This short-term investment decline may correlate with recent market corrections that have lost more than 50% of the value of Bitcoin (BTC) and other major cryptocurrencies.
Total venture capital investment in cryptocurrencies increased 97.8% from last year, down 38.2% from $ 6.8 billion in April to $ 4.7 billion in May, according to new data released by Dove Metrics.
Investment distribution data show that infrastructure companies received 21% of the pie, while decentralized finance (DeFi) startups accounted for 14%. Centralized finance (CeFi) and non-fungible token (NFT) projects each accounted for 13%.
This shows that venture capital funds may be functioning securely by investing in core technologies that actually bring innovation to the crypto space, rather than higher-risk projects.
Venture fund amount by the company. Source: Dove Metrics
Examples of this investment trend are Xendit, a payment gateway solution focused on Southeast Asia, and Lithosphere, the next-generation platform for cross-chain decentralized applications, raising a total of $ 700 million.
The largest allocation in May was led by Sam Bankman-Fried, the founder of the popular crypto exchange FTX. He invested $ 650 million in Robinhood, a popular brokerage platform, and secured a 7.6% stake in the company.
Other significant investments include renowned analytics firm Chainalysis and one of the largest crypto exchanges, KuCoin, raising more than $ 150 million each.
The largest crypto venture fund. Source: Dove Metrics
The data show the United States as the largest source of venture investment, followed by Singapore and Hong Kong, with statistics consistent with VC global trends.
The names of the largest venture capital firms include Andressen Horowitz. $ 4.5 billion will be raised for the Web3 project, bringing the total allocation of crypto investment to $ 7.6 billion. The company is known for supporting several successful projects in the past, such as Coinbase and Solana (SOL).
Another well-known company is Singapore-based NGC Ventures, which has recently raised $ 100 million and is aiming for a “potential project” in the Web3 space. Some of its successful previous investments include Algorand (ALGO) and Oasis (ROSE).
Despite the current cryptocurrency recession, venture capital seems to be more active than ever, and JP Morgan states that the recent collapse of the tera ecosystem did not affect VCs.
It is dominated by innovative technologies such as Web3 and DeFi, demonstrating the underlying confidence in the evolution of long-term crypto and blockchain technologies.