Investments in cryptocurrency start-ups rose 2.5% to $1.9 billion in the fourth quarter of 2023, breaking a downward trend, PitchBook data showed on Thursday.
This information suggests that cryptocurrency developers, who have been affected by the “cryptozima” in the past, may finally be feeling better as new funding comes in, which is positive. Additional improvement in sentiment came when the price of bitcoin surpassed $52,000 for the first time in two years.
The rise in popularity of cryptocurrencies has been rapid over the past two years, driven by the massive FTX implosion and the domino effect it caused, as well as growing government pressure.
Robert Le, senior analyst for emerging technologies at Pitchbook, pointed out that despite the recent troubles that have mainly plagued exchanges such as FTX and Binance, investors continue to view centralized finance (CeFi) providers as promising.
He said that for retail users, these exchanges and related wallets represent the lowest barriers to cryptocurrency adoption thanks to a better user experience.
In the last quarter of 2023, a major fundraising took place. Blockchain.com earned $100 million, and Swan Bitcoin earned $165 million. The largest investment, however, was in the Wormhole inter-chain bridging protocol, with a massive $225 million. Together.ai, a developer of a decentralized open source cloud platform, announced another significant investment of $102.5 million.
In an interview with Bloomberg , Le admitted: “A lot of counterfeiters have been eliminated” in reference to the events that have taken place over the past 18 months in the crypto industry. He added that by having the necessary tools, investors can now feel safer evaluating and analyzing these risky entities.
The analyst predicts that “real-world cryptocurrency use cases” will be a major topic in the next investment cycle. He identified decentralized physical infrastructure networks, which make it easier for companies to build the physical sides of cryptocurrency operations, as a potential high-growth sector this year.
In addition, he expects significant investment in tokenization, which is the process of transforming assets into their digital counterparts represented by blockchain. By supporting tangible applications and integrating with existing systems, it represents the future of cryptocurrencies.
