign of renewed investor interest.

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Venture capital flows in the cryptocurrency industry peaked at $11.1 billion in the first quarter of 2022, followed by seven consecutive quarters of declines to just $1.7 billion in the last quarter of 2023, according to PitchBook data.

“The cryptocurrency industry is still in its early stages and there is plenty of room for growth and innovation,” PitchBook senior analyst Robert Le said in the report.

“Barring a major market deterioration, we expect investment volumes and pace to continue to increase throughout the year,” he added.

A combination of low interest rates and high risk appetite fueled the cryptocurrency industry to grow rapidly in 2020 and 2021, but a series of bankruptcies of major cryptocurrency companies in 2022 spooked investors and sent the price of bitcoin plummeting.

Investors who supported US exchange FTX were forced to write down their investments to zero, while millions of people were left without money as various crypto platforms stopped allowing withdrawals.

Some investors have become more confident in cryptocurrencies over the past year, thanks to U.S. regulators’ early 2024 approval of exchange-traded funds that track the spot price of bitcoin.

has been steadily recovering from its 2022 lows, reaching a modern all-time high of $73,803.25 in March – though it has struggled to find direction since then.

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