PitchBook Report: Web3 VC Funding Totaled $1.9B in Q4 2023, Signaling End of Crypto Winter

The cryptocurrency market has experienced a huge shift in the twelve months, from a severe crypto winter to a bullish outlook. According to the latest report from PitchBook, a company focused on providing key data analysis on private markets, the cryptocurrency industry attracted a total of $1.9 billion during the fourth quarter. Notably, the total venture capital funding related to crypto firms increased by 2.5 percent compared to the prior quarter, thus signaling the end of the gruesome winter period. The firm highlighted that the fourth quarter of 2023 marked the first time the VC funding in the crypto industry increased since the first quarter of 2022.

The crypto industry recorded fewer blowouts in 2023 compared to 2022, which had the likes of Terra Luna UST and FTX exchange. Increased regulatory pressure from the United States, among other jurisdictions, significantly helped reduce the rogue actors in the cryptocurrency industry. Moreover, trillions of dollars from institutional funds have been preparing to enter the web3 industry and the digital asset space.

The approval of spot Bitcoin exchange-traded funds (ETFs) in the United States marked the largest turning point for the cryptocurrency industry around the world. More governments are using the web3 industry and digital assets to ensure all investors are largely protected from high inflation. Furthermore, the recent US CPI data has depicted that high inflation is here to stay.

According to PitchBook, the correlation between the private sector and the public market in terms of funding is high. However, the firm highlighted that only the strongest firms have been receiving funding since the number of deals declined by 2.4 percent in the fourth quarter.

Biggest Winners in Crypto VC Funding

The web3 industry and the digital asset sphere have been evolving with the market needs amid the mainstream adoption of blockchain technology. According to PitchBook, venture capital funding in the fourth quarter focused on firms that build on decentralized computing infrastructure, finance, and technology, particularly in real-world assets (RWA) tokenization. Furthermore, the use of blockchain technology to tokenize real-world assets like real estate and stock markets has revolutionized funding and encompassed more investors from all over the world.

During the fourth quarter of 2023, crypto exchanges Swan Bitcoin and Blockchain.com raised about $165 million and $100 million, respectively. Together.ai, a decentralized cloud platform for large foundation models, raised $102.5 million in a Series A round at a valuation of $463.5 million. The largest deal during the fourth quarter of 2023 involved a $225 million investment into Wormhole at a valuation of $2.5 billion.