According to a report by “The Block,” the landscape of cryptocurrency financing in 2023 faces significant challenges, with total investments dropping to $10.6 billion, a sharp contrast to the $33.2 billion invested in 2022, marking a 68% decrease and the lowest point since 2020.
Several factors contributed to this decline, including historically high interest rates, the rapid development of artificial intelligence diverting attention from cryptocurrencies, regulatory crackdowns, and the impact of prominent cryptocurrency closures involving FTX, Celsius, and BlockFi.
“The Block” interviewed 8 companies from the top 20 active crypto venture capital firms to discuss their views on the cryptocurrency financing prospects for 2024. The interviewed companies generally hold an optimistic outlook and shared many noteworthy cryptocurrency trends, such as projects combining AI technology and consumer-oriented use cases.
Coinbase Ventures, the investment arm of the cryptocurrency exchange Coinbase, remains optimistic about the future despite the challenges of 2023. They believe that several key factors, including increased regulatory clarity, mature protocol infrastructure, institutional participation, and innovative user engagement methods, lay the foundation for a bright outlook in 2024. Coinbase Ventures will continue to invest in areas that can accelerate bringing the next billion users into the blockchain, including cryptocurrency infrastructure, social, and gaming consumer applications, as well as opportunities at the intersection of AI and cryptocurrencies.
Galaxy Ventures, the venture capital arm of digital asset investment company Galaxy, maintains a cautious stance while focusing on early-stage projects. They expect more consolidation in the industry, with large companies acquiring smaller ones. Additionally, they anticipate increased investment in startups with sustainable business models and proven product-market fit, such as Blockspace and stablecoin products.
Animoca Brands, headquartered in Hong Kong, is “very optimistic” about the cryptocurrency market and anticipates a healthier financing environment in 2024, signaling a potential start of a new bull market cycle. They expect increased investment in games and AI sectors with Web3 elements attracting more funding.
Shima Capital, a venture capital firm focusing on early-stage crypto projects, maintains a “cautiously optimistic” view on cryptocurrency financing in 2024. They predict increased investment in verticals such as infrastructure, gaming, and tokenization.
HashKey Capital, an Asian venture capital firm, expects a bullish market next year and plans to actively seek new investment opportunities, including liquidity investments and diversifying funds based on different investment preferences.
Multicoin Capital’s managing partners, Kyle Samani and Tushar Jain, express optimism about the 2024 market development, particularly in the Solana ecosystem. Samani believes that there are significant opportunities for cryptocurrencies in the AI revolution, especially with the current shortage of GPUs. Jain expects the rise of new neobanks, DeFi primitives, payment applications, fund services, and decentralized exchanges in 2024.
Polygon Ventures’ CEO, Abhishek Saxena, believes that Web3 financing may have bottomed out, indicating that the new year will attract more investments in consumer-oriented use cases and tokenized verticals, accelerating innovation and adoption in 2024.
NGC Ventures, an Asian venture capital firm, maintains an optimistic outlook on the cryptocurrency market and risk investments in 2024. Their partners prefer verticals like AI and cryptocurrencies, Layer 2 Bitcoin networks, modular and zero-knowledge technologies. They also focus on intent-based protocols, decentralized physical infrastructure networks, and decentralized science as key verticals. Overall, NGC Ventures expects a full-fledged bull market in 2024, although the duration is uncertain.