Key Takeaways
- The cryptocurrency industry raised $2.1 billion via 297 rounds of funding in the third quarter of 2023—the lowest amount raised since the final quarter of 2020.
- Crypto industry fundraising peaked at more than $15 billion in the first quarter of 2022.
- Sectors of the crypto industry experiencing the most fundraising activity in the third quarter 2023 were blockchain infrastructure and decentralized finance (DeFi).
- Binance Labs was the most active investor during the latest quarter, with more than double the number of deals of the next-closest competitor.
- Interest in crypto has waned amid regulatory uncertainty and criminal charges for some of the biggest names from the last crypto bull market, such as Sam Bankman-Fried.
Crypto Industry Funding Trends
A report released by crypto intelligence firm Messari highlighted a continuing downtrend in crypto industry funding due to regulatory uncertainty in the U.S. and the ongoing criminal trial of FTX founder Sam Bankman-Fried.
Despite Bitcoin’s price increase of over 60% this year, the 36% drop in crypto industry fundraising from the second to the third quarter of 2023 suggests that the crypto bear market persists.
The total amount raised in the latest quarter, approximately $2.1 billion, is the lowest since the fourth quarter of 2020. Furthermore, the 297 fundraising deals in the quarter were the fewest since the same period in 2020.
Sector Analysis
Blockchain infrastructure received the largest share of funding at 18% of the total, while the DeFi sector saw the most activity with 67 deals closed. Scaling solutions in the blockchain infrastructure sector accounted for 43% of the funds raised, while exchanges in the DeFi sector secured the highest number of deals and funding.
Investments in DeFi, gaming, and zero-knowledge technologies have been the primary focus of Binance Labs, the most active investor in the third quarter of 2023.
Market Challenges
The crypto bear market persists due to factors such as regulatory uncertainties in the U.S., decreased industry interest following the collapse of FTX, and legal challenges faced by major platforms like Binance and Coinbase. The ongoing criminal trial of FTX founder Sam Bankman-Fried adds to the industry’s challenges, alongside potential new regulations being considered by Congress.
