After months of gradual declines in the cryptocurrency market, there are reports of a gradual decline in venture capital investments in cryptocurrencies. According to Morgan Stanley, crypto companies raised a record $30 billion in venture capital last year and the number of deals in the sector remains elevated despite the recent cryptocurrency market decline. Such a development is also expected given that “activity across eight of the most important VC bellwether markets over the past 12 months has reset 50% from the peak.”
Sufficient liquidity in US dollars and rising cryptocurrency prices supported record venture capital investment in a sector with more than 1,800 stores last year. This represented an increase of 160% over the average of previous years. Cryptocurrency investments accounted for 7% of all venture capital investments worldwide. Morgan Stanley also adds that the crypto sector has become much more diversified in recent years. While cryptocurrencies and financial companies were a so-called “hot topic” in 2019, it was the madness of DeFi in 2020, which was subsequently replaced by the NFT in 2021. Time will tell what will follow.