The cryptocurrency ecosystem suffered again in the third quarter as funding in the sector fell to a three-year low, blockchain intelligence firm Messari said in a research note last week.
In fact, in the third quarter, crypto-focused companies raised an Across 297 deals, total sales fell to just under $2.1 billion, down 36% from the second quarter in both categories and the lowest level since the fourth quarter of 2020, according to the report.
Funding peaked at approximately $17.5 billion in the first quarter of 2022 with more than 900 deals, but an industry-wide downturn caused by the collapse of the Terra ecosystem surfaced shortly thereafter.
In terms of overall funding and number of transactions, last year’s returns declined sharply from Q2 to Q3, with stablecoin TerraUSD (UST-USD) and sister token Luna (LUNA-USD) Tens of billions of dollars were wiped out due to its disappearance. Within a week, its market capitalization skyrocketed, contributing to the demise of several other major companies, such as Sam Bankman Freed’s multibillion-dollar empire.
Although the prices of major digital tokens have risen significantly since the beginning of the year, investors understand that interest rates are likely to remain high for an extended period of time as inflation rates are still too high for the Federal Reserve’s liking. The company recorded a loss in the third quarter of 2023. Bitcoin (BTC-USD) and Ethereum (ETH-USD), the two largest cryptocurrencies by market capitalization, fell 8.6% and 10.6%, respectively, during the quarter. In contrast, the S&P 500 recorded his 3.8% loss.
Messari noted that the majority of deals in the third quarter were concentrated in early-stage rounds, with seed funding accounting for the largest portion of total stages, with $488 million raised in 98 rounds. did. “Trends in deal volume indicate a significant shift from late-stage projects to early-stage projects over the past three years,” the report said.
Looking at the sector as a whole, chain infrastructure accounted for the largest share of funding, at 18%. Meanwhile, decentralized finance (DeFi) dominated with his 67 funding numbers. Gaming also had a strong quarter, raking in around $250 million.
Interestingly, Binance Labs, the venture capital arm of beleaguered cryptocurrency exchange Binance, was by far the most active investor during the quarter. Said. The 23 deals, which focused on projects related to the DeFi and gaming sectors, were more than double that of the next largest investor, Robot Ventures. The venture funding advantage comes as Zhao Changpeng’s Binance is embroiled in regulatory troubles, with both the U.S. Commodity Futures Trading Commission and the Securities and Exchange Commission warning that the platform has been referred to U.S. regulators. The lawsuit alleges that the company failed to register and sold illegal securities.
