Crypto startups faced a startling setback in August as venture funding plummeted to less than $500 million, marking the lowest point in over two years, according to data from The Block Research.
This decline marks the fourth consecutive month of dwindling venture funding volumes in the crypto space, reflecting a stark contrast to the exuberant investments witnessed in recent years.
Venture capitalists are adopting a more cautious approach, demonstrating a noticeable shift in sentiment. Tom Schmidt, managing partner at crypto VC firm Dragonfly, noted in a report that investors are taking their time, carefully selecting promising projects while being mindful of the exuberant valuations that characterized the market in previous years.
Many startups that raised enormous sums at inflated valuations are now struggling to secure funding in 2023, unless they undertake substantial restructuring efforts. While pre-seed and seed funding segments remain relatively healthy, they constitute only a fraction of the overall market.
Crypto Bear Market Adds To The Woes
The bear market has cast a long shadow over the industry, with declining cryptocurrency prices further compounding the challenges.
Friday witnessed yet another drop in cryptocurrency prices, driven by the realization that there might be no progress on the approval of a spot Bitcoin exchange-traded fund (ETF) until at least October. This delay has led to a wave of disillusionment among investors, triggering a mass exodus from the market.
David Lifchitz, managing partner and chief investment officer at ExoAlpha, identified a critical factor behind the persistent weakness in the crypto market: a severe shortage of liquidity.
Bitcoin (BTC) is currently trading at $25.899. Chart:Go to Source to See Full Article
Author: Christian EncilaDid you like this?
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