• Crypto startups only raised $548 million in January, a 91% drop from January 2022.
• The FTX collapse likely played a role in the decrease in venture capital investments.
• Most of the January 2023 deals were early-stage companies and CeFi investments dropped off significantly.
Crypto Winter Led to Significant Investment Decline
A CoinDesk analysis shows crypto startups only raised $548 million last month, a 91% decrease from $6 billion in January 2022. The FTX failure’s full impact on industry fundraising is yet to be seen, as many transactions take months to close. Venture capital (VC) and other investments plummeted and most of the 2023 deals were for smaller companies.
FTX Collapse Impacted CeFi Investments
The collapse of FTX created doubts about centralized exchange (CeFi) models for trading crypto, resulting in 99% drop of CeFi deals to $22.8 million in January 2023. Many investors shifted their focus towards decentralized finance (DeFi) and decentralized exchanges (DEX). The coming months will reveal how much investment capital dried up after the FTX scandal came to light.
Blockstream Investment Was Sole Deal Exceeding $100 Million
January 2022 saw 17 investment rounds that exceeded $100 million, including the transaction that valued the now-collapsed FTX crypto exchange at $32 billion. An investment in Blockstream was the only deal that big a year later, highlighting just how much funding has decreased over time due to crypto winter conditions and market uncertainty.
Fundraising Deals Take Time To Finalize
Funding rounds can take months to finalize or close, meaning any drought resulting from the November FTX collapse might not even be fully reflected yet by last month’s low numbers. This suggests more caution may be needed when predicting future industry trends based on recent data points alone.
This data reveals just how much volatility exists within cryptocurrency markets and serves as a reminder that investors must remain cautious when investing in this space – especially during times of economic uncertainty such as we are currently experiencing with cryptocurrency winter conditions leading to significant declines across all metrics of venture capital investments for crypto startups