Tech
Venture capital investment in cryptocurrencies resumes after a long decline
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, in a tentative sign of returning investor interest.
Cryptocurrency-related venture capital flows peaked at $11.1 billion in the first quarter of 2022, ahead of seven consecutive quarters of declining volumes, with just $1.7 billion in the final quarter of 2023 , as PitchBook data shows.
“The cryptocurrency industry is still in its early stages and there is a lot of room for growth and innovation,” PitchBook senior analyst Robert Le said in a report.
“Barring any major market downturns, we expect the volume and pace of investment to continue to increase throughout the year,” he added.
A combination of low interest rates and high risk appetite had fueled the cryptocurrency industry for explosive growth in 2020 and 2021, but a series of failures at major cryptocurrency firms in 2022 spooked investors and sent the the price of bitcoin.
Investors who had backed US exchange FTX were forced to write down their investments to zero, while millions of people were left out of money as various crypto platforms stopped allowing withdrawals.
Over the past year, some investors have become more bullish on cryptocurrencies, helped by U.S. regulators who in early 2024 approved exchange-traded funds that track the spot price of bitcoin.
Bitcoin has steadily recovered from 2022 lows, reaching a new all-time high of $73,803.25 in March, although it has struggled to find direction since then.
(Reporting by Elizabeth Howcroft; Editing by Tommy Reggiori Wilkes and Susan Fenton)