FX168 Financial News Agency (Europe) News Cryptocurrency startup trading is back. After a brutal year for cryptocurrency and blockchain-related companies, venture capital investment in the industry increased by nearly a third from the previous quarter, according to new data.

PitchBook data shows that venture capital investment in cryptocurrency startups reached $2.5 billion in the first quarter of 2024, an increase of 32% from the previous quarter and roughly the same as the same period last year. Meanwhile, cryptocurrency startups are raising more money and venture capital firms are launching new digital asset funds. #2024investmentstrategy#

"Investors are spending money again," said Robert Le, a cryptocurrency analyst at PitchBook. "They've been holding on to the money they raised over the last two years, 18 months."

Le said the renewed enthusiasm for cryptocurrencies was sparked in part by the approval of a Bitcoin exchange-traded fund (ETF) in January, as well as interest in the intersection of cryptocurrencies and artificial intelligence. During the downturn in late 2023 and 2022, venture capital firms were reluctant to use the funds they raised during the previous crypto bull market. This year things have started to change.

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(Source: Bloomberg)

Anand Iyer, managing general partner at early-stage venture capital fund Canonical Crypto, said he has seen an increase in funding activity in recent months. He noted that some of the founders raising money now are not new to the industry. "They actually built something in the last cycle and it didn't work out," Ayer said. Some of the early characteristics of cryptocurrencies have also resurfaced during the last bull run. For example, the latest “meme coin” craze has echoes of past madness. Sites like pump.fun enable anyone with an internet connection to create nonsense tokens inspired by animals, pop culture, or just about any other topic. “They’re fun, but it’s very cultural in the cryptocurrency space,” Ayer said.

Other venture capital firms are seizing on signs of industry maturation.

John Lo, a managing partner responsible for digital asset investments at Recharge Capital and previously a member of the leadership team of decentralized cryptocurrency exchange Sushi, participated under the pseudonym "Omakase" and used it in the webinar Anime character filter to hide your identity.

While Luo said there are still teams raising money anonymously, the trend is a nostalgic "remnant" of past cryptocurrency culture. Instead, he and his team are excited about the impact of established financial institutions getting more deeply involved in cryptocurrencies, as evidenced by the approval of a Bitcoin ETF.

“We’re seeing Bitcoin usage and adoption at a scale we’ve never seen before,” he said.

At the same time, there is still room for improvement. Recharge is committed to supporting startups that build better cryptocurrency infrastructure and make the industry more attractive to investors. "Cryptocurrency is still in a very early stage," Luo said.