New data shows that venture capitalists have shied away from funding cryptocurrency businesses following the collapse of the FTX exchange in November 2022.
Data from research firm PitchBook shows that funding for cryptocurrency start-ups has plunged 63% over the last 12 months and is now at its lowest point since the third quarter of 2020.
During this year’s third quarter, ended September 30, venture capitalists invested just $2 billion U.S. in crypto businesses worldwide, which is a tiny fraction of the funds invested during the 2021-2022 bull market in digital coins and tokens.
Previous fundraising among venture capitalists had benefited crypto companies such as FTX and non-fungible token (NFT) marketplace OpenSea.
But now, funding for crypto firms has dried up, says PitchBook, noting that many late-stage tech investors have exited the crypto sector altogether.
The funding of crypto firms by venture capitalists has come under renewed scrutiny as the trial of FTX and its founder Sam Bankman-Fried has begun in a New York City courtroom.
The decline in venture capitalist funding comes despite the price of cryptocurrencies rising this year. The price of Bitcoin (BTC), the largest cryptocurrency by market capitalization, is up 65% so far in 2023 at $27,400 U.S.
