“Jaw-dropping VC investments” indicate how strong crypto really is.
- 2022 Numbers Show Unwavering Belief in Crypto
- Record-Breaking Investment
- White Hot Web3
2022 Numbers Show Unwavering Belief in Crypto
Current prices definitely don’t display the entire picture of the crypto market. Recent data from Cointelegraph Research shows that the crypto sector as a whole could not be more bullish. Venture Capital is pouring money into promising startups at a much higher rate than even the mania-driven year of 2021.
In 2021, venture capitalists poured in over $30 billion into “infrastructure, nonfungible tokens (NFTs), decentralized finance (DeFi), centralized finance (CeFi), and Web3.” That came during a year of all-time highs across the board. How is 2022 shaping up? The entire year has been dismal so far. Prices have slumped, hype has fizzled, and the macro-outlook has been worse than ever.
Despite this, in the first three months of 2022, venture capital invested a staggering $14.6 billion into the crypto space, nearly 50% of all the VC investment in 2021. “Over 500 individual deals were struck in the first three months of 2022 throughout the five major [crypto] sectors listed above.”
This is remarkable in an economy where liquidity is drying up and “easy money” is becoming harder to access. The Fed will continue raising interest rates, tightening the belt on the economy, making borrowing more expensive. In theory, this restrains economic growth, resulting in fewer investments and more risk-aversion by venture capital.
While this affects prices, the number has only gone up in terms of investments. Q1 of 2022 already set the record for deals closed, peaking at 514. The average deal value is also at all-time highs, reaching $32 million in the same period. 2022 is on track to see $100 billion of VC investments into crypto sectors, which would shatter the 2021 numbers by more than 3x.
Trad-Fi behemoths like Bain Capital and Sequoia Capital are also getting into crypto. This highlights that the ‘flash-in-a-pan’ narrative about crypto is clearly not a view shared by even the most traditional investment funds. They are starting to realize we are still “very, very early.” According to the research, Bain capital is most interested in Web3 rather than DeFi.
White Hot Web3
Just yesterday, we published a story about the launch of a Web3 incubator powered by some big names in crypto and TradFi. This research dovetails with that, showing that Web3 is the hottest trend in the market. In Q1 of 2022, the Web3 sector made up 26% of all the deals inked (seeds rounds) in that time.
When you think Web3, think metaverse/game-fi. Basically, it is anything crypto-related outside the bounds of money markets, DEX, etc. You can think of Web3 as user-facing ‘social’ dApps. The second-largest sector of Q1 was DeFi, with DAOs like PrismaticFi on Algorand being specifically mentioned in the report.
DeFi made up 23% of all investments in Q1. Following DeFi were infrastructure (middleware), NFTs, and CeFi platforms. This goes to show that crypto is not a one-trick pony or “solution looking for a problem.” There are multiple, robust sectors that are attracting capital from old-guard, legacy firms, and new ones as well.
Considering the circumstances in the global economy, these numbers are spectacularly bullish and provide insight into what sectors are rated as the best bets for the big money. Interest in crypto has never been higher, and neither has investment. It is truly the best of times and the worst of times.