New data from crypto insights firm Galaxy Research shows that venture capitalists poured billions of dollars into the digital asset industry in the first quarter of the year.
In a new articleAccording to Galaxy Research, venture capitalists invested $2.49 billion in cryptocurrencies in the first quarter of 2024, up 29% quarter-on-quarter (QoQ).
The analytics platform says heavy investment in the first quarter of 2024 suggests that the fourth quarter of 2023 could have been the market’s bottom.
“In the first quarter of 2024, venture capitalists invested $2.49 billion (+29% quarter-on-quarter) in crypto and blockchain-focused companies in 603 deals (+68% quarter-on-quarter).
This was the first increase in both capital employed and number of deals in three quarters, perhaps signaling that the fourth quarter of 2023 was the ‘bottom’, although a continuation of QoQ increases – and a more meaningful increase – could mean this would confirm in the coming quarters.”
Galaxy Research further notes that while venture capitalist investments in the crypto space have historically been correlated with the price of Bitcoin (BTC), the crypto king’s meteoric rise in 2024 caused them to decouple.
“While venture capital investments in the crypto sector are typically correlated with the Bitcoin price, that correlation has broken over the past year, with Bitcoin rising significantly since January 2023 but VC activity largely languishing.
The first quarter of 2024 saw a significant increase in BTC, and while invested capital also increased, investment activity is still nowhere near the level when Bitcoin last traded above $60,000.
The combination of crypto industry catalysts (Bitcoin exchange-traded funds, new areas such as recapture, modularity, Bitcoin layer-2s, etc.) and macro headwinds (rates) have contributed to the notable divergence.”
Bitcoin is trading at $62,754 at the time of writing, up 5.2% over the past 24 hours.
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